New Financial Incentives for Physician Quality Reporting

Widespread physician "pay-for-performance" under the Medicare program is one step closer to a reality. On April 3, 2007, the Centers for Medicare & Medicaid Services (CMS) released 74 detailed specifications for its Physician Quality Reporting Initiative (PQRI). Under this program, physicians and certain other healthcare providers (including physical therapists, physician assistants, nurse practitioners and CRNAs) can earn a bonus payment in return for complying with at least three applicable standards of good practice. PQRI is a component of the Tax Relief and Health Care Act of 2006 that restored the previous reduction in physician payment updates under Medicare. This law authorized the establishment of a physician quality reporting system by CMS. For 2007, PQRI allows the specified providers to submit claims for dates of service from July 1 to December 31, 2007 with the additional codes to evidence their compliance with the applicable standards. The provider may earn a bonus payment of up to 1.5 percent of his or her total allowed charges for covered Medicare physician fee schedule services during the six month period, subject to an overall cap to be developed by CMS in 2008. It should be noted that this bonus will only be paid with respect to traditional Medicare fee-for-service patients and not for Medicare Advantage patients. Earned bonuses will be paid out as lump sums to qualifying providers in mid-2008. The detailed standards are available at http://www.cms.hhs.gov/PQRI/Downloads/PQRIMeasuresList.pdf. Fifty-nine of the 74 standards came from the Physician Consortium for Performance Improvement, a group spearheaded by the American Medical Association and involving most of the physician specialty societies. The standards range from the administration of aspirin after myocardial infarctions to recommending that end-stage renal disease patients undergoing hemodialysis have a documented hematocrit value of 33 or greater. To receive the bonus, physicians must demonstrate compliance with at least three separate standards at the 80 percent or greater level. Of course, not all standards will apply to every physician. Oncologists, for example, are unlikely to submit compliance with Standard 44, Pre-Operative Beta-blocker in Patients with Isolated Coronary Artery Bypass Graft Surgery. Individual providers are responsible for selecting the quality measures that are applicable to their practices. If an eligible professional submits data for a quality measure, then that measure is presumed to be applicable for the purposes of determining satisfactory reporting. CMS has recommended that physicians report on all quality specifications that are applicable to their patients in order to make it more likely that: (a) they will reach the 80 percent satisfactory reporting requirement for the required number of standards, and (b) they will not be subject to the bonus cap. If there are three quality measures applicable to the services provided by the eligible professional, then each measure must be reported for at least 80 percent of the cases in which the measure was reportable. If there are more than four quality standards applicable to the services provided by the eligible practitioner, then a minimum of three measures, selected by the eligible professional, must be reported for at least 80 percent of the cases in which each measure was reportable. Reporting requires that the practitioner add an appropriate G-code or CPT II code (when available) to the Medicare claim that also contains the relevant ICD-9 code. CMS will determine whether an individual practitioner qualifies for the bonus on the basis of claims submitted at the individual eligible professional level using the individual-level NPI number. Additional enrollment beyond Medicare is not required for PQRI, and all claims submitted will be reviewed for the additional information. The eligible professional's individual NPI must be listed along with the HCPCS codes for services, procedures, and quality data on the claim. Physicians should also realize that CMS's determination with respect to a particular physician's compliance under PQRI is not reviewable or appealable. Although the program is currently voluntary, there is some speculation that PQRI will become a mandatory program in the future. In addition, many private third party payors may require their participating providers to be enrolled in the program. CMS has also indicated that this program is only the beginning of its efforts to differentiate payments among providers on the basis of quality or outcomes. CMS has indicated in its press release about the program that "PQRI is a first step toward linking Medicare health professionals' payments to quality, which is expected to evolve over time into a value-based purchasing or pay-for-performance program." Physician reimbursement may never be the same.