Nash, David B

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Medicare and P4P

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Vol. 32  No. 3 • March  2007  • P&T®    123It has not resulted in much fanfare yet,but I am sure that it will. I am speak-ing of the latest report from the Insti-tute of Medicine (IOM) in its seriescalled “Pathways to Quality Health Care.”The most recent report is called Reward-ing Provider Performance: Aligning Incen-tives in Medicare.1First, I’d like to summarize some ofthe main messages in the new IOMreport and give our readers a sense of itspotential impact on P&T committeesnationwide. In 1970, the National Acad-emy of Sciences established the IOM inorder to:secure the services of eminent members ofappropriate professions in the examinationof policy matters pertaining to the health ofthe public. The Institute acts under theresponsibility given to the National Acad-emy of Sciences by its congressionalcharter to be an advisor to the federalgovernment and upon its own initiative toidentify issues of medical care, research,and education.2You can read more about the IOM at itsWeb site, www.national-academies.org.Of course, it was the IOM that nearlysix years ago brought us the famous andimportant report, Crossing the QualityChasm.3 This 2001 report outlined thecritical quality deficiencies in the healthcare system and was generally regardedas the follow-up report to the infamousTo Err is Human, first published in 1999.4Most P&T committee members by now,I hope, are familiar with both of thesereports.This current report, Rewarding Pro-vider Performance,1 I believe, is a water-shed event in the history of the Medicareprogram. It recommends a nationaldesign and implementation of a pay-for-performance (P4P) program for theentire Medicare system. The IOMbelieves that paying health care pro-viders for higher-quality care, as meas-ured by selected standards and pro-cedures, will allow us to accomplish thefollowing:• encourage the most rapid, feasibleper formance improvement by allhealth care providers.• support innovation and constructivechange throughout the health caresystem.• promote better outcomes of care, espe-cially through coordination of care forall providers and at all times.The IOM calls for an initial phasedapproach to implement this P4P pro-gram. Specifically, the organization rec-ommends that Congress derive initialfunding (over the next three to fiveyears) for a P4P program in Medicarelargely from existing funds and that itcreate provider-specific pools from a re-duction in base Medicare payments foreach class of providers. These would in-clude hospitals, skilled nursing facilities,Medicare advantage plans, dialysis facil-ities, home health agencies, and physi-cians. In essence, the IOM is suggestingthat we implement a Medicare-wide P4Pprogram by reducing the monies wecurrently pay to everyone throughoutthe system! The IOM goes on to recommend thatCongress give the Department of Healthand Human Services the authority toaggregate the pools for different caresettings into one consolidated pool. Fromthis single pool, all providers would berewarded when the development of newperformance measures allows for sharedaccountability and more coordinatedcare for all health care provider settings.If this were to occur, it would representa dramatic change in the overarchingstructure and function of the reimburse-ment activities for the Centers forMedicare & Medicaid Services (CMS).The experts who formed the panel ofauthors of this report are intelligent; theyknow that this is a huge political battle,one that demands complete transforma-tion of the payment procedures for theCMS. However, other aspects of thereport are equally challenging.The IOM report wants incentives tohealth care providers who submit per-formance data to ensure that the informa-tion pertaining to their performance istransparent and is made public so that itis meaningful and understandable toconsumers. The repor t also recom-mends that all Medicare providers sub-mit performance measures for publicreporting and that they participate in aP4P program as soon as possible.Although the IOM recognizes that theinitial measurement requirements mightbe narrow, it understands that the paceof expanding the measurement setsneeds to be sensitive to the operationalchallenges faced by health care pro-viders who work in many different kindsof practice settings. That is why the IOMis requesting an implementation periodof three to five years starting immedi-ately.Once again, this is an extraordinarychallenge for every P&T committee inalmost every hospital that treats Medi-care patients. Are you ready to monitor the qualityand safety of medical care in your insti-tution more effectively and efficiently?Do you have the appropriate personnelcurrently on the team ready to meet suchpotential challenges posed by the IOM?It has been more that five years sincethe publication of Crossing the QualityChasm. Although progress is beingmade, it is painfully slow, as we try tocreate the patient-centered, transparent,effective, and timely health care systemof the future. P&T committees will play a criticalrole in this transformation. I sense thatthe leadership at the IOM—and withinthe CMS—is becoming impatient withthe pace of reform. It is our responsibil-ity not only to monitor the work of theIOM but also to be prepared to enact theinevitable reforms necessary.Readers can review the entire IOMreport at the National Academies Press’Web site (www.nap.edu/catalogue/11723.html).As usual, I am interested in your views.I can be reached at my e-mail address,david.nash@jefferson.edu.EDITORIALMedicare and P4PDavid B. Nash, MD, MBAcontinued on page 181Vol. 32  No. 3 • March  2007  • P&T®    181REFERENCES1. Committee on Redesigning Health Insurance PerformanceMeasures, Payment, and Performance Improvement Programs.Rewarding Provider Performance: Aligning Incentives in Medicare.Washington, DC: National Academies Press; 2006.2. Institute of Medicine. Charter and by-laws. 2002. Available at:www.iom.edu.3. Institute of Medicine. Crossing the Quality Chasm: A New Systemfor the 21st Century. Washington, DC: National Academies Press;2001.4. Kohn LT, Corrigan JM, Donaldson, MS, eds. Committee onQuality of Health Care in America. To Err Is Human: Building aSafer Health System. Washington, DC: National Academies Press;2000. EDITORIALcontinued from page 123

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