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Health On The Hill: Medicare’s Payment Change For Physicians

KHN’s Jordan Rau and Mary Agnes Carey discuss Medicare’s transition to compensating doctors based on the quality of the medical care they provide.

>> Listen to audio of the interview.

>> Read related story: Medicare To Tie Doctors’ Pay To Quality, Cost Of Care


MARY AGNES CAREY:  Hello and welcome to Health on the Hill.  I’m Mary Agnes Carey.  The 2010 health care law requires that Medicare providers be paid on the quality of medical care they give and the amount their patients cost Medicare.  That’s a change from the current Medicare system, which is based on the number of services provided.  Making this payment change for physicians is turning out to be more complicated than experts anticipated.  Jordan Rau of Kaiser Health News is here to give us the details. 

Now as we know, backers of the health law have said that linking provider payment to the quality of the service that they provide, something known as value-based purchasing, is really important to reducing health care costs.  But when it comes to implementing this for physicians, it’s turning out to be a little more complicated than it is for other providers, like a hospital.  Why is that?

JORDAN RAU:  It’s really interesting – this was part of the law that was least controversial when it was passed, because everyone thinks, well, pay more for quality and less for low quality, that doesn’t sound unreasonable.  But now that they’re getting to the details, it’s proving to be very difficult.  And it’s more difficult for physicians than just about anyone, because, first of all, there are fewer number of patients that a physician sees and you need a large sample or mass to really figure out how they’re treating the patients.  Because if you just have a couple and one patient is particularly sick or doesn’t do that well, you don’t want it to unfairly reflect on the physician.  So that’s one reason.

Another problem or challenge that they have is who to compare the doctors to. You don’t want to compare one type of specialist to a different type that isn’t exactly the same. And then they also have the challenge of figuring out – and this is probably the hardest thing – how much resources that doctor uses of Medicare. That is proving very challenging, because you can’t just take a look at the Medicare billing of that doctor, but you have to figure out what they’re doing: Are they referring too many people to high priced specialists and not intervening early enough? Are they having too many lab tests? Conversely, you want to make sure you’re not thinking that someone who is not doing enough is actually doing a great job.

MARY AGNES CAREY: In the story that you recently did on this issue, you talked about 20,000 physicians in four states getting reports from Medicare about the care that they deliver to patients. What sorts of things did those reports discuss?

JORDAN RAU: These are really long reports. They’re 14 pages long, and they were links [that] were e-mailed in, and they have extensive amounts of the quality measures that the Centers for Medicare and Medicaid Services are considering using. So [it asks] everything from “How did you handle a patient with diabetes?” to “Did you do depression screening?” Just dozens — I think 28 — so two dozen, different potential tests. And they also have in them — what I think is going to be the most disconcerting for some physicians — they have the average amount that their patients cost Medicare compared to all other doctors. And that’s not just including what that doctor did that cost Medicare, but all of the patient’s services.

MARY AGNES CAREY:  And what’s Medicare going to use all this information for?

JORDAN RAU:  These are technically called “feedback reports,” and that is actually very accurate. These were started because Medicare is really trying to figure out how to do this correctly, so they are sending these out to doctors to see what the doctors are going to say: You know what, this is really unfair or inaccurate because of x, y or z.

It’s almost like a survey. Rather than waiting until they’ve implemented this program, and people’s pay are actually being affected by it, they want to do a dry run of their initial efforts, and then they’re going to use these to fine-tune their metrics.

MARY AGNES CAREY:  Do they have a time yet, when by this date, this is how Medicare will evaluate what you’re paid as a physician.

JORDAN RAU:  The law says that they have to start doing this new payment system in 2015, but they have a lot of leeway. They’re supposed to do it for large-group practices and some specialists as the government sees fit. But they’re supposed to have it all wrapped in by 2017.  And then it should apply to most physicians. 

For the people that are picked in 2015 – and the government hasn’t decided who those are going to be – their initial pay is going to be based on what happened to their patients in 2013. So that’s actually pretty close. That’s just a couple of months away. 

MARY AGNES CAREY:  We know that physicians are unhappy with the current Medicare payment system. Something known as the Sustainable Growth Rate always calls for these large reductions unless Congress steps in to stop it.  They can’t be happy about this. 

JORDAN RAU:  You would think that in some ways that half of them would be happy, because most doctors, you would think, think that they do a pretty good job. But they’re very, very worried about this. The professional societies are very worried about this.  We did a story about this for the Washington Post and it got over 200 comments, and they were all concerned — because doctors are already so frustrated with the Medicare payment levels, because they are so much less than commercial insurance – that they just see this as another uncertainty, another potential for them to lose out on money.  And they are very worried about it.

MARY AGNES CAREY:  Thank you so much, we appreciate your time, Jordan Rau of Kaiser Health News.

JORDAN RAU:  Thanks. 

Related Topics

Cost and Quality Health Industry Medicare