Compensation Monitor

CMS prepares to tie Medicare physician pay to performance

Physicians providing care for Medicare fee-for-service beneficiaries will start to get bonuses or penalties depending on their performance as the Centers for Medicare & Medicaid Services phases in its “value based payment modifier” system between 2015 and 2017 ( An in-your-face reminder of that was delivered to 20,000 doctors in Kansas, Iowa, Missouri, and Nebraska. They were issued reports ( showing how much their patients cost the system on average, as well as the quality of care provided.

About those quality measures, there’s been much discussion. CMS admits that it is still trying to figure out exactly how to measure quality while taking into account the differences in health status of patients and how “to select physicians’ peer groups for comparison.” For its reports, CMS chose 28 measures, “most of which are HEDIS measures….”

Often, Medicare and commercial insurers borrow each other’s techniques, but what plans use now to measure physician cost-effectiveness was of little help with Medicare beneficiaries, according to a report by the General Accounting Office (

In addition, CMS found more in the way of quality measurement tools for primary care doctors than for specialists, saying in an August 2011 report that CMS prefers to use quality measures endorsed by the National Quality Forum, but adding that “many of the measures that specialty societies have created have not yet achieved NQF endorsement.”

In the CMS survey, Physician Quality Reporting System measures were used to give the doctors in the four states an idea of what physicians in their region spend for treating specific diseases and conditions — the cost of testing, admissions, procedures, and everything else, including the doctor’s compensation.

Case cost by physician and condition

Case cost by physician and condition

And here’s how the physicians fared in terms of quality — in this case, the percentage of patients who received the recommended service for a particular condition.

Quality of care not so great

Mean performance rate on measures in the critical category for physicians in Iowa, Kansas, Missouri, Nebraska

Mean performance rate on measures in the critical category for physicians in Iowa, Kansas, Missouri, Nebraska

Source: Centers for Medicare & Medicaid Services, “Physician Feedback Program: 2010 Individual Physician Quality and Resource Use Reports,” April 5, 2012.


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