Pay-For-Performance: The MedPAC Perspective

Medicare payment systems are neutral and sometimes negative toward quality of care. The Medicare Payment Advisory Commission (MedPAC) has recommended that Congress build incentives for quality into Medicare's payment systems for hospitals, physicians, home health agencies, facilities that treat dialysis patients, and Medicare Advantage plans. In this Commentary we describe the rationale for the recommendations, criteria for determining which settings are ready, program design principles, and potential measures.

Fitness, knowledge, progress: assessing physician qualification

The informed and empowered consumer is an ideal invoked by many would-be health care reformers. An actual consumer wishing to don the mantle of power may be hindered by the scarcity of information available, particularly with respect to choosing among physicians. How is one to know who is best qualified? This issue brief looks at the basics of physician qualification and the processes by which physicians are licensed, credentialed, and board-certified. It examines how the evolution of these processes (for example, the move from lifetime certification to ongoing maintenance of certification) affects clinicians and their patients. The rise of quality measurement and pay-for-performance programs is considered as well.

Setting physicians' prices in FFS medicare: an economic perspective

Recent policy discussions by the Medicare Payment Advisory Commission (MedPAC) regarding physician prices in the traditional fee-for-service (FFS) Medicare Program reflect movement toward a market pricing model. Earlier objectives such as sustainable levels of spending have given way to concerns over the relationship between fees and actual costs, access to care, and the importance of demand and supply in local markets. An important objective in other policy settings is economically efficient distribution of services. We explain the meaning of economic efficiency for Medicare physician prices and explore difficulties one might encounter in pursuing economic efficiency, as well as the cost of not pursuing it.

A rural crossroad

The critical access hospital program is one of the few positive things for hospitals to come out of the 1997 Balanced Budget Act. It has meant salvation for the nearly 1,200 hospitals that have received the designation, and enables them to invest in facility upgrades, new equipment and additional staff. But a revamped Medicare managed care initiative threatens their payments and the Centers for Medicare & Medicaid Services and the Medicare Payment Advisory Program are taking a hard look at the program's costs. Some observers fear changes could be proposed that would weaken the CAH program.

Specialty hospitals: can general hospitals compete?

The rapid increase in specialty cardiac, surgical, and orthopedic hospitals has captured the attention of general hospitals and policymakers. Although the number of specialty hospitals remains small in absolute terms, their entry into certain health care markets has fueled arguments about the rules of "fair" competition among health care providers. To allow the smoke to clear, Congress effectively stalled the growth in new specialty hospitals by temporarily prohibiting physicians from referring Medicare or Medicaid patients to specialty hospitals in which they had an ownership interest. During this 18-month moratorium, which expired June 8, 2005, two mandated studies of specialty hospitals provided information to help assess their potential effect on health care delivery. This issue brief discusses the research on specialty hospitals, including their payments under Medicare's hospital inpatient payment system, the quality and cost of care they deliver, their effect on general hospitals and on overall health care delivery, and the regulatory and legal environment in which they have proliferated. It concludes with open issues concerning physician self-referral and the role of general hospitals in providing a range of health care services.

Legislation. Niche fight rages

With MedPAC recommending extending the ban on new specialty hospital construction as well as changes to Medicare's payment structure, all eyes now turn to Congress for what portends to be a contentious face-off.