Pay-for-Performance Legislation Emerges in Congress
In recent years, the Bush Administration has worked closely with Congress to develop policies to guarantee that all Americans, especially Medicare beneficiaries, receive the highest quality health care. In the 109th Congress, the "pay for performance" paradigm is the leading patient-centered policy initiative offered to accomplish this goal.
Both the House and the Senate have introduced pay-for-performance legislation. On June 30, 2005, Senate Finance Chairman Charles E. Grassley (R, Iowa) and Sen Max Baucus (D, Mont) introduced S. 1356, the Medicare Value Purchasing Act of 2005. The legislation creates a new Part E (Value-Based Purchasing) for title 18 of the Social Security Act, under which the Secretary of Health and Human Services would develop a measurement system to provide value-based payments to: (1) hospitals; (2) physicians and practitioners; (3) health plans; (4) end stage renal disease providers and facilities; and (5) home health agencies. Under this legislation, CMS would develop the quality measures. As MedPAC recommends, this bill is budget neutral.
Specifically, S. 1356 would establish a 2-phase implementation of paying providers bonuses for delivering high quality care to patients. During phase 1, Medicare reimbursement would be linked to reporting quality data. During phase 2, Medicare providers would voluntarily participate in value-based purchasing, with a portion of their payments set aside to create a quality pool. In FY 2007, payments would begin at 1% of the Medicare payments for each provider group. These payments would annually rise in small increments to 2% in FY 2011 and beyond. This pool would initially be valued at $2.5 billion, increasing annually to $7.5 billion by 2013.
Many health care providers, purchasers, quality organizations, and senior citizen advocacy groups are expressing considerable support for S. 1356. While expressing general support for the pay-for-performance concept as outlined in S. 1356, the ACR, however, shares the chief concern of the stakeholders regarding the proposal's budget neutrality. Many believe new money should be added to the Medicare system for this concept to work. Some stakeholders are also not satisfied that the only recognition of the current reimbursement problem in the Senate bill is a "Sense of the Senate" provision. Although S. 1356 does not directly address Medicare's Sustainable Growth Rate (SGR) formula which sets spending targets and adjusts physician fees based on those targets, Chairman Grassley expects this bill to be part of a Senate "final package" at the end of the year with additional legislative language to remedy the SGR problems.
On July 28, 2005, House Ways and Means Health Subcommittee Chairman Nancy L. Johnson (R, Conn) introduced H.R. 3617, the Medicare Value-Based Purchasing for Physicians' Service Act of 2005. This legislation reforms Medicare's physician payments system by replacing the SGR with the Medicare Economic Index (MEI) and introduces pay-for-performance reimbursement. This program will initially reward physicians for reporting, then for their actual performance.
Under the Johnson bill, the scheduled 4.3% Medicare physician reimbursement cut for 2006 will be replaced by a 1.3% increase. In 2007 and 2008, physicians reporting quality measures would receive an annual update equal to the MEI, while those who do not report would be penalized 1 percentage point of the MEI. For 2009 and succeeding years, doctors meeting quality measures or making progress toward meeting them would get a full MEI update. Those who do not would be penalized 1 percentage point of the MEI.
The quality standards will: (1) contain a mix of outcome, process, and structural measures; (2) include efficiency measures related to clinical care; (3) be evidence based; and (4) include measures assessing the use of resources. Medical specialty societies will help develop such measures by submitting input to consensus-building organizations, such as the National Quality Forum (NQF) of which the ACR is a member. NQF will make recommendations to CMS.
The ACR views both bills as potential legislative vehicles on which it could attach legislative language to increase quality, safety, and training standards for those who perform advanced imaging procedures.
Although there has been no formal debate scheduled regarding this legislation, Congress most likely will address these bills sometime this fall.
Medical Liability Reform Passes the House
On July 28, 2005, the House of Representatives passed H.R. 5, the Help Efficient, Accessible, Low Cost, Timely Healthcare (HEALTH) Act of 2005, by a vote of 230-194. This bill is identical to H.R. 5 of the 108th Congress, which also successfully passed the chamber. As in the 108th Congress, the ACR supported the 109th Congress' version.
To provide more certainty in the amount of damages awarded in medical malpractice lawsuits, H.R. 5 is modeled after California's Medical Injury Compensation Reform Act of 1975 ("MICRA"). Because many attribute the stable medical liability insurance rates California physicians have enjoyed since 1976 to MICRA, President Bush, Congress, and several states have used the law to develop their own initiatives in recent years.
The most controversial provision found in H.R. 5 is its $250,000 limit on noneconomic damages. Generally, noneconomic damages are defined as damages to compensate for pain, suffering, inconvenience, physical impairment, disfigurement, and other non-pecuniary damage. This cap would have no effect on economic damages, which are the monetary losses, such as medical expenses and lost wages, resulting from an injury.
Just as in the 108th Congress, the Senate will not likely take action during this first session of the 109th Congress. While there are several bills that have been re-introduced this Congress by Sen John Ensign (R, Nev) and Senate Budget Chairman Judd Gregg (R, NH), Senate leadership has had trouble finding a viable legislative vehicle to remedy this growing problem. Moreover, there do not appear to be enough legislative days remaining with at least 1 US Supreme Court nomination with which to contend, as well as asbestos liability reform, prescription drug importation, and several appropriations bills, including the controversial defense reauthorization.
Patient Safety Bill Signed Into Law
On July 29, President Bush signed S. 544, the ACR-supported Patient Safety and Quality Improvement Act of 2005, into law. Public Law No. 109-041 amends the Public Health Services Act to create a system of voluntary reporting by health care providers of medical errors. The legislation passed the Senate on July 21, 2005, and passed the House on July 27, 2005.
Under this system, the US Department of Health and Human Services would certify a number of private and public groups to act as patient safety organizations. These organizations would analyze data on medical errors, determine their causes, and develop and disseminate evidence-based information to providers to help them implement changes to improve patient safety. Most important for physicians, the bill includes a provision that makes these reports undiscoverable in criminal and civil proceedings.