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The Carrot and Stick Approach to Health Care Delivery

Can Commercial Payors Be Very Far Behind?

shutterstock_39210619PQRS – the Physician Quality Reporting System – is very much a “carrot and stick” approach to health care delivery.

To encourage eligible health care professionals, such as doctors, to report their data on specific quality measures, CMS has been using incentive payments through its Physician Quality Reporting System (PQRS). The program provides incentive payments to individual physicians and to medical practices participating in the group practice reporting option. Through higher reimbursement, it rewards physicians or their practices provided they satisfactorily report data on quality measures for physician-provided covered services. The covered services are furnished under Part B Fee-for-Service of Medicare and are covered by the Physician Fee Schedule (PFS). Patient beneficiaries are those covered under traditional Medicare, the Railroad Retirement Board and Medicare Secondary Payer.

The types of measures reported under PQRS change from year to year. Quality measures are developed by provider associations, quality groups and CMS. They are used to assign a quantity, based on a standard set by the developers, to the quality of care provided by the physician or group practice. The measures vary by specialty and focus on areas such as care coordination, patient safety and engagement, clinical process and effectiveness and population and public health. Reported measures include, among others: clinical conditions commonly treated; types of care delivered frequently (preventive, chronic, acute); settings where care is often delivered (office ER, surgical suite); and overall quality improvement goals.

When making their decision, physicians or their practices can choose which PQRS reporting method best fits their practice to report quality information through one of the following methods:

• Medicare Part B claims

• Qualified PQRS registry

• Direct EHR using Certified EHR Technology (CEHRT)

• CEHRT via Data Submission Vendor

• Qualified clinical data registry

Larger groups – those with 25+ physicians –can utilize a Web interface or CMS-certified survey vendor, in addition to those reporting methods above.

The “carrot” is an incentive payment equal to 0.5% of the total Medicare Part B PFS allowed charges for covered professional services furnished during the same reporting period.

The “stick” is a 2% payment adjustment to Medicare PFS amount for services provided in 2016.

Can commercial payors be far behind?

The answer is “no.” In their effort to “drive” their value proposition, non-government payors are evaluating the CMS “carrot – stick” experiment critically. In the event it has not become part of the terms and conditions of newer managed care contracts with commercial insurers, do not be surprised to see such concepts make their way into the market here.

Whether one believes in the concept or not is unimportant. What is important is that physicians and their group practices plan now by beginning to participate now in data reporting opportunities with CMS which, as mandated, is endeavoring to balance the quality of services received by the patient with payments made for them.