Linking Medicare Reimbursement to Quality Outcomes: Congress Considers “Pay for Performance” Legislation A new Medicare reimbursement system based on performance and outcomes has been proposed in legislation recently introduced in Congress. “Pay for performance” has emerged in the context of staggering federal deficits and severe cuts that are expected in the Medicare Fee Schedule issued annually by the Centers for Medicare and ... Policy Analysis
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Policy Analysis  |   October 01, 2005
Linking Medicare Reimbursement to Quality Outcomes: Congress Considers “Pay for Performance” Legislation
Author Notes
  • Ingrida Lusis, director of federal and political affairs, can be reached at ilusis@asha.org.
    Ingrida Lusis, director of federal and political affairs, can be reached at ilusis@asha.org.×
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Regulatory, Legislative & Advocacy / Policy Analysis
Policy Analysis   |   October 01, 2005
Linking Medicare Reimbursement to Quality Outcomes: Congress Considers “Pay for Performance” Legislation
The ASHA Leader, October 2005, Vol. 10, 1-15. doi:10.1044/leader.PA.10142005.1
The ASHA Leader, October 2005, Vol. 10, 1-15. doi:10.1044/leader.PA.10142005.1
A new Medicare reimbursement system based on performance and outcomes has been proposed in legislation recently introduced in Congress.
“Pay for performance” has emerged in the context of staggering federal deficits and severe cuts that are expected in the Medicare Fee Schedule issued annually by the Centers for Medicare and Medicaid Services (CMS). An overall decrease of 4.5% is anticipated in the 2006 fee schedule, with subsequent cuts that could reach 24% over the next five years.
In this harsh budget environment, Congress has proposed this new system as a way to customize payment of outpatient services. Currently, the fee schedule under which most Medicare outpatient providers are reimbursed is updated yearly through a formula—the sustainable growth rate or SGR—which links the fee to the total volume of Medicare services paid the prior year. Under SGR, providers are reimbursed equally regardless of the quality and efficiency of service delivery.
Under pay for performance, providers could either receive additional payment for submitting outcomes data or be penalized for not submitting data during the first years after the system is implemented. In later years, as CMS collects data, a portion of the Medicare reimbursement could be tied to the individual provider’s ability to meet quality standards.
ASHA believes that passage of pay for performance must be preceded by legislation establishing the right of direct billing of Medicare by SLPs. (Audiologists already have the right to bill Medicare directly).
Legislative Goals
The first, crucial step toward reimbursement equity for SLPs who treat Medicare patients is to gain the legislative right to directly bill Medicare for services. SLPs are not yet recognized as suppliers under the outpatient Medicare law and would not be able to directly report quality measures to Medicare, if pay-for-performance legislation passes.
Bills have been introduced in the House and Senate (S. 657 and H.R. 3795) to remedy this inequity and to view SLPs as private practitioners under Medicare and enable direct reporting of quality measures. Grassroots advocacy is underway, and SLPs are encouraged to contact their members of Congress through ASHA’s Take Action site and urge them to support S. 657 and H.R. 3795.
Pay for performance legislation has also been introduced in both chambers. Rep. Nancy Johnson (R-CT), Chair of the House Ways and Means Health Subcommittee, introduced H.R. 3617, which would repeal the current SGR payment system and implement a pay-for-performance program. The legislation would penalize providers and suppliers for not reporting quality measures by withholding the annual updates in reimbursement for their services.
The Senate bill (S. 1356), the Medicare Value Purchasing Act, would tie a portion of Medicare reimbursement to quality outcomes. Under this bill, CMS would be charged with developing performance measures through a new standard-setting group that would work with stakeholder organizations.
Both House and Senate committees have held hearings on their bills, which will likely be considered as part of a larger Medicaid or Medicare omnibus bill this fall.
The concept of pay for performance also is being discussed as an alternative to the Medicare outpatient therapy caps. With the moratorium on implementing the caps set to expire on Dec. 31, ASHA is lobbying aggressively for an alternative that would replace the caps with a pay for performance system. Although CMS does not yet have the data to develop this system, ASHA is working with CMS and Congress to gain recognition of ASHA’s National Outcomes Measurement System (NOMS) as the data collection and benchmarking tool for speech-language pathology services.
Demonstration Projects
CMS has initiated demonstration projects that would gauge the feasibility of adopting a Medicare pay for performance system. These projects primarily focus on hospital and physician services. Health care systems participating in the five-year “Medicare Health Care Quality Demonstration” will be permitted to modify payment systems and provide incentives for better quality and lower costs.
Participants in the demonstration program will have the opportunity to adopt and use decision support tools (e.g., evidence-based guidelines, shared decision-making tools), reduce unwarranted variation in practice, measure outcomes and enhance cultural competence in the delivery of care. Details on CMS demonstration projects can be found at www.cms.hhs.gov/researchers/demos.
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October 2005
Volume 10, Issue 14