Pay for Performance: More Opportunity Than Threat

Alexander A. Hannenberg, M.D.

hen two powerful currents meet at sea, turbulent waters result, and the mariner requires great skill to remain on course. In the area of Medicare physician payment, the sea is roiled. The first strong current is the financial unraveling of the Medicare program, projected to be insolvent by 2016, and the unprecedented federal deficits that make rescue seem impossible. The trajectory of Medicare physician payments is straight down: The annual update formula will produce 30-percent cuts over the coming decade; averting these cuts will cost more than $150 billion.

In the context of the passionate belief that health care quality is deficient and that patients are unsafe in hospitals, the fiscal calamity gives rise to a financing strategy in which payment is linked to quality improvement. Concerns about inadequate quality, as articulated in the Institute of Medicine’s Crossing the Quality Chasm: A New Health System for the 21st Century are strongly held among employers, government and the public. Mention “Medicare” and these are the two themes heard from Washington policymakers. Strong currents and turbulent politics, indeed.

The emerging attitude is that health care spending must be structured in a way that promotes quality improvement. This linkage is growing stronger and stronger, not only among those responsible for Medicare, but also for private health insurers who face a new round of double-digit premium increases and demand from purchasers that the quality issues must be addressed. Quality incentive payments, or “pay for performance,” are on the lips of those writing our checks.

Specialists such as anesthesiologists are relatively new to the game, but primary care physicians have had dollars at stake for their adherence to diabetic and cardiac care protocols, among others, for some time. The frequency of measurement of hemoglobin A1c, for example, may drive the return of withheld fees or eligibility for quality incentive bonus payments. The distinction between avoiding penalties and earning rewards is blurring.

Last year Medicare began a quality incentive program for hospitals. Those hospitals providing reports on their activities in the areas of cardiac care, surgical antibiotic prophylaxis, immunizations and a dozen other predominantly physician interventions were eligible for an annual Medicare diagnosis-related group payment adjustment of 3.2 percent instead of 2.8 percent. While this does not sound like much, consider that Medicare payments to hospitals total more than $100 billion annually — thus, hospitals are theoretically earning nearly a half billion dollars on the basis of physician quality measures!

If Medicare physician fee cuts are to be averted or increases obtained, it is increasingly clear that specialist physicians must identify areas for improvement that can serve as the basis for fee schedule funding. In view of anesthesiology’s pre-eminent record in the area of safety improvement and practice guideline development, ASA can be in the forefront of this effort. Federally sponsored groups, such as the Surgical Care Improvement Project, have already identified interventions known to improve outcomes that are relevant to our practice. Maintenance of perioperative normothermia and normoglycemia and the timely administration of antibiotic prophylaxis are among those measures with strong acceptance among medical specialties and federal agencies. Clearly the implementation of such measures is within the purview of the perioperative practice of anesthesiologists. There appears to be an excellent opportunity to develop public and private financial incentives for ASA members to address these measures. Doing so promotes the “value added” practice of anesthesiology, strengthens our standing as the perioperative medicine specialists and, at the same time, can strengthen our position in this new payment environment.

What is the alternative to doing so? By definition, incentive programs will produce winners and losers. It seems clear that hospitals and primary care specialties are already positioned to do better financially than others. There is a scarce and limited pool of funding, if any, available to health care providers as a group and a strengthening determination that those on the sidelines will be treated less favorably than those engaged in advancing patient care. For anesthesiology there seems little doubt that we can identify and deliver measures to improve quality. To be acceptable, these measures must genuinely advance patient care even if secondarily reducing costs. They must be rewarded sufficiently to justify the effort and costs of adopting them, and they must be broadly applicable to anesthesia practices and settings.

It is true that, in the case of the Medicare Physician Fee Schedule, normal inflation-based annual adjustments are in jeopardy because of the flaws in the Sustainable Growth Rate (SGR) annual update formula. Failure to deliver fair Medicare fees and to keep them adequate in the face of growing practice costs is inexcusable and will ultimately doom the Medicare program. ASA’s commitment to fight alongside all other specialties to produce a solution to this problem is unwavering. We must be careful, however, not to mistake an opportunity to simultaneously advance our specialty’s practice and economic interests for a means to protest the inadequacies of the Medicare program. Failure to engage the opportunities in pay for performance will do nothing to fix SGR and will sacrifice a chance to have payer incentives promote improved anesthesia practice and strengthen the specialty.



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