Data needed to support Medicare pay-for-performance drive

A move by Congress and the Bush administration to change the way doctors are compensated for treating Medicare patients will require a new data collection effort.

Soon, Medicare will pay physicians according to their performance rather than by the number of patient visits, said John Dyer, chief operating officer of the Health and Human Services Department's Centers for Medicare and Medicaid Services. The federal health insurance entitlement program processes more than a billion claims a year from one million providers, which include doctors, hospitals and nursing homes.

Medical costs keep going up, but "it's not sure that the quality is keeping up with that," Dyer said earlier this week at an event sponsored by Input, a Reston, Va.-based government market analysis firm.

The matching of payment dollars to therapies will require collection of clinical data and integration of previously separate data sets, Dyer said. "It comes down to matching administrative data with clinical data," he explained. That way, Medicare can grade doctors based on standards such as whether they implement known effective treatments and if medical offices are structurally able to deliver good care.

Merging the data sets without violating patient privacy is possible, Dyer said. The agency can scrub the clinical data to measure trends without revealing individual identities, he said.

CMS in late October announced a voluntary pilot program for physicians willing to participate in an initial data collection effort leading up to the new pay-for-performance Medicare era. By January, the agency will prepare the existing administrative system to collect clinical data on 36 medical measures.

Pay-for-performance won't harm patient care, Dyer said. Effective therapies are often initially more expensive but are better in the long term because health risks go down, he said. "Let's see if we can't move to a financing reimbursement system where we pay a little more, but the other things that aren't as effective, aren't as efficient, we pay a lot less for."

Under the current reimbursement system, health care providers often receive greater payment if patients remain under care for longer periods. This can amount to a negative incentive against good performance, according to the independent Medicare Payment Advisory Commission, in a report earlier this year. Performance measures also would have to be crafted to avoid deterring doctors from avoiding high-risk patients, the report states.

The commission's report also says an early measure of medical performance could be how well health care providers use information technology in a clinical setting. Adoption of IT outside of administrative functions has been low due to barriers such as a lack of visible return on investment, cost and difficulty, the report finds. Giving doctors a financial incentive would spur further adoption, the report adds.

Both the House and Senate have bills pending based on the commission's recommendation that Medicare stop paying all care providers equally, regardless of which treatments they use.

No clear connection exists between the dollars that physicians spend on treating an illness and the ultimate outcome, said CMS Administrator Mark McClellan, testifying on Capitol Hill in September.