Jennifer Silverman

Pay-for-Performance Principles

Any “pay-for-performance” program should offer voluntary physician participation and foster the relationship between physician and patient, the American Medical Association asserted in a new set of principles for such programs. Such programs also should use accurate data and fair reporting, provide program incentives, and ensure quality of care, the AMA stated. If done improperly, “some so-called pay-for-performance programs are a lose-lose proposition for patients and their physicians with the only benefit accruing to health insurers,” AMA Secretary John H. Armstrong, M.D., said in a statement. Both private and public sector organizations have started offering incentive payments to physicians based on an appraisal of their performance. Before taking on such reforms, however, Congress should try to fix Medicare's flawed payment formula, according to recent AMA testimony.

Cost of New Drug Benefit

National health care spending costs will remain stable over the next 10 years, although public programs will account for half of total spending, in part because of the new Medicare Part D prescription drug benefit, according to a report by the Centers for Medicare and Medicaid Services. The agency claims that the drug benefit—which kicks in next January—is expected to “significantly” increase prescription drug use and reduce out-of-pocket spending for older patients without causing any major increase in the health care spending trend. However, the new benefit will result in a significant shift in funding from private payers and Medicaid to Medicare. Medicare spending is projected to have grown almost 8% in 2004 and to grow 8.5% in 2005, due to several changes in the program under the Medicare Modernization Act, such as positive physician updates and higher Medicare Advantage payment rates.

Legislating Sex Education

Democrats in Congress are offering an alternative to the Bush Administration's proposal to spend $206 million on abstinence-only education. Rep. Barbara Lee (D-Calif.) and Sen. Frank Lautenberg (D-N.J.) have introduced the Responsible Education About Life Act (H.R. 768) that would provide funding to states for programs that include information about both abstinence and contraception. The bill would create a grant program administered by the Health and Human Services Department that would award $206 million each year to states for comprehensive sex education. There are three federal programs that fund abstinence-only-until-marriage programs, but no federal funding currently exists specifically for comprehensive programs, according to Rep. Lee.

Clinical Trial Registry Legislation

Sen. Chuck Grassley (R-Iowa) and Sen. Christopher Dodd (D-Conn.) have introduced legislation to require drug makers to register clinical trials about prescription medicines. The bill is similar to legislation Sen. Dodd introduced in the last Congress, but it stipulates that

www.clinicaltrials.gov

Views on Physician-Assisted Suicide

More than half of physicians in a national survey say they believe it's ethical to assist a patient in committing suicide. Of the 1,000 physicians surveyed in the national poll, about 57% said it was ethical and 39% said it was unethical. In addition, 41% of the physicians surveyed would endorse the legalization of physician-assisted suicide under a wide variety of circumstances, while 30% support its legalization in a few cases, and 29% oppose legalizing it in all cases. Although many physicians support physician-assisted suicide as a public policy, the results were mixed when it came to whether they would personally participate in an assisted suicide. About 46% said they would not assist a patient for any reason, 34% said they would assist a patient in a few cases, and 20% said they would assist under a wide variety of circumstances. The survey was conducted by HCD Research, a marketing and communications research company, and the Louis Finkelstein Institute for Social and Religious Research.

Perceptions of the Drug Industry

Prescription drugs may be improving patients' lives, but 70% of 1,201 adults polled in a Kaiser Family Foundation survey thought the drug industry cared more about profits than people. Only 24% thought the companies were most concerned with developing new drugs that save lives and improve quality of life. People also blame drug companies for rising health care costs: Nearly 60% said prescription drugs increased overall medical costs because they were so expensive, compared with the 23% who said drugs lowered medical costs by reducing the need for expensive medical procedures and hospitalizations. In an earlier poll, Kaiser found that people were more likely to cite drug company profits than other causes as the major cost of rising health care. While not as popular as physicians or hospitals, drug companies were in fact viewed more favorably than oil or tobacco companies, according to the survey.

Pay-for-Performance Principles

Any “pay-for-performance” program should offer voluntary physician participation and foster the relationship between physician and patient, the American Medical Association asserted in a new set of principles for such programs. Such programs also should use accurate data and fair reporting, provide program incentives, and ensure quality of care, the AMA stated. If done improperly, “some so-called pay-for-performance programs are a lose-lose proposition for patients and their physicians with the only benefit accruing to health insurers,” AMA Secretary John H. Armstrong, M.D., said in a statement. Both private and public sector organizations have started offering incentive payments to physicians based on an appraisal of their performance. Before taking on such reforms, however, Congress should try to fix Medicare's flawed payment formula, according to recent AMA testimony.

Cost of New Drug Benefit

National health care spending costs will remain stable over the next 10 years, although public programs will account for half of total spending, in part because of the new Medicare Part D prescription drug benefit, according to a report by the Centers for Medicare and Medicaid Services. The agency claims that the drug benefit—which kicks in next January—is expected to “significantly” increase prescription drug use and reduce out-of-pocket spending for older patients without causing any major increase in the health care spending trend. However, the new benefit will result in a significant shift in funding from private payers and Medicaid to Medicare. Medicare spending is projected to have grown almost 8% in 2004 and to grow 8.5% in 2005, due to several changes in the program under the Medicare Modernization Act, such as positive physician updates and higher Medicare Advantage payment rates.

Legislating Sex Education

Democrats in Congress are offering an alternative to the Bush Administration's proposal to spend $206 million on abstinence-only education. Rep. Barbara Lee (D-Calif.) and Sen. Frank Lautenberg (D-N.J.) have introduced the Responsible Education About Life Act (H.R. 768) that would provide funding to states for programs that include information about both abstinence and contraception. The bill would create a grant program administered by the Health and Human Services Department that would award $206 million each year to states for comprehensive sex education. There are three federal programs that fund abstinence-only-until-marriage programs, but no federal funding currently exists specifically for comprehensive programs, according to Rep. Lee.

Clinical Trial Registry Legislation

Sen. Chuck Grassley (R-Iowa) and Sen. Christopher Dodd (D-Conn.) have introduced legislation to require drug makers to register clinical trials about prescription medicines. The bill is similar to legislation Sen. Dodd introduced in the last Congress, but it stipulates that

www.clinicaltrials.gov

Views on Physician-Assisted Suicide

More than half of physicians in a national survey say they believe it's ethical to assist a patient in committing suicide. Of the 1,000 physicians surveyed in the national poll, about 57% said it was ethical and 39% said it was unethical. In addition, 41% of the physicians surveyed would endorse the legalization of physician-assisted suicide under a wide variety of circumstances, while 30% support its legalization in a few cases, and 29% oppose legalizing it in all cases. Although many physicians support physician-assisted suicide as a public policy, the results were mixed when it came to whether they would personally participate in an assisted suicide. About 46% said they would not assist a patient for any reason, 34% said they would assist a patient in a few cases, and 20% said they would assist under a wide variety of circumstances. The survey was conducted by HCD Research, a marketing and communications research company, and the Louis Finkelstein Institute for Social and Religious Research.

Perceptions of the Drug Industry

Prescription drugs may be improving patients' lives, but 70% of 1,201 adults polled in a Kaiser Family Foundation survey thought the drug industry cared more about profits than people. Only 24% thought the companies were most concerned with developing new drugs that save lives and improve quality of life. People also blame drug companies for rising health care costs: Nearly 60% said prescription drugs increased overall medical costs because they were so expensive, compared with the 23% who said drugs lowered medical costs by reducing the need for expensive medical procedures and hospitalizations. In an earlier poll, Kaiser found that people were more likely to cite drug company profits than other causes as the major cost of rising health care. While not as popular as physicians or hospitals, drug companies were in fact viewed more favorably than oil or tobacco companies, according to the survey.

Pay-for-Performance Principles

Any “pay-for-performance” program should offer voluntary physician participation and foster the relationship between physician and patient, the American Medical Association asserted in a new set of principles for such programs. Such programs also should use accurate data and fair reporting, provide program incentives, and ensure quality of care, the AMA stated. If done improperly, “some so-called pay-for-performance programs are a lose-lose proposition for patients and their physicians with the only benefit accruing to health insurers,” AMA Secretary John H. Armstrong, M.D., said in a statement. Both private and public sector organizations have started offering incentive payments to physicians based on an appraisal of their performance. Before taking on such reforms, however, Congress should try to fix Medicare's flawed payment formula, according to recent AMA testimony.

Cost of New Drug Benefit

National health care spending costs will remain stable over the next 10 years, although public programs will account for half of total spending, in part because of the new Medicare Part D prescription drug benefit, according to a report by the Centers for Medicare and Medicaid Services. The agency claims that the drug benefit—which kicks in next January—is expected to “significantly” increase prescription drug use and reduce out-of-pocket spending for older patients without causing any major increase in the health care spending trend. However, the new benefit will result in a significant shift in funding from private payers and Medicaid to Medicare. Medicare spending is projected to have grown almost 8% in 2004 and to grow 8.5% in 2005, due to several changes in the program under the Medicare Modernization Act, such as positive physician updates and higher Medicare Advantage payment rates.

Legislating Sex Education

Democrats in Congress are offering an alternative to the Bush Administration's proposal to spend $206 million on abstinence-only education. Rep. Barbara Lee (D-Calif.) and Sen. Frank Lautenberg (D-N.J.) have introduced the Responsible Education About Life Act (H.R. 768) that would provide funding to states for programs that include information about both abstinence and contraception. The bill would create a grant program administered by the Health and Human Services Department that would award $206 million each year to states for comprehensive sex education. There are three federal programs that fund abstinence-only-until-marriage programs, but no federal funding currently exists specifically for comprehensive programs, according to Rep. Lee.

Clinical Trial Registry Legislation

Sen. Chuck Grassley (R-Iowa) and Sen. Christopher Dodd (D-Conn.) have introduced legislation to require drug makers to register clinical trials about prescription medicines. The bill is similar to legislation Sen. Dodd introduced in the last Congress, but it stipulates that

www.clinicaltrials.gov

Views on Physician-Assisted Suicide

More than half of physicians in a national survey say they believe it's ethical to assist a patient in committing suicide. Of the 1,000 physicians surveyed in the national poll, about 57% said it was ethical and 39% said it was unethical. In addition, 41% of the physicians surveyed would endorse the legalization of physician-assisted suicide under a wide variety of circumstances, while 30% support its legalization in a few cases, and 29% oppose legalizing it in all cases. Although many physicians support physician-assisted suicide as a public policy, the results were mixed when it came to whether they would personally participate in an assisted suicide. About 46% said they would not assist a patient for any reason, 34% said they would assist a patient in a few cases, and 20% said they would assist under a wide variety of circumstances. The survey was conducted by HCD Research, a marketing and communications research company, and the Louis Finkelstein Institute for Social and Religious Research.

Perceptions of the Drug Industry

Prescription drugs may be improving patients' lives, but 70% of 1,201 adults polled in a Kaiser Family Foundation survey thought the drug industry cared more about profits than people. Only 24% thought the companies were most concerned with developing new drugs that save lives and improve quality of life. People also blame drug companies for rising health care costs: Nearly 60% said prescription drugs increased overall medical costs because they were so expensive, compared with the 23% who said drugs lowered medical costs by reducing the need for expensive medical procedures and hospitalizations. In an earlier poll, Kaiser found that people were more likely to cite drug company profits than other causes as the major cost of rising health care. While not as popular as physicians or hospitals, drug companies were in fact viewed more favorably than oil or tobacco companies, according to the survey.

WASHINGTON — Mix a little money with solid incentives physicians can relate to, and you've got a successful recipe for a pay-for-performance program, Ronald P. Bangasser, M.D., said at the annual National Managed Health Care Congress.

Physicians try to deliver the highest level of medical care they can, but most can't keep track of the needs of every patient, said Dr. Bangasser, a family physician and immediate past president of the California Medical Association.

Studies show that 50% of patients don't get what they need in quality of care, he said. “Most patients rate their doctor a four out of five, but they hate the health care system.”

That's one reason physician groups need a data-based approach to help reduce errors and improve care, he continued. A new program in California has yielded positive results, and is “certainly one way to pay for quality,” Dr. Bangasser said.

Backed by a state foundation grant, the statewide Integrated Healthcare Association (IHA) got together with medical groups, health plans, purchasers, and consumer groups several years ago to collaborate on a plan to reduce expenses for physician reporting.

The program was able to achieve this savings “by accumulating all of the health plans together, so physician groups only had one reporting mechanism instead of seven or eight,” said Dr. Bangasser, medical director of the wound care department of the Beaver Medical Group L.P., at Redlands (Calif.) Community Hospital. The group participates in the IHA program.

All of the health plans and medical groups had to agree on a common set of measures and a common way to report those measures. The IHA in turn acted as a “neutral convener,” in coming up with standards for reporting the data, he said.

The measures had to be valid and accurate, meaningful to consumers and physicians, and important to public health in California. “They also had to get harder over time,” Dr. Bangasser said. In the IHA program, physicians get paid not just for performance, but also for performance improvement. “We actually have a calculator [that determines whether] people are improving.”

The first payout took place in 2004, based on first-year data from 2003.

Physicians are assessed on three types of measures: clinical, patient experience, and information-technology investment.

First-year results saw little variation among the participating groups on patient experience, although variations were seen among clinical and IT measures.

There was room for improvement in both of these areas, Dr. Bangasser said. Fewer groups participated in IT measures than in the other measures, and of those who tried, “only two thirds of them got full credit for it. It showed us that we had a huge IT deficit.”

Variations occurred in the clinical measures because not all of the groups used a registry-type system—a list detailing the specific diagnoses of each patient. Physicians using a registry can find out if a patient got a certain test or if they need one, Dr. Bangasser said. To date, groups that use registries “are doing much better on these measures than groups that don't.”

One of the biggest improvement areas was in cervical cancer screening, he said. Based on data comparisons between 2002 and 2003—the year the program got started—nearly 150,000 more women were screened for cervical cancer, and 35,000 more women were screened for breast cancer.

An additional 10,000 children got two needed immunizations, and 180,000 more patients were tested for diabetes.

Although some groups scored fairly high, specialists didn't fare as well. Patients cited access problems to specialists as a specific complaint in the satisfaction surveys, Dr. Bangasser said.

The estimated aggregate payment to physician groups in the IHA program in 2003 was between $40 million and $50 million, although some groups thought they didn't get paid properly, Dr. Bangasser said. There were some concerns about increased utilization and cost of services for groups participating in the program, and concerns about what the long-term returns on investment would be.

It was also determined that physician groups serving large Hispanic or Native American populations should get “extra credit” for having to deal with more diverse, culturally different populations.

Applying the right types of incentives is key, he said. “If a physician thinks the measure is a good idea, putting a little money behind it will speed quality improvement. However, if the physician thinks the measure is not going to improve quality, $1 million will not change behavior.”

Sometimes, the simplest incentives can produce good results. During a particularly bad flu season, when patients had to wait in long lines to see physicians in his practice, Dr. Bangasser asked all the doctors to see two extra patients per day. All but 2 of the over 60 physicians agreed, and he gave them movie tickets to thank them.

WASHINGTON — Mix a little money with solid incentives physicians can relate to, and you've got a successful recipe for a pay-for-performance program, Ronald P. Bangasser, M.D., said at the annual National Managed Health Care Congress.

Physicians try to deliver the highest level of medical care they can, but most can't keep track of the needs of every patient, said Dr. Bangasser, a family physician and immediate past president of the California Medical Association.

Studies show that 50% of patients don't get what they need in quality of care, he said. “Most patients rate their doctor a four out of five, but they hate the health care system.”

That's one reason physician groups need a data-based approach to help reduce errors and improve care, he continued. A new program in California has yielded positive results, and is “certainly one way to pay for quality,” Dr. Bangasser said.

Backed by a state foundation grant, the statewide Integrated Healthcare Association (IHA) got together with medical groups, health plans, purchasers, and consumer groups several years ago to collaborate on a plan to reduce expenses for physician reporting.

The program was able to achieve this savings “by accumulating all of the health plans together, so physician groups only had one reporting mechanism instead of seven or eight,” said Dr. Bangasser, medical director of the wound care department of the Beaver Medical Group L.P., at Redlands (Calif.) Community Hospital. The group participates in the IHA program.

All of the health plans and medical groups had to agree on a common set of measures and a common way to report those measures. The IHA in turn acted as a “neutral convener,” in coming up with standards for reporting the data, he said.

The measures had to be valid and accurate, meaningful to consumers and physicians, and important to public health in California. “They also had to get harder over time,” Dr. Bangasser said. In the IHA program, physicians get paid not just for performance, but also for performance improvement. “We actually have a calculator [that determines whether] people are improving.”

The first payout took place in 2004, based on first-year data from 2003.

Physicians are assessed on three types of measures: clinical, patient experience, and information-technology investment.

First-year results saw little variation among the participating groups on patient experience, although variations were seen among clinical and IT measures.

There was room for improvement in both of these areas, Dr. Bangasser said. Fewer groups participated in IT measures than in the other measures, and of those who tried, “only two thirds of them got full credit for it. It showed us that we had a huge IT deficit.”

Variations occurred in the clinical measures because not all of the groups used a registry-type system—a list detailing the specific diagnoses of each patient. Physicians using a registry can find out if a patient got a certain test or if they need one, Dr. Bangasser said. To date, groups that use registries “are doing much better on these measures than groups that don't.”

One of the biggest improvement areas was in cervical cancer screening, he said. Based on data comparisons between 2002 and 2003—the year the program got started—nearly 150,000 more women were screened for cervical cancer, and 35,000 more women were screened for breast cancer.

An additional 10,000 children got two needed immunizations, and 180,000 more patients were tested for diabetes.

Although some groups scored fairly high, specialists didn't fare as well. Patients cited access problems to specialists as a specific complaint in the satisfaction surveys, Dr. Bangasser said.

The estimated aggregate payment to physician groups in the IHA program in 2003 was between $40 million and $50 million, although some groups thought they didn't get paid properly, Dr. Bangasser said. There were some concerns about increased utilization and cost of services for groups participating in the program, and concerns about what the long-term returns on investment would be.

It was also determined that physician groups serving large Hispanic or Native American populations should get “extra credit” for having to deal with more diverse, culturally different populations.

Applying the right types of incentives is key, he said. “If a physician thinks the measure is a good idea, putting a little money behind it will speed quality improvement. However, if the physician thinks the measure is not going to improve quality, $1 million will not change behavior.”

Sometimes, the simplest incentives can produce good results. During a particularly bad flu season, when patients had to wait in long lines to see physicians in his practice, Dr. Bangasser asked all the doctors to see two extra patients per day. All but 2 of the over 60 physicians agreed, and he gave them movie tickets to thank them.

WASHINGTON — Mix a little money with solid incentives physicians can relate to, and you've got a successful recipe for a pay-for-performance program, Ronald P. Bangasser, M.D., said at the annual National Managed Health Care Congress.

Physicians try to deliver the highest level of medical care they can, but most can't keep track of the needs of every patient, said Dr. Bangasser, a family physician and immediate past president of the California Medical Association.

Studies show that 50% of patients don't get what they need in quality of care, he said. “Most patients rate their doctor a four out of five, but they hate the health care system.”

That's one reason physician groups need a data-based approach to help reduce errors and improve care, he continued. A new program in California has yielded positive results, and is “certainly one way to pay for quality,” Dr. Bangasser said.

Backed by a state foundation grant, the statewide Integrated Healthcare Association (IHA) got together with medical groups, health plans, purchasers, and consumer groups several years ago to collaborate on a plan to reduce expenses for physician reporting.

The program was able to achieve this savings “by accumulating all of the health plans together, so physician groups only had one reporting mechanism instead of seven or eight,” said Dr. Bangasser, medical director of the wound care department of the Beaver Medical Group L.P., at Redlands (Calif.) Community Hospital. The group participates in the IHA program.

All of the health plans and medical groups had to agree on a common set of measures and a common way to report those measures. The IHA in turn acted as a “neutral convener,” in coming up with standards for reporting the data, he said.

The measures had to be valid and accurate, meaningful to consumers and physicians, and important to public health in California. “They also had to get harder over time,” Dr. Bangasser said. In the IHA program, physicians get paid not just for performance, but also for performance improvement. “We actually have a calculator [that determines whether] people are improving.”

The first payout took place in 2004, based on first-year data from 2003.

Physicians are assessed on three types of measures: clinical, patient experience, and information-technology investment.

First-year results saw little variation among the participating groups on patient experience, although variations were seen among clinical and IT measures.

There was room for improvement in both of these areas, Dr. Bangasser said. Fewer groups participated in IT measures than in the other measures, and of those who tried, “only two thirds of them got full credit for it. It showed us that we had a huge IT deficit.”

Variations occurred in the clinical measures because not all of the groups used a registry-type system—a list detailing the specific diagnoses of each patient. Physicians using a registry can find out if a patient got a certain test or if they need one, Dr. Bangasser said. To date, groups that use registries “are doing much better on these measures than groups that don't.”

One of the biggest improvement areas was in cervical cancer screening, he said. Based on data comparisons between 2002 and 2003—the year the program got started—nearly 150,000 more women were screened for cervical cancer, and 35,000 more women were screened for breast cancer.

An additional 10,000 children got two needed immunizations, and 180,000 more patients were tested for diabetes.

Although some groups scored fairly high, specialists didn't fare as well. Patients cited access problems to specialists as a specific complaint in the satisfaction surveys, Dr. Bangasser said.

The estimated aggregate payment to physician groups in the IHA program in 2003 was between $40 million and $50 million, although some groups thought they didn't get paid properly, Dr. Bangasser said. There were some concerns about increased utilization and cost of services for groups participating in the program, and concerns about what the long-term returns on investment would be.

It was also determined that physician groups serving large Hispanic or Native American populations should get “extra credit” for having to deal with more diverse, culturally different populations.

Applying the right types of incentives is key, he said. “If a physician thinks the measure is a good idea, putting a little money behind it will speed quality improvement. However, if the physician thinks the measure is not going to improve quality, $1 million will not change behavior.”

Sometimes, the simplest incentives can produce good results. During a particularly bad flu season, when patients had to wait in long lines to see physicians in his practice, Dr. Bangasser asked all the doctors to see two extra patients per day. All but 2 of the over 60 physicians agreed, and he gave them movie tickets to thank them.

Tweaking the Geographic Adjusters

Medicare's geographic adjusters for setting physician fees are valid in their fundamental design, but their methods need refinement, the Government Accountability Office reported. Geographic practice cost indices (GPCIs) are used to raise or lower Medicare physician fees depending on whether local practice costs are above or below the national average. They are based on physician work, practice, and malpractice expenses. The adjusters play a useful role by protect physicianing fees in low-cost areas from dropping to levels that could be considered unfair relative to fees in high-cost areas. On the other hand, the wage data used are not current, and the malpractice data used are incomplete, GAO said. The adjusters also seem to have little bearing on whether physicians decide to locate in rural areas, as factors other than a paycheck come into play.

'Rent-A-Patient' Fraud

Hundreds of patients from across the country had unnecessary and sometimes dangerous surgical procedures that led to the submission of tens of millions of dollars in fraudulent medical claims, according to a $30 million lawsuit filed by 12 Blue Cross and Blue Shield Plans. The suit was filed against nine California-based outpatient surgery clinics, seven medical management companies, and 34 individuals, in a Los Angeles federal district court. The Blues Plans allege that paid recruiters enlisted patients to travel to the surgical centers and undergo “needless and sometimes hazardous” surgical procedures and treatments. In return, the patients received cash payments or cosmetic surgery, and the providers submitted fraudulent insurance claims. These “rent-a-patient” tactics have resulted in significant financial losses to insurers and employee benefit plans since 1999, according to the suit.

A Plan to Reform Medicaid

Governors were unable to reach a consensus with lawmakers on Medicaid reform at their annual meeting, but they're pushing their own plan to modernize the program. In the report, “Medicaid in 2005: Principles and Proposals for Reform,” the National Governors Association recommended simplifying state plan and waiver standards and processing requirements, and allowing states to adopt policies that encourage Medicaid beneficiaries to direct their own care and share in any associated cost savings. Medicaid should also update its formula for calculating state-specific federal matching rates, while Medicare law should be amended so the federal government assumes specific responsibility for low-income Medicare-Medicaid dual eligibles, the governors said.

Discount Cards: Not Created Equal

Some discount medical cards provide value, but others have serious drawbacks such as high-pressure sales tactics, exaggerated claims of savings, inaccurate promotions, or difficulty finding participating physicians, a survey by the Commonwealth Fund concluded. The cards promise discounts for a wide range of providers, including physicians and hospitals, as well as for lab work, surgical procedures and other services. Some discount card firm are seeking to reform the market through a trade association and voluntary code of conduct. But the cards aren't regulated, so “legislative action is needed that gives state insurance departments the authority and resources to have direct oversight of the discount medical card industry,” the survey authors said. Researchers tested 5 of 27 cards advertised in the Washington, D.C. area by undergoing the application process, seeking health care services from participating providers, then canceling the cards.

Conflict-of-Interest Rules Targeted

People with direct financial conflicts of interest should not be put on Food and Drug Administration advisory committees, a coalition of public interest groups has recommended. Financial conflicts undermine “the public's faith in the fairness and credibility of the panel's work,” the Center for Science in the Public Interest, the National Women's Health Network, the U.S. Cochrane Center Consumer Coalition, and eight other groups said in a letter to Acting FDA Commissioner Lester Crawford, D.V.M., Ph.D. The groups cited the FDA advisory committee that recently reviewed the safety of cyclooxygenase-2 inhibitors, noting that 10 of the 32 members had direct financial conflicts. In addition to prohibiting scientists, physicians, and clinicians with relevant conflicts of interest from serving on advisory committees, the groups also recommended that people with any industry ties make up no more than half of a committee.

Assault on Salt?

The federal government's refusal to reveal data that it used to develop its recommendation to reduce salt intake with the goal of preventing strokes has drawn fire from the salt industry. The Salt Institute, representing salt manufacturers, sued the Department of Health and Human Services, claiming HHS refused to release the studies supporting its 2002 recommendation that Americans cut salt intake as a way to avoid hypertension and stroke. The failure to release the information was a violation of the federal Information Quality Act, the suit alleges. Under the act, parties who feel that the government is withholding information have the right to appeal to the agency in question; the institute, along with the U.S. Chamber of Commerce, did just that, but the appeal was denied. HHS says the suit is not valid because there is no provision in the act for a judicial review of a denied appeal; the court agreed and dismissed the suit. The chamber and the institute are appealing that decision.

Tweaking the Geographic Adjusters

Medicare's geographic adjusters for setting physician fees are valid in their fundamental design, but their methods need refinement, the Government Accountability Office reported. Geographic practice cost indices (GPCIs) are used to raise or lower Medicare physician fees depending on whether local practice costs are above or below the national average. They are based on physician work, practice, and malpractice expenses. The adjusters play a useful role by protect physicianing fees in low-cost areas from dropping to levels that could be considered unfair relative to fees in high-cost areas. On the other hand, the wage data used are not current, and the malpractice data used are incomplete, GAO said. The adjusters also seem to have little bearing on whether physicians decide to locate in rural areas, as factors other than a paycheck come into play.

'Rent-A-Patient' Fraud

Hundreds of patients from across the country had unnecessary and sometimes dangerous surgical procedures that led to the submission of tens of millions of dollars in fraudulent medical claims, according to a $30 million lawsuit filed by 12 Blue Cross and Blue Shield Plans. The suit was filed against nine California-based outpatient surgery clinics, seven medical management companies, and 34 individuals, in a Los Angeles federal district court. The Blues Plans allege that paid recruiters enlisted patients to travel to the surgical centers and undergo “needless and sometimes hazardous” surgical procedures and treatments. In return, the patients received cash payments or cosmetic surgery, and the providers submitted fraudulent insurance claims. These “rent-a-patient” tactics have resulted in significant financial losses to insurers and employee benefit plans since 1999, according to the suit.

A Plan to Reform Medicaid

Governors were unable to reach a consensus with lawmakers on Medicaid reform at their annual meeting, but they're pushing their own plan to modernize the program. In the report, “Medicaid in 2005: Principles and Proposals for Reform,” the National Governors Association recommended simplifying state plan and waiver standards and processing requirements, and allowing states to adopt policies that encourage Medicaid beneficiaries to direct their own care and share in any associated cost savings. Medicaid should also update its formula for calculating state-specific federal matching rates, while Medicare law should be amended so the federal government assumes specific responsibility for low-income Medicare-Medicaid dual eligibles, the governors said.

Discount Cards: Not Created Equal

Some discount medical cards provide value, but others have serious drawbacks such as high-pressure sales tactics, exaggerated claims of savings, inaccurate promotions, or difficulty finding participating physicians, a survey by the Commonwealth Fund concluded. The cards promise discounts for a wide range of providers, including physicians and hospitals, as well as for lab work, surgical procedures and other services. Some discount card firm are seeking to reform the market through a trade association and voluntary code of conduct. But the cards aren't regulated, so “legislative action is needed that gives state insurance departments the authority and resources to have direct oversight of the discount medical card industry,” the survey authors said. Researchers tested 5 of 27 cards advertised in the Washington, D.C. area by undergoing the application process, seeking health care services from participating providers, then canceling the cards.

Conflict-of-Interest Rules Targeted

People with direct financial conflicts of interest should not be put on Food and Drug Administration advisory committees, a coalition of public interest groups has recommended. Financial conflicts undermine “the public's faith in the fairness and credibility of the panel's work,” the Center for Science in the Public Interest, the National Women's Health Network, the U.S. Cochrane Center Consumer Coalition, and eight other groups said in a letter to Acting FDA Commissioner Lester Crawford, D.V.M., Ph.D. The groups cited the FDA advisory committee that recently reviewed the safety of cyclooxygenase-2 inhibitors, noting that 10 of the 32 members had direct financial conflicts. In addition to prohibiting scientists, physicians, and clinicians with relevant conflicts of interest from serving on advisory committees, the groups also recommended that people with any industry ties make up no more than half of a committee.

Assault on Salt?

The federal government's refusal to reveal data that it used to develop its recommendation to reduce salt intake with the goal of preventing strokes has drawn fire from the salt industry. The Salt Institute, representing salt manufacturers, sued the Department of Health and Human Services, claiming HHS refused to release the studies supporting its 2002 recommendation that Americans cut salt intake as a way to avoid hypertension and stroke. The failure to release the information was a violation of the federal Information Quality Act, the suit alleges. Under the act, parties who feel that the government is withholding information have the right to appeal to the agency in question; the institute, along with the U.S. Chamber of Commerce, did just that, but the appeal was denied. HHS says the suit is not valid because there is no provision in the act for a judicial review of a denied appeal; the court agreed and dismissed the suit. The chamber and the institute are appealing that decision.

Tweaking the Geographic Adjusters

Medicare's geographic adjusters for setting physician fees are valid in their fundamental design, but their methods need refinement, the Government Accountability Office reported. Geographic practice cost indices (GPCIs) are used to raise or lower Medicare physician fees depending on whether local practice costs are above or below the national average. They are based on physician work, practice, and malpractice expenses. The adjusters play a useful role by protect physicianing fees in low-cost areas from dropping to levels that could be considered unfair relative to fees in high-cost areas. On the other hand, the wage data used are not current, and the malpractice data used are incomplete, GAO said. The adjusters also seem to have little bearing on whether physicians decide to locate in rural areas, as factors other than a paycheck come into play.

'Rent-A-Patient' Fraud

Hundreds of patients from across the country had unnecessary and sometimes dangerous surgical procedures that led to the submission of tens of millions of dollars in fraudulent medical claims, according to a $30 million lawsuit filed by 12 Blue Cross and Blue Shield Plans. The suit was filed against nine California-based outpatient surgery clinics, seven medical management companies, and 34 individuals, in a Los Angeles federal district court. The Blues Plans allege that paid recruiters enlisted patients to travel to the surgical centers and undergo “needless and sometimes hazardous” surgical procedures and treatments. In return, the patients received cash payments or cosmetic surgery, and the providers submitted fraudulent insurance claims. These “rent-a-patient” tactics have resulted in significant financial losses to insurers and employee benefit plans since 1999, according to the suit.

A Plan to Reform Medicaid

Governors were unable to reach a consensus with lawmakers on Medicaid reform at their annual meeting, but they're pushing their own plan to modernize the program. In the report, “Medicaid in 2005: Principles and Proposals for Reform,” the National Governors Association recommended simplifying state plan and waiver standards and processing requirements, and allowing states to adopt policies that encourage Medicaid beneficiaries to direct their own care and share in any associated cost savings. Medicaid should also update its formula for calculating state-specific federal matching rates, while Medicare law should be amended so the federal government assumes specific responsibility for low-income Medicare-Medicaid dual eligibles, the governors said.

Discount Cards: Not Created Equal

Some discount medical cards provide value, but others have serious drawbacks such as high-pressure sales tactics, exaggerated claims of savings, inaccurate promotions, or difficulty finding participating physicians, a survey by the Commonwealth Fund concluded. The cards promise discounts for a wide range of providers, including physicians and hospitals, as well as for lab work, surgical procedures and other services. Some discount card firm are seeking to reform the market through a trade association and voluntary code of conduct. But the cards aren't regulated, so “legislative action is needed that gives state insurance departments the authority and resources to have direct oversight of the discount medical card industry,” the survey authors said. Researchers tested 5 of 27 cards advertised in the Washington, D.C. area by undergoing the application process, seeking health care services from participating providers, then canceling the cards.

Conflict-of-Interest Rules Targeted

People with direct financial conflicts of interest should not be put on Food and Drug Administration advisory committees, a coalition of public interest groups has recommended. Financial conflicts undermine “the public's faith in the fairness and credibility of the panel's work,” the Center for Science in the Public Interest, the National Women's Health Network, the U.S. Cochrane Center Consumer Coalition, and eight other groups said in a letter to Acting FDA Commissioner Lester Crawford, D.V.M., Ph.D. The groups cited the FDA advisory committee that recently reviewed the safety of cyclooxygenase-2 inhibitors, noting that 10 of the 32 members had direct financial conflicts. In addition to prohibiting scientists, physicians, and clinicians with relevant conflicts of interest from serving on advisory committees, the groups also recommended that people with any industry ties make up no more than half of a committee.

Assault on Salt?

The federal government's refusal to reveal data that it used to develop its recommendation to reduce salt intake with the goal of preventing strokes has drawn fire from the salt industry. The Salt Institute, representing salt manufacturers, sued the Department of Health and Human Services, claiming HHS refused to release the studies supporting its 2002 recommendation that Americans cut salt intake as a way to avoid hypertension and stroke. The failure to release the information was a violation of the federal Information Quality Act, the suit alleges. Under the act, parties who feel that the government is withholding information have the right to appeal to the agency in question; the institute, along with the U.S. Chamber of Commerce, did just that, but the appeal was denied. HHS says the suit is not valid because there is no provision in the act for a judicial review of a denied appeal; the court agreed and dismissed the suit. The chamber and the institute are appealing that decision.

WASHINGTON — Older patients are choosing their physician over the telephone or using electronic resources to help them understand the complexities of the new prescription drug law.

Many beneficiaries don't understand what the new law does, and many are not comfortable looking for information about it on the Internet, Drew Altman, president and CEO of the Kaiser Family Foundation, said during the annual conference of the National Academy of Social Insurance.

In a Kaiser Family Foundation poll of more than 1,200 adults, only 13% of respondents said they understood the new law very well.

More than half of the respondents (53%) said they did not have enough information about the law to understand how it would impact them personally.

The poll was conducted in December 2004 and included responses from 237 adults aged 65 years and older and 953 adults aged 18-64.

In a question specifically addressed to seniors, respondents were asked what sources they would turn to for help. The majority (38%) said they'd ask for their physician's counsel, in deciding whether or not to enroll in a Medicare drug plan, Mr. Altman said during the meeting.

Seniors also cited Medicare offices, Web sites, or phone number (31%); pharmacists (30%); and health insurance companies (25%) as consultation sources for the new drug benefit.

Upon closer look, however, it doesn't seem like the Internet or the phone are popular venues to get information.

Forty-three percent of seniors who responded to the poll said they had never heard of the 1-800 Medicare number, and 42% acknowledged that they were aware of the toll-free number, but have never used it.

Only 6% of the respondents said they had heard of Medicare.gov, and 39% said they'd never heard of the Medicare Web site.

For those aged 65 and older, 73% said they have never gone online, and 85% said they've never gotten assistance from a friend or family member to visit an Internet site on their behalf to get information about Medicare.

Most of the information isn't access friendly to the average beneficiary, Roslyn Taylor, M.D., a family physician in Savannah, Ga., said in an interview.

“Many of the seniors do not have or know how to use computers.” Those patients who said they do know how to use a computer “told me that even if they went on the Web site, they still were confused,” Dr. Taylor added.

Thirty-seven percent of the seniors who responded to the survey said they would prefer to get their Medicare information from mailings, and 25% said they would not mind obtaining the information in person from Medicare or Social Security offices.

Only 18% cited toll-free telephone hotlines as a preferred method.

Physicians themselves may need a quick tutorial on the new Medicare benefits. “I think that a lot of physicians are not aware of the details regarding what new things Medicare is covering—and under what specific rules,” said Colette Willins, M.D., who is a professor at Case Western Reserve University in Westlake, Ohio.

Older beneficiaries seemed more aware of specific benefits. Respectively, 86% and 67% of beneficiaries aged 65 and older knew about the discount drug card, and a $600 subsidy on the costs of drugs for low-income people.

Only 27% of beneficiaries aged 18-64 were aware of the subsidy.

Senior respondents seemed divided on their reported plans to enroll in the drug benefit in 2006.

Nineteen percent of the respondents said they would enroll in the drug benefit, 37% said they would not, and an another 37% said they had not heard enough about the new benefit to decide.

WASHINGTON — Older patients are choosing their physician over the telephone or using electronic resources to help them understand the complexities of the new prescription drug law.

Many beneficiaries don't understand what the new law does, and many are not comfortable looking for information about it on the Internet, Drew Altman, president and CEO of the Kaiser Family Foundation, said during the annual conference of the National Academy of Social Insurance.

In a Kaiser Family Foundation poll of more than 1,200 adults, only 13% of respondents said they understood the new law very well.

More than half of the respondents (53%) said they did not have enough information about the law to understand how it would impact them personally.

The poll was conducted in December 2004 and included responses from 237 adults aged 65 years and older and 953 adults aged 18-64.

In a question specifically addressed to seniors, respondents were asked what sources they would turn to for help. The majority (38%) said they'd ask for their physician's counsel, in deciding whether or not to enroll in a Medicare drug plan, Mr. Altman said during the meeting.

Seniors also cited Medicare offices, Web sites, or phone number (31%); pharmacists (30%); and health insurance companies (25%) as consultation sources for the new drug benefit.

Upon closer look, however, it doesn't seem like the Internet or the phone are popular venues to get information.

Forty-three percent of seniors who responded to the poll said they had never heard of the 1-800 Medicare number, and 42% acknowledged that they were aware of the toll-free number, but have never used it.

Only 6% of the respondents said they had heard of Medicare.gov, and 39% said they'd never heard of the Medicare Web site.

For those aged 65 and older, 73% said they have never gone online, and 85% said they've never gotten assistance from a friend or family member to visit an Internet site on their behalf to get information about Medicare.

Most of the information isn't access friendly to the average beneficiary, Roslyn Taylor, M.D., a family physician in Savannah, Ga., said in an interview.

“Many of the seniors do not have or know how to use computers.” Those patients who said they do know how to use a computer “told me that even if they went on the Web site, they still were confused,” Dr. Taylor added.

Thirty-seven percent of the seniors who responded to the survey said they would prefer to get their Medicare information from mailings, and 25% said they would not mind obtaining the information in person from Medicare or Social Security offices.

Only 18% cited toll-free telephone hotlines as a preferred method.

Physicians themselves may need a quick tutorial on the new Medicare benefits. “I think that a lot of physicians are not aware of the details regarding what new things Medicare is covering—and under what specific rules,” said Colette Willins, M.D., who is a professor at Case Western Reserve University in Westlake, Ohio.

Older beneficiaries seemed more aware of specific benefits. Respectively, 86% and 67% of beneficiaries aged 65 and older knew about the discount drug card, and a $600 subsidy on the costs of drugs for low-income people.

Only 27% of beneficiaries aged 18-64 were aware of the subsidy.

Senior respondents seemed divided on their reported plans to enroll in the drug benefit in 2006.

Nineteen percent of the respondents said they would enroll in the drug benefit, 37% said they would not, and an another 37% said they had not heard enough about the new benefit to decide.

WASHINGTON — Older patients are choosing their physician over the telephone or using electronic resources to help them understand the complexities of the new prescription drug law.

Many beneficiaries don't understand what the new law does, and many are not comfortable looking for information about it on the Internet, Drew Altman, president and CEO of the Kaiser Family Foundation, said during the annual conference of the National Academy of Social Insurance.

In a Kaiser Family Foundation poll of more than 1,200 adults, only 13% of respondents said they understood the new law very well.

More than half of the respondents (53%) said they did not have enough information about the law to understand how it would impact them personally.

The poll was conducted in December 2004 and included responses from 237 adults aged 65 years and older and 953 adults aged 18-64.

In a question specifically addressed to seniors, respondents were asked what sources they would turn to for help. The majority (38%) said they'd ask for their physician's counsel, in deciding whether or not to enroll in a Medicare drug plan, Mr. Altman said during the meeting.

Seniors also cited Medicare offices, Web sites, or phone number (31%); pharmacists (30%); and health insurance companies (25%) as consultation sources for the new drug benefit.

Upon closer look, however, it doesn't seem like the Internet or the phone are popular venues to get information.

Forty-three percent of seniors who responded to the poll said they had never heard of the 1-800 Medicare number, and 42% acknowledged that they were aware of the toll-free number, but have never used it.

Only 6% of the respondents said they had heard of Medicare.gov, and 39% said they'd never heard of the Medicare Web site.

For those aged 65 and older, 73% said they have never gone online, and 85% said they've never gotten assistance from a friend or family member to visit an Internet site on their behalf to get information about Medicare.

Most of the information isn't access friendly to the average beneficiary, Roslyn Taylor, M.D., a family physician in Savannah, Ga., said in an interview.

“Many of the seniors do not have or know how to use computers.” Those patients who said they do know how to use a computer “told me that even if they went on the Web site, they still were confused,” Dr. Taylor added.

Thirty-seven percent of the seniors who responded to the survey said they would prefer to get their Medicare information from mailings, and 25% said they would not mind obtaining the information in person from Medicare or Social Security offices.

Only 18% cited toll-free telephone hotlines as a preferred method.

Physicians themselves may need a quick tutorial on the new Medicare benefits. “I think that a lot of physicians are not aware of the details regarding what new things Medicare is covering—and under what specific rules,” said Colette Willins, M.D., who is a professor at Case Western Reserve University in Westlake, Ohio.

Older beneficiaries seemed more aware of specific benefits. Respectively, 86% and 67% of beneficiaries aged 65 and older knew about the discount drug card, and a $600 subsidy on the costs of drugs for low-income people.

Only 27% of beneficiaries aged 18-64 were aware of the subsidy.

Senior respondents seemed divided on their reported plans to enroll in the drug benefit in 2006.

Nineteen percent of the respondents said they would enroll in the drug benefit, 37% said they would not, and an another 37% said they had not heard enough about the new benefit to decide.

WASHINGTON — Congress should establish a quality incentive payment policy for Medicare physicians, the Medicare Payment Advisory Commission has recommended.

In light of the challenges facing Medicare, “nothing is more important” than distinguishing between providers based on performance, MedPAC Chairman Glenn Hackbarth said at a commission meeting. “Providers are not all created equal—there's abundant evidence that some providers do a better job than others. To continue to pay them as if they're all performing equally well is a tragic situation.”

And that was just one of several of the commission's recommendations aimed at establishing a pay-for-performance system across health care channels, using information technology in Medicare initiatives to financially reward providers on the basis of quality.

The recommendations were included in MedPAC's Report to the Congress on Medicare Payment Policy, submitted in March.

“Physicians are ready for a pay-for-performance program,” Karen Milgate, a MedPAC research director said at the meeting.

Those participating in such a program could use various facets of information technology to manage patients, such as registries to track patients and identify when they need certain preventive services, or systems for detecting drug interactions, Ms. Milgate said. These types of information have the potential to improve important aspects of care, and increase physician ability to assess and report on their care.

“Without information technology, it would be difficult for physicians to keep up with and apply the latest clinical science and appropriately track and follow up with patients,” she said. “This is true for primary care and especially for patients with chronic conditions. But [it is] also true for surgeons and other specialists, to ensure follow-up after acute events and coordination with other settings of care.”

Considering that it's the only information collected on physicians, Ms. Milgate noted that claims-based measures could be used to determine whether beneficiaries received appropriate follow-up care.

The claims-based process puts no burden on physicians and research shows it's widely available for a broad group of beneficiaries and physicians, she said.

“However, the depth of information on each kind of physician is unclear and we do know that claims-based measures are not available for every single type of physician,” she continued.

Because these actions would redistribute resources already in the system, they would not affect spending relative to current law, although they may increase or lower payments for providers, depending on the quality of their care, she said.

Nicholas Wolter, M.D., a MedPAC commissioner from Billings, Mont., cautioned that physicians may be reluctant to embrace yet another change that would limit their revenue, after the sustainable growth rate. Pay for performance might be “another irritation, rather than an incentive,” he said.

Are all physicians equally ready for such a system? “I'm not sure that's true,” he added.

Smaller practices in particular may not be ready to provide the clinical information necessary for a mature pay-for-performance initiative, Alan Nelson, M.D., a commissioner representing the American College of Physicians, said in an interview. “However, the insistence of payers for incentives to promote quality is something that can't be ignored,” he said.

Although a differential payment system that rewards higher quality “is almost certainly in our future,” Medicare should proceed with caution on this initiative, taking care to not increase the administrative burden—and always being aware of unintended consequences, Dr. Nelson continued.

Most of these information technology developments “seem to apply more to primary care physicians than other specialties,” observed commissioner William Scanlon, Ph.D., a health policy consultant from Oak Hill, Va. “The question is how we would differentiate the rewards for different specialties even on the structural measures?”

He suggested that Congress create a project to test these rewards on an ongoing basis, to accumulate evidence that it was working effectively among the various specialties.

Mandating use of information technology could accelerate use, but “providers could find such a requirement to be overly burdensome,” MedPAC analyst Chantal Worzala said. Such requirements could become appropriate as the health care market develops.

The panel also recommended that prescription claims data from Medicare's Part D program be available for assessing the quality of pharmaceutical and physician care.

“Linking prescription data with physician claims could help identify a broader set of patients with certain conditions, and help determine whether they filled or refilled a prescription and received appropriate pharmaceutical care,” Ms. Milgate said.

Rewards could also be given to providers who improve outcomes in care for their patients in other settings, such as physicians whose patients do better in hospitals, or home health agencies who manage their patients' care transition to nursing homes, MedPAC analyst Sharon Bee Cheng told commissioners.

WASHINGTON — Congress should establish a quality incentive payment policy for Medicare physicians, the Medicare Payment Advisory Commission has recommended.

In light of the challenges facing Medicare, “nothing is more important” than distinguishing between providers based on performance, MedPAC Chairman Glenn Hackbarth said at a commission meeting. “Providers are not all created equal—there's abundant evidence that some providers do a better job than others. To continue to pay them as if they're all performing equally well is a tragic situation.”

And that was just one of several of the commission's recommendations aimed at establishing a pay-for-performance system across health care channels, using information technology in Medicare initiatives to financially reward providers on the basis of quality.

The recommendations were included in MedPAC's Report to the Congress on Medicare Payment Policy, submitted in March.

“Physicians are ready for a pay-for-performance program,” Karen Milgate, a MedPAC research director said at the meeting.

Those participating in such a program could use various facets of information technology to manage patients, such as registries to track patients and identify when they need certain preventive services, or systems for detecting drug interactions, Ms. Milgate said. These types of information have the potential to improve important aspects of care, and increase physician ability to assess and report on their care.

“Without information technology, it would be difficult for physicians to keep up with and apply the latest clinical science and appropriately track and follow up with patients,” she said. “This is true for primary care and especially for patients with chronic conditions. But [it is] also true for surgeons and other specialists, to ensure follow-up after acute events and coordination with other settings of care.”

Considering that it's the only information collected on physicians, Ms. Milgate noted that claims-based measures could be used to determine whether beneficiaries received appropriate follow-up care.

The claims-based process puts no burden on physicians and research shows it's widely available for a broad group of beneficiaries and physicians, she said.

“However, the depth of information on each kind of physician is unclear and we do know that claims-based measures are not available for every single type of physician,” she continued.

Because these actions would redistribute resources already in the system, they would not affect spending relative to current law, although they may increase or lower payments for providers, depending on the quality of their care, she said.

Nicholas Wolter, M.D., a MedPAC commissioner from Billings, Mont., cautioned that physicians may be reluctant to embrace yet another change that would limit their revenue, after the sustainable growth rate. Pay for performance might be “another irritation, rather than an incentive,” he said.

Are all physicians equally ready for such a system? “I'm not sure that's true,” he added.

Smaller practices in particular may not be ready to provide the clinical information necessary for a mature pay-for-performance initiative, Alan Nelson, M.D., a commissioner representing the American College of Physicians, said in an interview. “However, the insistence of payers for incentives to promote quality is something that can't be ignored,” he said.

Although a differential payment system that rewards higher quality “is almost certainly in our future,” Medicare should proceed with caution on this initiative, taking care to not increase the administrative burden—and always being aware of unintended consequences, Dr. Nelson continued.

Most of these information technology developments “seem to apply more to primary care physicians than other specialties,” observed commissioner William Scanlon, Ph.D., a health policy consultant from Oak Hill, Va. “The question is how we would differentiate the rewards for different specialties even on the structural measures?”

He suggested that Congress create a project to test these rewards on an ongoing basis, to accumulate evidence that it was working effectively among the various specialties.

Mandating use of information technology could accelerate use, but “providers could find such a requirement to be overly burdensome,” MedPAC analyst Chantal Worzala said. Such requirements could become appropriate as the health care market develops.

The panel also recommended that prescription claims data from Medicare's Part D program be available for assessing the quality of pharmaceutical and physician care.

“Linking prescription data with physician claims could help identify a broader set of patients with certain conditions, and help determine whether they filled or refilled a prescription and received appropriate pharmaceutical care,” Ms. Milgate said.

Rewards could also be given to providers who improve outcomes in care for their patients in other settings, such as physicians whose patients do better in hospitals, or home health agencies who manage their patients' care transition to nursing homes, MedPAC analyst Sharon Bee Cheng told commissioners.

WASHINGTON — Congress should establish a quality incentive payment policy for Medicare physicians, the Medicare Payment Advisory Commission has recommended.

In light of the challenges facing Medicare, “nothing is more important” than distinguishing between providers based on performance, MedPAC Chairman Glenn Hackbarth said at a commission meeting. “Providers are not all created equal—there's abundant evidence that some providers do a better job than others. To continue to pay them as if they're all performing equally well is a tragic situation.”

And that was just one of several of the commission's recommendations aimed at establishing a pay-for-performance system across health care channels, using information technology in Medicare initiatives to financially reward providers on the basis of quality.

The recommendations were included in MedPAC's Report to the Congress on Medicare Payment Policy, submitted in March.

“Physicians are ready for a pay-for-performance program,” Karen Milgate, a MedPAC research director said at the meeting.

Those participating in such a program could use various facets of information technology to manage patients, such as registries to track patients and identify when they need certain preventive services, or systems for detecting drug interactions, Ms. Milgate said. These types of information have the potential to improve important aspects of care, and increase physician ability to assess and report on their care.

“Without information technology, it would be difficult for physicians to keep up with and apply the latest clinical science and appropriately track and follow up with patients,” she said. “This is true for primary care and especially for patients with chronic conditions. But [it is] also true for surgeons and other specialists, to ensure follow-up after acute events and coordination with other settings of care.”

Considering that it's the only information collected on physicians, Ms. Milgate noted that claims-based measures could be used to determine whether beneficiaries received appropriate follow-up care.

The claims-based process puts no burden on physicians and research shows it's widely available for a broad group of beneficiaries and physicians, she said.

“However, the depth of information on each kind of physician is unclear and we do know that claims-based measures are not available for every single type of physician,” she continued.

Because these actions would redistribute resources already in the system, they would not affect spending relative to current law, although they may increase or lower payments for providers, depending on the quality of their care, she said.

Nicholas Wolter, M.D., a MedPAC commissioner from Billings, Mont., cautioned that physicians may be reluctant to embrace yet another change that would limit their revenue, after the sustainable growth rate. Pay for performance might be “another irritation, rather than an incentive,” he said.

Are all physicians equally ready for such a system? “I'm not sure that's true,” he added.

Smaller practices in particular may not be ready to provide the clinical information necessary for a mature pay-for-performance initiative, Alan Nelson, M.D., a commissioner representing the American College of Physicians, said in an interview. “However, the insistence of payers for incentives to promote quality is something that can't be ignored,” he said.

Although a differential payment system that rewards higher quality “is almost certainly in our future,” Medicare should proceed with caution on this initiative, taking care to not increase the administrative burden—and always being aware of unintended consequences, Dr. Nelson continued.

Most of these information technology developments “seem to apply more to primary care physicians than other specialties,” observed commissioner William Scanlon, Ph.D., a health policy consultant from Oak Hill, Va. “The question is how we would differentiate the rewards for different specialties even on the structural measures?”

He suggested that Congress create a project to test these rewards on an ongoing basis, to accumulate evidence that it was working effectively among the various specialties.

Mandating use of information technology could accelerate use, but “providers could find such a requirement to be overly burdensome,” MedPAC analyst Chantal Worzala said. Such requirements could become appropriate as the health care market develops.

The panel also recommended that prescription claims data from Medicare's Part D program be available for assessing the quality of pharmaceutical and physician care.

“Linking prescription data with physician claims could help identify a broader set of patients with certain conditions, and help determine whether they filled or refilled a prescription and received appropriate pharmaceutical care,” Ms. Milgate said.

Rewards could also be given to providers who improve outcomes in care for their patients in other settings, such as physicians whose patients do better in hospitals, or home health agencies who manage their patients' care transition to nursing homes, MedPAC analyst Sharon Bee Cheng told commissioners.

WASHINGTON — Rewarding states based on quality is one way to cover more uninsured Americans, Henry J. Aaron said at the annual meeting of the National Governors Association.

Following up on a trend that has already affected the physician community, Mr. Aaron proposed a “pay-for-performance” system, where states could receive federal grants based on their “actual measured progress of increasing the number and proportion of state residents covered by health insurance.” The grants would be set to cover much or all of the costs of extending coverage.

“Any state that succeeded in boosting a fraction of its population [covered by] health insurance would receive federal support. The states that made no such progress would receive nothing,” said Mr. Aaron, senior fellow for economic studies at the Brookings Institution.

The federal government should first define a standard for health insurance coverage, Mr. Aaron said, suggesting that the minimum be “similar to the actuarial value of the Federal Employees Health Benefits Program.”

His plan also would include a “first do no harm” standard, prohibiting states from materially eroding coverage for the current Medicaid population. “Even now, Medicaid is substantially less costly than private insurance of the same scope. Still, state costs for long-term care [are] on track to rise relentlessly as baby boomers age.” This means that states need continued financial protection from adverse trends—and not a cap on federal support.

“[States] also need flexibility to modernize Medicaid but within the limits that maintain the per capita protection of the most vulnerable populations in our nation,” Mr. Aaron said.

Within these broad guidelines, states should be encouraged to pursue any approach that would increase the proportion of state residents with health insurance coverage, he continued. Depending on local conditions and political preferences, states could use refundable tax credits or vouchers to promote individual insurance.

States could also facilitate new insurance groups by allowing churches, unions, and the like to create association health plans; extend Medicaid or the State Children's Health Insurance Program; impose employer mandates; or try to create an intrastate single-payer plan. None of these would be mandatory, he said.

Another panelist, Stuart M. Butler, Ph.D., vice president, domestic and economic policy studies, the Heritage Foundation, Washington, suggested that Congress enact a policy “toolbox” that would make a range of ideas available to states. Under such an approach, states could propose an initiative for preserving coverage, selecting certain elements from the toolbox, and negotiating with the U.S. Health and Human Services department on appropriate waivers to pull such an option together, he explained.

In an attempt to maintain and extend the functional equivalent of Medicaid during these very tight budget times, states could utilize an enhanced federal refundable tax credit from the policy toolbox, using additional federal funds to create purchasing alliances or pools, he said. The key is to make sure that Medicaid populations are protected, “encouraging innovations through the states [and] rewarding pay-for-performance successes by the states, to reach these goals.”

WASHINGTON — Rewarding states based on quality is one way to cover more uninsured Americans, Henry J. Aaron said at the annual meeting of the National Governors Association.

Following up on a trend that has already affected the physician community, Mr. Aaron proposed a “pay-for-performance” system, where states could receive federal grants based on their “actual measured progress of increasing the number and proportion of state residents covered by health insurance.” The grants would be set to cover much or all of the costs of extending coverage.

“Any state that succeeded in boosting a fraction of its population [covered by] health insurance would receive federal support. The states that made no such progress would receive nothing,” said Mr. Aaron, senior fellow for economic studies at the Brookings Institution.

The federal government should first define a standard for health insurance coverage, Mr. Aaron said, suggesting that the minimum be “similar to the actuarial value of the Federal Employees Health Benefits Program.”

His plan also would include a “first do no harm” standard, prohibiting states from materially eroding coverage for the current Medicaid population. “Even now, Medicaid is substantially less costly than private insurance of the same scope. Still, state costs for long-term care [are] on track to rise relentlessly as baby boomers age.” This means that states need continued financial protection from adverse trends—and not a cap on federal support.

“[States] also need flexibility to modernize Medicaid but within the limits that maintain the per capita protection of the most vulnerable populations in our nation,” Mr. Aaron said.

Within these broad guidelines, states should be encouraged to pursue any approach that would increase the proportion of state residents with health insurance coverage, he continued. Depending on local conditions and political preferences, states could use refundable tax credits or vouchers to promote individual insurance.

States could also facilitate new insurance groups by allowing churches, unions, and the like to create association health plans; extend Medicaid or the State Children's Health Insurance Program; impose employer mandates; or try to create an intrastate single-payer plan. None of these would be mandatory, he said.

Another panelist, Stuart M. Butler, Ph.D., vice president, domestic and economic policy studies, the Heritage Foundation, Washington, suggested that Congress enact a policy “toolbox” that would make a range of ideas available to states. Under such an approach, states could propose an initiative for preserving coverage, selecting certain elements from the toolbox, and negotiating with the U.S. Health and Human Services department on appropriate waivers to pull such an option together, he explained.

In an attempt to maintain and extend the functional equivalent of Medicaid during these very tight budget times, states could utilize an enhanced federal refundable tax credit from the policy toolbox, using additional federal funds to create purchasing alliances or pools, he said. The key is to make sure that Medicaid populations are protected, “encouraging innovations through the states [and] rewarding pay-for-performance successes by the states, to reach these goals.”

WASHINGTON — Rewarding states based on quality is one way to cover more uninsured Americans, Henry J. Aaron said at the annual meeting of the National Governors Association.

Following up on a trend that has already affected the physician community, Mr. Aaron proposed a “pay-for-performance” system, where states could receive federal grants based on their “actual measured progress of increasing the number and proportion of state residents covered by health insurance.” The grants would be set to cover much or all of the costs of extending coverage.

“Any state that succeeded in boosting a fraction of its population [covered by] health insurance would receive federal support. The states that made no such progress would receive nothing,” said Mr. Aaron, senior fellow for economic studies at the Brookings Institution.

The federal government should first define a standard for health insurance coverage, Mr. Aaron said, suggesting that the minimum be “similar to the actuarial value of the Federal Employees Health Benefits Program.”

His plan also would include a “first do no harm” standard, prohibiting states from materially eroding coverage for the current Medicaid population. “Even now, Medicaid is substantially less costly than private insurance of the same scope. Still, state costs for long-term care [are] on track to rise relentlessly as baby boomers age.” This means that states need continued financial protection from adverse trends—and not a cap on federal support.

“[States] also need flexibility to modernize Medicaid but within the limits that maintain the per capita protection of the most vulnerable populations in our nation,” Mr. Aaron said.

Within these broad guidelines, states should be encouraged to pursue any approach that would increase the proportion of state residents with health insurance coverage, he continued. Depending on local conditions and political preferences, states could use refundable tax credits or vouchers to promote individual insurance.

States could also facilitate new insurance groups by allowing churches, unions, and the like to create association health plans; extend Medicaid or the State Children's Health Insurance Program; impose employer mandates; or try to create an intrastate single-payer plan. None of these would be mandatory, he said.

Another panelist, Stuart M. Butler, Ph.D., vice president, domestic and economic policy studies, the Heritage Foundation, Washington, suggested that Congress enact a policy “toolbox” that would make a range of ideas available to states. Under such an approach, states could propose an initiative for preserving coverage, selecting certain elements from the toolbox, and negotiating with the U.S. Health and Human Services department on appropriate waivers to pull such an option together, he explained.

In an attempt to maintain and extend the functional equivalent of Medicaid during these very tight budget times, states could utilize an enhanced federal refundable tax credit from the policy toolbox, using additional federal funds to create purchasing alliances or pools, he said. The key is to make sure that Medicaid populations are protected, “encouraging innovations through the states [and] rewarding pay-for-performance successes by the states, to reach these goals.”

WASHINGTON — Patients may find it easier to appeal denials of payment for medications under Medicare's new Part D prescription drug benefit than they do under other health programs, an analyst said during a meeting of the Medicare Payment Advisory Commission.

Specifically, the new benefit offers quicker alternatives to getting formulary exceptions for nonpreferred drugs than private plans or Medicaid, said Joan Sokolovsky, Ph.D., a MedPAC senior analyst. The new prescription drug benefit, a part of the Medicare Modernization Act of 2003, goes into effect in January.

MedPAC analysts reviewed the appeals processes in several private plans and in Medicaid to see how they compare with the upcoming Part D prescription drug benefit. The commission queried a number of stakeholders in these markets, including physicians, pharmacists, consumer advocates, health plan representatives, and pharmacy benefit manager representatives.

While Medicare's regulations on appeals generally support the processes of Medicaid and private health plans, MedPAC did find some fundamental differences, Dr. Sokolovsky said.

More situations are considered “coverage determinations” under the Part D benefit and may be appealed, she said. For example, Medicare beneficiaries will be able to appeal an increased copayment if they are prescribed a nonpreferred drug as opposed to a preferred drug. Dr. Sokolovsky said that private plans reported having little experience with this kind of adjustment.

The time frame for handling exception requests is also shorter under Part D, Dr. Sokolovsky continued. “If under an urgent request for an exception, a [Medicare Part D] plan must handle these determinations within 24 hours. That's typically faster than required for most [private insurers] now.”

Shorter, expedited time frames and the ability to appeal copays, however, may lead to an increased volume of appeals, and possibly higher premiums, she said.

To minimize appeals, Medicare Part D plans may put fewer restrictions on separate, tiered cost sharing on nonpreferred drugs. “Good communication is important to prevent an excessive increase in appeals,” she said.

In some cases, physicians under Part D must get prior approval or authorization before nonpreferred drugs are covered.

From its interviews with stakeholders, MedPAC learned that prior authorization often creates burdens for both beneficiaries and providers in commercial and Medicaid plans.

Prior authorization should ideally take place before the prescription is written—but often doesn't, Dr. Sokolovsky said.

“Physicians frequently don't know what the drugs are on their patients' formularies, or which ones require prior authorization.” Patients often become aware of the need for prior authorization when the pharmacist tries to process the prescription and gets a notice that the drug is not covered, but lists other drugs that would be covered.

Private health plans tend to keep detailed information on the disposition of exception requests; however, some information never comes back to a plan, she said.

For example, the private plans MedPAC surveyed didn't seem to know how often a beneficiary paid out of pocket for a drug when the drug was not covered, how often pharmacists contact physicians or the plan member when a drug isn't covered, or if the physician even had time to respond to the situation.

One physician whom MedPAC analysts surveyed reported that his practice spends several hours a day trying to resolve prior authorization matters.

Private plans have tried to minimize this burden by educating their members and physicians about their formularies.

“Some plans deal with the burden by simply placing fewer drugs on prior authorization,” she said.

WASHINGTON — Patients may find it easier to appeal denials of payment for medications under Medicare's new Part D prescription drug benefit than they do under other health programs, an analyst said during a meeting of the Medicare Payment Advisory Commission.

Specifically, the new benefit offers quicker alternatives to getting formulary exceptions for nonpreferred drugs than private plans or Medicaid, said Joan Sokolovsky, Ph.D., a MedPAC senior analyst. The new prescription drug benefit, a part of the Medicare Modernization Act of 2003, goes into effect in January.

MedPAC analysts reviewed the appeals processes in several private plans and in Medicaid to see how they compare with the upcoming Part D prescription drug benefit. The commission queried a number of stakeholders in these markets, including physicians, pharmacists, consumer advocates, health plan representatives, and pharmacy benefit manager representatives.

While Medicare's regulations on appeals generally support the processes of Medicaid and private health plans, MedPAC did find some fundamental differences, Dr. Sokolovsky said.

More situations are considered “coverage determinations” under the Part D benefit and may be appealed, she said. For example, Medicare beneficiaries will be able to appeal an increased copayment if they are prescribed a nonpreferred drug as opposed to a preferred drug. Dr. Sokolovsky said that private plans reported having little experience with this kind of adjustment.

The time frame for handling exception requests is also shorter under Part D, Dr. Sokolovsky continued. “If under an urgent request for an exception, a [Medicare Part D] plan must handle these determinations within 24 hours. That's typically faster than required for most [private insurers] now.”

Shorter, expedited time frames and the ability to appeal copays, however, may lead to an increased volume of appeals, and possibly higher premiums, she said.

To minimize appeals, Medicare Part D plans may put fewer restrictions on separate, tiered cost sharing on nonpreferred drugs. “Good communication is important to prevent an excessive increase in appeals,” she said.

In some cases, physicians under Part D must get prior approval or authorization before nonpreferred drugs are covered.

From its interviews with stakeholders, MedPAC learned that prior authorization often creates burdens for both beneficiaries and providers in commercial and Medicaid plans.

Prior authorization should ideally take place before the prescription is written—but often doesn't, Dr. Sokolovsky said.

“Physicians frequently don't know what the drugs are on their patients' formularies, or which ones require prior authorization.” Patients often become aware of the need for prior authorization when the pharmacist tries to process the prescription and gets a notice that the drug is not covered, but lists other drugs that would be covered.

Private health plans tend to keep detailed information on the disposition of exception requests; however, some information never comes back to a plan, she said.

For example, the private plans MedPAC surveyed didn't seem to know how often a beneficiary paid out of pocket for a drug when the drug was not covered, how often pharmacists contact physicians or the plan member when a drug isn't covered, or if the physician even had time to respond to the situation.

One physician whom MedPAC analysts surveyed reported that his practice spends several hours a day trying to resolve prior authorization matters.

Private plans have tried to minimize this burden by educating their members and physicians about their formularies.

“Some plans deal with the burden by simply placing fewer drugs on prior authorization,” she said.

WASHINGTON — Patients may find it easier to appeal denials of payment for medications under Medicare's new Part D prescription drug benefit than they do under other health programs, an analyst said during a meeting of the Medicare Payment Advisory Commission.

Specifically, the new benefit offers quicker alternatives to getting formulary exceptions for nonpreferred drugs than private plans or Medicaid, said Joan Sokolovsky, Ph.D., a MedPAC senior analyst. The new prescription drug benefit, a part of the Medicare Modernization Act of 2003, goes into effect in January.

MedPAC analysts reviewed the appeals processes in several private plans and in Medicaid to see how they compare with the upcoming Part D prescription drug benefit. The commission queried a number of stakeholders in these markets, including physicians, pharmacists, consumer advocates, health plan representatives, and pharmacy benefit manager representatives.

While Medicare's regulations on appeals generally support the processes of Medicaid and private health plans, MedPAC did find some fundamental differences, Dr. Sokolovsky said.

More situations are considered “coverage determinations” under the Part D benefit and may be appealed, she said. For example, Medicare beneficiaries will be able to appeal an increased copayment if they are prescribed a nonpreferred drug as opposed to a preferred drug. Dr. Sokolovsky said that private plans reported having little experience with this kind of adjustment.

The time frame for handling exception requests is also shorter under Part D, Dr. Sokolovsky continued. “If under an urgent request for an exception, a [Medicare Part D] plan must handle these determinations within 24 hours. That's typically faster than required for most [private insurers] now.”

Shorter, expedited time frames and the ability to appeal copays, however, may lead to an increased volume of appeals, and possibly higher premiums, she said.

To minimize appeals, Medicare Part D plans may put fewer restrictions on separate, tiered cost sharing on nonpreferred drugs. “Good communication is important to prevent an excessive increase in appeals,” she said.

In some cases, physicians under Part D must get prior approval or authorization before nonpreferred drugs are covered.

From its interviews with stakeholders, MedPAC learned that prior authorization often creates burdens for both beneficiaries and providers in commercial and Medicaid plans.

Prior authorization should ideally take place before the prescription is written—but often doesn't, Dr. Sokolovsky said.

“Physicians frequently don't know what the drugs are on their patients' formularies, or which ones require prior authorization.” Patients often become aware of the need for prior authorization when the pharmacist tries to process the prescription and gets a notice that the drug is not covered, but lists other drugs that would be covered.

Private health plans tend to keep detailed information on the disposition of exception requests; however, some information never comes back to a plan, she said.

For example, the private plans MedPAC surveyed didn't seem to know how often a beneficiary paid out of pocket for a drug when the drug was not covered, how often pharmacists contact physicians or the plan member when a drug isn't covered, or if the physician even had time to respond to the situation.

One physician whom MedPAC analysts surveyed reported that his practice spends several hours a day trying to resolve prior authorization matters.

Private plans have tried to minimize this burden by educating their members and physicians about their formularies.

“Some plans deal with the burden by simply placing fewer drugs on prior authorization,” she said.

Tweaking the Geographic Adjusters

Medicare's geographic adjusters for setting physician fees are valid in their fundamental design, but need refinement, the Government Accountability Office reported. Geographic practice cost indices (GPCIs) are used to raise or lower Medicare physician fees depending on whether local practice costs are above or below the national average. They are based on physician work, practice, and malpractice expenses. The adjusters are useful in that they protect physician fees in low-cost areas from dropping to levels that could be considered unfair relative to fees in high-cost areas. On the other hand, the wage data used are not current, and the malpractice data used are incomplete, GAO said. The adjusters also seem to have little bearing on physicians' decision to locate in rural areas, as factors other than a paycheck come into play.

Discount Cards: Not Created Equal

Some discount medical cards provide value, while others have serious drawbacks, a survey from the Commonwealth Fund concluded. The cards promise discounts for a broad range of providers, including physicians and hospitals, as well as for laboratory work, surgical procedures, and other services. Some discount card companies are seeking to reform the market through a trade association and voluntary code of conduct. Because the cards aren't regulated, however, “legislative action is needed that gives state insurance departments the authority and resources to have direct oversight of the discount medical card industry,” the survey's authors stated. Researchers tested 5 of 27 cards advertised in the Washington, D.C., area by undergoing the application process, seeking health care services from participating providers, and then canceling the cards.

'Rent-a-Patient' Fraud

Hundreds of patients from across the country underwent unnecessary and sometimes dangerous surgical procedures that resulted in the submission of tens of millions of dollars in fraudulent medical claims, according to a $30 million lawsuit filed by 12 Blue Cross and Blue Shield Plans. The suit was filed against nine California-based outpatient surgery clinics, seven medical management companies, and 34 individuals, in a Los Angeles federal district court. The Blues Plans allege that recruiters enlisted patients to travel to the surgical centers and undergo “needless and sometimes hazardous” surgical procedures and treatments. In return, the patients received cash payments or cosmetic surgery, and the providers submitted fraudulent insurance claims. These “rent-a-patient” tactics have resulted in significant financial losses to insurance companies and employee benefit plans since 1999, according to the suit.

A Plan to Reform Medicaid

Governors were unable to reach a consensus with lawmakers on Medicaid reform at their annual meeting, but they're pushing their own plan to modernize the program. In the report, “Medicaid in 2005: Principles and Proposals for Reform,” the National Governors Association recommended simplifying state plan and waiver standards and processing requirements, and allowing states to adopt policies that encourage Medicaid beneficiaries to direct their own care and share in any associated cost savings. Medicaid should also update its formula for calculating state-specific federal matching rates to make it more responsive to economic downturns, while Medicare law should be amended so that the federal government assumes specific responsibility for low-income Medicare-Medicaid dual eligibles, the governors stated.

Conflict-of-Interest Rules Targeted

People with direct financial conflicts of interest should not be put on Food and Drug Administration advisory committees, a coalition of public interest groups has recommended. Financial conflicts undermine “the public's faith in the fairness and credibility of the panel's work,” the Center for Science in the Public Interest, the National Women's Health Network, the U.S. Cochrane Center Consumer Coalition, and eight other groups said in a letter to Acting FDA Commissioner Lester Crawford, D.V.M., Ph.D. The groups cited the FDA advisory committee that recently reviewed the safety of cyclooxygenase-2 inhibitors, noting that 10 of the 32 members had direct financial conflicts. In addition to prohibiting scientists, physicians, and clinicians with relevant conflicts of interest from serving on advisory committees, the groups also recommended that people with any industry ties make up no more than half of a committee.

Assault on Salt?

Federal withholding of data on which the government has based its recommendation to reduce salt intake with the goal of lowering stroke risk is drawing fire from the salt industry. The Salt Institute, which represents the interests of salt manufacturers, sued the Department of Health and Human Services, claiming that the department refused to release the studies that support its 2002 recommendation that Americans cut down on their salt intake as a way to avoid hypertension and stroke. The failure to release that information was a violation of the federal Information Quality Act, the suit alleges. Under the act, parties who feel that the government is withholding information have the right to appeal to the agency in question; the institute, along with the U.S. Chamber of Commerce, did just that, but the appeal was denied. HHS says that the suit is not valid because there is no provision in the act for a judicial review of a denied appeal; the court agreed and dismissed the suit. The chamber and the institute are appealing that decision.

Tweaking the Geographic Adjusters

Medicare's geographic adjusters for setting physician fees are valid in their fundamental design, but need refinement, the Government Accountability Office reported. Geographic practice cost indices (GPCIs) are used to raise or lower Medicare physician fees depending on whether local practice costs are above or below the national average. They are based on physician work, practice, and malpractice expenses. The adjusters are useful in that they protect physician fees in low-cost areas from dropping to levels that could be considered unfair relative to fees in high-cost areas. On the other hand, the wage data used are not current, and the malpractice data used are incomplete, GAO said. The adjusters also seem to have little bearing on physicians' decision to locate in rural areas, as factors other than a paycheck come into play.

Discount Cards: Not Created Equal

Some discount medical cards provide value, while others have serious drawbacks, a survey from the Commonwealth Fund concluded. The cards promise discounts for a broad range of providers, including physicians and hospitals, as well as for laboratory work, surgical procedures, and other services. Some discount card companies are seeking to reform the market through a trade association and voluntary code of conduct. Because the cards aren't regulated, however, “legislative action is needed that gives state insurance departments the authority and resources to have direct oversight of the discount medical card industry,” the survey's authors stated. Researchers tested 5 of 27 cards advertised in the Washington, D.C., area by undergoing the application process, seeking health care services from participating providers, and then canceling the cards.

'Rent-a-Patient' Fraud

Hundreds of patients from across the country underwent unnecessary and sometimes dangerous surgical procedures that resulted in the submission of tens of millions of dollars in fraudulent medical claims, according to a $30 million lawsuit filed by 12 Blue Cross and Blue Shield Plans. The suit was filed against nine California-based outpatient surgery clinics, seven medical management companies, and 34 individuals, in a Los Angeles federal district court. The Blues Plans allege that recruiters enlisted patients to travel to the surgical centers and undergo “needless and sometimes hazardous” surgical procedures and treatments. In return, the patients received cash payments or cosmetic surgery, and the providers submitted fraudulent insurance claims. These “rent-a-patient” tactics have resulted in significant financial losses to insurance companies and employee benefit plans since 1999, according to the suit.

A Plan to Reform Medicaid

Governors were unable to reach a consensus with lawmakers on Medicaid reform at their annual meeting, but they're pushing their own plan to modernize the program. In the report, “Medicaid in 2005: Principles and Proposals for Reform,” the National Governors Association recommended simplifying state plan and waiver standards and processing requirements, and allowing states to adopt policies that encourage Medicaid beneficiaries to direct their own care and share in any associated cost savings. Medicaid should also update its formula for calculating state-specific federal matching rates to make it more responsive to economic downturns, while Medicare law should be amended so that the federal government assumes specific responsibility for low-income Medicare-Medicaid dual eligibles, the governors stated.

Conflict-of-Interest Rules Targeted

People with direct financial conflicts of interest should not be put on Food and Drug Administration advisory committees, a coalition of public interest groups has recommended. Financial conflicts undermine “the public's faith in the fairness and credibility of the panel's work,” the Center for Science in the Public Interest, the National Women's Health Network, the U.S. Cochrane Center Consumer Coalition, and eight other groups said in a letter to Acting FDA Commissioner Lester Crawford, D.V.M., Ph.D. The groups cited the FDA advisory committee that recently reviewed the safety of cyclooxygenase-2 inhibitors, noting that 10 of the 32 members had direct financial conflicts. In addition to prohibiting scientists, physicians, and clinicians with relevant conflicts of interest from serving on advisory committees, the groups also recommended that people with any industry ties make up no more than half of a committee.

Assault on Salt?

Federal withholding of data on which the government has based its recommendation to reduce salt intake with the goal of lowering stroke risk is drawing fire from the salt industry. The Salt Institute, which represents the interests of salt manufacturers, sued the Department of Health and Human Services, claiming that the department refused to release the studies that support its 2002 recommendation that Americans cut down on their salt intake as a way to avoid hypertension and stroke. The failure to release that information was a violation of the federal Information Quality Act, the suit alleges. Under the act, parties who feel that the government is withholding information have the right to appeal to the agency in question; the institute, along with the U.S. Chamber of Commerce, did just that, but the appeal was denied. HHS says that the suit is not valid because there is no provision in the act for a judicial review of a denied appeal; the court agreed and dismissed the suit. The chamber and the institute are appealing that decision.

Tweaking the Geographic Adjusters

Medicare's geographic adjusters for setting physician fees are valid in their fundamental design, but need refinement, the Government Accountability Office reported. Geographic practice cost indices (GPCIs) are used to raise or lower Medicare physician fees depending on whether local practice costs are above or below the national average. They are based on physician work, practice, and malpractice expenses. The adjusters are useful in that they protect physician fees in low-cost areas from dropping to levels that could be considered unfair relative to fees in high-cost areas. On the other hand, the wage data used are not current, and the malpractice data used are incomplete, GAO said. The adjusters also seem to have little bearing on physicians' decision to locate in rural areas, as factors other than a paycheck come into play.

Discount Cards: Not Created Equal

Some discount medical cards provide value, while others have serious drawbacks, a survey from the Commonwealth Fund concluded. The cards promise discounts for a broad range of providers, including physicians and hospitals, as well as for laboratory work, surgical procedures, and other services. Some discount card companies are seeking to reform the market through a trade association and voluntary code of conduct. Because the cards aren't regulated, however, “legislative action is needed that gives state insurance departments the authority and resources to have direct oversight of the discount medical card industry,” the survey's authors stated. Researchers tested 5 of 27 cards advertised in the Washington, D.C., area by undergoing the application process, seeking health care services from participating providers, and then canceling the cards.

'Rent-a-Patient' Fraud

Hundreds of patients from across the country underwent unnecessary and sometimes dangerous surgical procedures that resulted in the submission of tens of millions of dollars in fraudulent medical claims, according to a $30 million lawsuit filed by 12 Blue Cross and Blue Shield Plans. The suit was filed against nine California-based outpatient surgery clinics, seven medical management companies, and 34 individuals, in a Los Angeles federal district court. The Blues Plans allege that recruiters enlisted patients to travel to the surgical centers and undergo “needless and sometimes hazardous” surgical procedures and treatments. In return, the patients received cash payments or cosmetic surgery, and the providers submitted fraudulent insurance claims. These “rent-a-patient” tactics have resulted in significant financial losses to insurance companies and employee benefit plans since 1999, according to the suit.

A Plan to Reform Medicaid

Governors were unable to reach a consensus with lawmakers on Medicaid reform at their annual meeting, but they're pushing their own plan to modernize the program. In the report, “Medicaid in 2005: Principles and Proposals for Reform,” the National Governors Association recommended simplifying state plan and waiver standards and processing requirements, and allowing states to adopt policies that encourage Medicaid beneficiaries to direct their own care and share in any associated cost savings. Medicaid should also update its formula for calculating state-specific federal matching rates to make it more responsive to economic downturns, while Medicare law should be amended so that the federal government assumes specific responsibility for low-income Medicare-Medicaid dual eligibles, the governors stated.

Conflict-of-Interest Rules Targeted

People with direct financial conflicts of interest should not be put on Food and Drug Administration advisory committees, a coalition of public interest groups has recommended. Financial conflicts undermine “the public's faith in the fairness and credibility of the panel's work,” the Center for Science in the Public Interest, the National Women's Health Network, the U.S. Cochrane Center Consumer Coalition, and eight other groups said in a letter to Acting FDA Commissioner Lester Crawford, D.V.M., Ph.D. The groups cited the FDA advisory committee that recently reviewed the safety of cyclooxygenase-2 inhibitors, noting that 10 of the 32 members had direct financial conflicts. In addition to prohibiting scientists, physicians, and clinicians with relevant conflicts of interest from serving on advisory committees, the groups also recommended that people with any industry ties make up no more than half of a committee.

Assault on Salt?

Federal withholding of data on which the government has based its recommendation to reduce salt intake with the goal of lowering stroke risk is drawing fire from the salt industry. The Salt Institute, which represents the interests of salt manufacturers, sued the Department of Health and Human Services, claiming that the department refused to release the studies that support its 2002 recommendation that Americans cut down on their salt intake as a way to avoid hypertension and stroke. The failure to release that information was a violation of the federal Information Quality Act, the suit alleges. Under the act, parties who feel that the government is withholding information have the right to appeal to the agency in question; the institute, along with the U.S. Chamber of Commerce, did just that, but the appeal was denied. HHS says that the suit is not valid because there is no provision in the act for a judicial review of a denied appeal; the court agreed and dismissed the suit. The chamber and the institute are appealing that decision.

WASHINGTON – A federal advisory panel wants to raise the bar on quality and use of imaging services.

In a series of recommendations, the Medicare Payment Advisory Commission called for national standards for physicians who bill Medicare for interpreting diagnostic imaging services, and for any provider who bills Medicare for performing such services. MedPAC advises Congress on Medicare payment issues.

There is evidence of variations in the quality of physician interpretations and reports, MedPAC analyst Ariel Winter said at a recent commission meeting. “Ensuring that only qualified physicians are paid for interpreting imaging studies should improve diagnostic accuracy and treatment,” he said.

Standards for physicians would be based on education, training, and experience required to properly interpret studies. Private organizations would be charged with administering the standards, Mr. Winter said.

Several MedPAC commissioners questioned whether Medicare should get involved in the business of credentialing or accrediting physicians for interpreting imaging studies.

Whether in cardiology or another specialty, Medicare would be taking on responsibilities that previously fell to licensing boards, specialty society certification, or other private sector organizations, said MedPAC commissioner Sheila Burke, R.N., of the Smithsonian Institution. “It is a new area and it's not entirely clear to me that Medicare may be the right place for that to occur.”

Mr. Winter acknowledged that some providers might not be able to meet these standards, or incur costs to meet them. For example, they might have to invest in newer equipment or higher credentialed technicians, or they might have to obtain additional education, he said.

Measuring physicians' use of imaging services should be part of MedPAC's broader effort to profile fee-for-service physicians on their use of all services, Mr. Winter said. Radiologists can influence which tests physicians order, but physicians are important to the analysis on imaging because “they determine whether a test is appropriate,” he said.

Under the MedPAC recommendations, the Centers for Medicare and Medicaid Services could develop measures of imaging volume for a patient seen by a physician, and could compare these measures to peer benchmarks or clinical guidelines, Mr. Winter said. The agency could then provide this information to the physician in confidence.

“The goal is to encourage physicians who order significantly more tests than their peers to reconsider their practice patterns,” Mr. Winter said.

On other recommendations related to imaging, the panel voted that the Department of Health and Human Services improve Medicare's coding edits that detect unbundled diagnostic imaging services, and reduce the technical component payment for multiple imaging services performed on contiguous body parts.

Better coding will help Medicare pay more accurately for imaging services and help to control rapid spending growth, Mr. Winter said.

MedPAC also proposed to strengthen the rules in the Ethics in Patient Referral Act (Stark law), which restrict physicians' investment in the imaging centers to which they refer Medicare or Medicaid patients.

The restrictions already apply to radiology and certain other imaging services, but it's unclear whether nuclear medicine is a radiology service, Mr. Winter said.

The panel ultimately voted to include nuclear medicine and positron emission tomography procedures as designated health services under the Stark law. Investment in facilities that provide nuclear medicine services is associated with higher use, creating financial incentives to order additional services and to refer patients to facilities in which the physician is an investor. This undermines fair competition, Mr. Winter said.

Not according to Michael J. Wolk, M.D., who is president of the American College of Cardiology. Dr. Wolk criticized MedPAC for recommending “restrictive tactics” in an effort to ratchet down the use of PET scans, CT, and MRI.

Studies that support these recommendations are biased, and specifically exclude examination of these procedures, Dr. Wolk said.

WASHINGTON – A federal advisory panel wants to raise the bar on quality and use of imaging services.

In a series of recommendations, the Medicare Payment Advisory Commission called for national standards for physicians who bill Medicare for interpreting diagnostic imaging services, and for any provider who bills Medicare for performing such services. MedPAC advises Congress on Medicare payment issues.

There is evidence of variations in the quality of physician interpretations and reports, MedPAC analyst Ariel Winter said at a recent commission meeting. “Ensuring that only qualified physicians are paid for interpreting imaging studies should improve diagnostic accuracy and treatment,” he said.

Standards for physicians would be based on education, training, and experience required to properly interpret studies. Private organizations would be charged with administering the standards, Mr. Winter said.

Several MedPAC commissioners questioned whether Medicare should get involved in the business of credentialing or accrediting physicians for interpreting imaging studies.

Whether in cardiology or another specialty, Medicare would be taking on responsibilities that previously fell to licensing boards, specialty society certification, or other private sector organizations, said MedPAC commissioner Sheila Burke, R.N., of the Smithsonian Institution. “It is a new area and it's not entirely clear to me that Medicare may be the right place for that to occur.”

Mr. Winter acknowledged that some providers might not be able to meet these standards, or incur costs to meet them. For example, they might have to invest in newer equipment or higher credentialed technicians, or they might have to obtain additional education, he said.

Measuring physicians' use of imaging services should be part of MedPAC's broader effort to profile fee-for-service physicians on their use of all services, Mr. Winter said. Radiologists can influence which tests physicians order, but physicians are important to the analysis on imaging because “they determine whether a test is appropriate,” he said.

Under the MedPAC recommendations, the Centers for Medicare and Medicaid Services could develop measures of imaging volume for a patient seen by a physician, and could compare these measures to peer benchmarks or clinical guidelines, Mr. Winter said. The agency could then provide this information to the physician in confidence.

“The goal is to encourage physicians who order significantly more tests than their peers to reconsider their practice patterns,” Mr. Winter said.

On other recommendations related to imaging, the panel voted that the Department of Health and Human Services improve Medicare's coding edits that detect unbundled diagnostic imaging services, and reduce the technical component payment for multiple imaging services performed on contiguous body parts.

Better coding will help Medicare pay more accurately for imaging services and help to control rapid spending growth, Mr. Winter said.

MedPAC also proposed to strengthen the rules in the Ethics in Patient Referral Act (Stark law), which restrict physicians' investment in the imaging centers to which they refer Medicare or Medicaid patients.

The restrictions already apply to radiology and certain other imaging services, but it's unclear whether nuclear medicine is a radiology service, Mr. Winter said.

The panel ultimately voted to include nuclear medicine and positron emission tomography procedures as designated health services under the Stark law. Investment in facilities that provide nuclear medicine services is associated with higher use, creating financial incentives to order additional services and to refer patients to facilities in which the physician is an investor. This undermines fair competition, Mr. Winter said.

Not according to Michael J. Wolk, M.D., who is president of the American College of Cardiology. Dr. Wolk criticized MedPAC for recommending “restrictive tactics” in an effort to ratchet down the use of PET scans, CT, and MRI.

Studies that support these recommendations are biased, and specifically exclude examination of these procedures, Dr. Wolk said.

WASHINGTON – A federal advisory panel wants to raise the bar on quality and use of imaging services.

In a series of recommendations, the Medicare Payment Advisory Commission called for national standards for physicians who bill Medicare for interpreting diagnostic imaging services, and for any provider who bills Medicare for performing such services. MedPAC advises Congress on Medicare payment issues.

There is evidence of variations in the quality of physician interpretations and reports, MedPAC analyst Ariel Winter said at a recent commission meeting. “Ensuring that only qualified physicians are paid for interpreting imaging studies should improve diagnostic accuracy and treatment,” he said.

Standards for physicians would be based on education, training, and experience required to properly interpret studies. Private organizations would be charged with administering the standards, Mr. Winter said.

Several MedPAC commissioners questioned whether Medicare should get involved in the business of credentialing or accrediting physicians for interpreting imaging studies.

Whether in cardiology or another specialty, Medicare would be taking on responsibilities that previously fell to licensing boards, specialty society certification, or other private sector organizations, said MedPAC commissioner Sheila Burke, R.N., of the Smithsonian Institution. “It is a new area and it's not entirely clear to me that Medicare may be the right place for that to occur.”

Mr. Winter acknowledged that some providers might not be able to meet these standards, or incur costs to meet them. For example, they might have to invest in newer equipment or higher credentialed technicians, or they might have to obtain additional education, he said.

Measuring physicians' use of imaging services should be part of MedPAC's broader effort to profile fee-for-service physicians on their use of all services, Mr. Winter said. Radiologists can influence which tests physicians order, but physicians are important to the analysis on imaging because “they determine whether a test is appropriate,” he said.

Under the MedPAC recommendations, the Centers for Medicare and Medicaid Services could develop measures of imaging volume for a patient seen by a physician, and could compare these measures to peer benchmarks or clinical guidelines, Mr. Winter said. The agency could then provide this information to the physician in confidence.

“The goal is to encourage physicians who order significantly more tests than their peers to reconsider their practice patterns,” Mr. Winter said.

On other recommendations related to imaging, the panel voted that the Department of Health and Human Services improve Medicare's coding edits that detect unbundled diagnostic imaging services, and reduce the technical component payment for multiple imaging services performed on contiguous body parts.

Better coding will help Medicare pay more accurately for imaging services and help to control rapid spending growth, Mr. Winter said.

MedPAC also proposed to strengthen the rules in the Ethics in Patient Referral Act (Stark law), which restrict physicians' investment in the imaging centers to which they refer Medicare or Medicaid patients.

The restrictions already apply to radiology and certain other imaging services, but it's unclear whether nuclear medicine is a radiology service, Mr. Winter said.

The panel ultimately voted to include nuclear medicine and positron emission tomography procedures as designated health services under the Stark law. Investment in facilities that provide nuclear medicine services is associated with higher use, creating financial incentives to order additional services and to refer patients to facilities in which the physician is an investor. This undermines fair competition, Mr. Winter said.

Not according to Michael J. Wolk, M.D., who is president of the American College of Cardiology. Dr. Wolk criticized MedPAC for recommending “restrictive tactics” in an effort to ratchet down the use of PET scans, CT, and MRI.

Studies that support these recommendations are biased, and specifically exclude examination of these procedures, Dr. Wolk said.

WASHINGTON – Congress should establish a quality incentive payment policy for Medicare physicians, the Medicare Payment Advisory Commission recommended.

In light of the challenges facing Medicare, “nothing is more important” than distinguishing between providers based on performance, MedPAC Chairman Glenn Hackbarth said at a commission meeting. “There's abundant evidence that some providers do a better job than others,” he said. “To continue to pay them as if they're all performing equally well is a tragic situation.”

And that was just one of several of the commission's recommendations aimed at establishing a pay-for-performance system across health care channels, using information technology in Medicare initiatives to financially reward providers on the basis of quality.

“Physicians are ready for a pay-for-performance program,” Karen Milgate, a MedPAC research director said at the meeting.

Those participating in such a program could use various facets of information technology to manage patients, such as registries to track patients and identify when they need certain preventive services, or systems for detecting drug interactions, Ms. Milgate said. These types of information have the potential to increase the ability of physicians to assess and report on patient care.

“Without information technology, it would be difficult for physicians to keep up with and apply the latest clinical science and appropriately track and follow up with patients,” she said. “This is true for primary care and especially for patients with chronic conditions. But [it is] also true for surgeons and other specialists, to ensure follow-up after acute events and coordination with other settings of care.”

Considering that it's the only information collected on physicians, Ms. Milgate noted that claims-based measures could be used to determine whether beneficiaries received appropriate follow-up care.

The claims-based process puts no burden on physicians and research shows it's widely available for a broad group of beneficiaries and physicians, she said.

“However, the depth of information on each kind of physician is unclear and we do know that claims based measures are not available for every single type of physician.”

Because these actions would redistribute resources already in the system, they would not affect spending relative to current law, although they may increase or lower payments for providers, depending on the quality of their care, she said.

Nicholas Wolter, M.D., a MedPAC commissioner from Billings, Mont., cautioned that physicians may be reluctant to embrace yet another change that would limit their revenue, after the sustainable growth rate. Pay for performance might be “another irritation, rather than an incentive.”

Are all physicians equally ready for such a system? “I'm not sure that's true,” he added.

WASHINGTON – Congress should establish a quality incentive payment policy for Medicare physicians, the Medicare Payment Advisory Commission recommended.

In light of the challenges facing Medicare, “nothing is more important” than distinguishing between providers based on performance, MedPAC Chairman Glenn Hackbarth said at a commission meeting. “There's abundant evidence that some providers do a better job than others,” he said. “To continue to pay them as if they're all performing equally well is a tragic situation.”

And that was just one of several of the commission's recommendations aimed at establishing a pay-for-performance system across health care channels, using information technology in Medicare initiatives to financially reward providers on the basis of quality.

“Physicians are ready for a pay-for-performance program,” Karen Milgate, a MedPAC research director said at the meeting.

Those participating in such a program could use various facets of information technology to manage patients, such as registries to track patients and identify when they need certain preventive services, or systems for detecting drug interactions, Ms. Milgate said. These types of information have the potential to increase the ability of physicians to assess and report on patient care.

“Without information technology, it would be difficult for physicians to keep up with and apply the latest clinical science and appropriately track and follow up with patients,” she said. “This is true for primary care and especially for patients with chronic conditions. But [it is] also true for surgeons and other specialists, to ensure follow-up after acute events and coordination with other settings of care.”

Considering that it's the only information collected on physicians, Ms. Milgate noted that claims-based measures could be used to determine whether beneficiaries received appropriate follow-up care.

The claims-based process puts no burden on physicians and research shows it's widely available for a broad group of beneficiaries and physicians, she said.

“However, the depth of information on each kind of physician is unclear and we do know that claims based measures are not available for every single type of physician.”

Because these actions would redistribute resources already in the system, they would not affect spending relative to current law, although they may increase or lower payments for providers, depending on the quality of their care, she said.

Nicholas Wolter, M.D., a MedPAC commissioner from Billings, Mont., cautioned that physicians may be reluctant to embrace yet another change that would limit their revenue, after the sustainable growth rate. Pay for performance might be “another irritation, rather than an incentive.”

Are all physicians equally ready for such a system? “I'm not sure that's true,” he added.

WASHINGTON – Congress should establish a quality incentive payment policy for Medicare physicians, the Medicare Payment Advisory Commission recommended.

In light of the challenges facing Medicare, “nothing is more important” than distinguishing between providers based on performance, MedPAC Chairman Glenn Hackbarth said at a commission meeting. “There's abundant evidence that some providers do a better job than others,” he said. “To continue to pay them as if they're all performing equally well is a tragic situation.”

And that was just one of several of the commission's recommendations aimed at establishing a pay-for-performance system across health care channels, using information technology in Medicare initiatives to financially reward providers on the basis of quality.

“Physicians are ready for a pay-for-performance program,” Karen Milgate, a MedPAC research director said at the meeting.

Those participating in such a program could use various facets of information technology to manage patients, such as registries to track patients and identify when they need certain preventive services, or systems for detecting drug interactions, Ms. Milgate said. These types of information have the potential to increase the ability of physicians to assess and report on patient care.

“Without information technology, it would be difficult for physicians to keep up with and apply the latest clinical science and appropriately track and follow up with patients,” she said. “This is true for primary care and especially for patients with chronic conditions. But [it is] also true for surgeons and other specialists, to ensure follow-up after acute events and coordination with other settings of care.”

Considering that it's the only information collected on physicians, Ms. Milgate noted that claims-based measures could be used to determine whether beneficiaries received appropriate follow-up care.

The claims-based process puts no burden on physicians and research shows it's widely available for a broad group of beneficiaries and physicians, she said.

“However, the depth of information on each kind of physician is unclear and we do know that claims based measures are not available for every single type of physician.”

Because these actions would redistribute resources already in the system, they would not affect spending relative to current law, although they may increase or lower payments for providers, depending on the quality of their care, she said.

Nicholas Wolter, M.D., a MedPAC commissioner from Billings, Mont., cautioned that physicians may be reluctant to embrace yet another change that would limit their revenue, after the sustainable growth rate. Pay for performance might be “another irritation, rather than an incentive.”

Are all physicians equally ready for such a system? “I'm not sure that's true,” he added.