Medicare Pay-for-Performance Proposed

On July 27, 2005, before the US Senate Committee of Finance, the Medicare Payment Advisory Commission (MedPac) recommended Medicare adopt a pay-for- performance physician reimbursement system. MedPac concluded, “… Medicare is ready to implement pay-for-performance as a national program and that differentiating among providers based on quality is an important first step towards purchasing the best care for beneficiaries and assuring the future of the program.” Under MedPac’s plan, 1% to 2% higher reimbursements would be awarded to healthcare providers who improved quality of care, with lower-performing physicians receiving a lower percent. However, there is concern that reducing reimbursement of hospitals and physicians who don’t perform well may negatively affect their resources to improve. Professional associations such as the American Medical Association and the Medical Group Management Association are moving to ensure pay-for-performance can be designed to be fair to all physicians.