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Pay for Performance, or Performance for Pay?

The new federal pay-for-performance pilot program may prove to be short-lived.On December 20, 2006, President Bush signed into law the Tax Relief and Health Care Act of 2006 (TRHCA). A broad tax reform omnibus that also included a number of key health care measures, the bill authorized the establishment of a pay-for-performance program known as the Physician Quality Reporting Initiative (PQRI). extortion-letter.jpgAccording to the website of the Centers for Medicare & Medicaid Services, PQRI establishes a financial incentive of up to 1.5% of the total allowed charges for covered Medicare physician fee schedule services for eligible professionals whose performance meets a designated set of quality measures.

While 1.5% may not sound like a windfall, this bonus may add up to hundreds of thousands of dollars of additional revenue for even mid-size medical practices over time. As a result, many practices have opted to participate in the test phase of the program, and are currently in the process of modifying their workflows, policies, and protocols in preparation for the full roll-out of the PQRI program.

Although the long-term efficacy of the PQRI concept is not yet known, a number of leading industry figures and prominent public health advocates are already urging that private-payer insurance plans develop similar programs. On the other hand, some critics of the program argue that rather than rewarding eligible practices, these programs will, in effect, penalize those providers who don’t meet the quality standards, leading some to characterize PQRI more cynically as a “performance-for-pay” program.

But before you spend too much time considering your position in the PQRI debate, keep in mind that like many health care reforms, these proposed changes may prove to be short-lived. In today’s politically-charged environment, the kind of funding needed to sustain such a program is increasingly hard to come by. In fact, pending legislation may soon offset potential fee cuts by eliminating the fledgling PQRI program altogether.

The State Children’s Health Insurance Program (SCHIP) recently passed in both the House and the Senate. However, only the House version of the bill includes a physician payment fix for Medicare. The Children’s Health and Medicare Protection Act of 2007 (CHAMP H.R. 3162) will provide for two years of .5 percent fee increases, rather than the cuts of 10 percent and 5 percent in 2008 and 2009 proposed in other bills. A small but heartening victory— until you factor in the cost of inflation. Oh, and the President has already threatened to veto the legislation if it ever finds its way onto his desk.

Considering PQRI’s uncertain prognosis, does the possibility of a 1.5% bonus merit a complete overhaul of your practice’s policies and procedures? Let us know your take on pay-for-performance.

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