Improving the Medicare Value Purchasing Act of 2005

The Medicare Value Purchasing Act of 2005—the bipartisan legislation that Sens. Chuck Grassley (R-IA) and Max Baucus (D-MT) proposed in late June—is intended to both improve care for Medicare beneficiaries and make it more cost-effective.

Based in part on the pay-for-performance recommendations of the Institute of Medicine (IOM) and the Medicare Payment Advisory Commission (MedPAC), the proposed legislation would offer to plans, home health agencies, and, to a limited extent, skilled nursing facilities, hospitals, physicians, and other health care professionals, financial incentives to meet quality standards.

In light of the IOM’s recent report, “Crossing the Quality Chasm,” it’s clear that we must take steps to ensure that Medicare beneficiaries get consistently high quality care. But the Medicare Value Purchasing Act, as written, does not include everything necessary to implement appropriate pay-for-performance. And it could have unintended consequences. That’s why the American Geriatrics Society has offered conditional support for this legislation, endorsing several, but not all, elements of the Act.

Here’s how the proposed legislation would work: During an initial phase, starting in 2007, physicians and other providers would have the option of reporting quality data (similar to the way that hospitals are now required to report this information). Providers reporting quality data would be rewarded with the full fee increase scheduled for the given year. Those failing to report this data would see up to a 2% reduction in the increase. During a subsequent phase, slated to begin in 2008, a percentage of providers’ Medicare payments would be set aside in a “quality pool” to be distributed among those meeting, or making progress toward meeting, quality measures that would be developed under the guidance of the Department of Health and Human Services (HHS) Secretary. (In the first year, 1% of payments would be set aside; that would rise to 2% over a five-year period.)

The AGS worked with the bill’s sponsors to ensure that the HHS Secretary includes geriatrics measures that apply to the frail elderly and those with multiple chronic diseases—patients most likely to be under the care of a geriatrician, or in a long-term care setting. Under the legislation, all measures would be validated through a multi-stakeholder process that includes experts with geriatrics expertise, considers the scientific evidence behind the measures, allows variation among specialties and types of practices, and employs risk adjustment.

One of the AGS’ main concerns, however, is that the bill would not rescind the Medicare payment cuts slated to take effect in 2006. The Act acknowledges—in nonbinding language—that these cuts are “unsustainable” and should be addressed. But this isn’t sufficient. In a letter to the sponsors, the AGS reiterated its position that an increased fee schedule should be the floor for Medicare payments, with additional dollars added to support quality improvements. The Act, which would require physicians to invest in additional information technology and incur other care-management expenses, makes this even more imperative.

Another concern is that the legislation’s proposed 1-2% set-aside is inadequate as a pay-for-performance incentive. The AGS supports MedPAC’s recommendation for a higher set-aside, which would then be distributed to providers meeting quality measures.

As written, the Act could unintentionally add to the factors driving physicians and other care providers away from the field of geriatrics, which is one of the lowest-paying specialties in medicine. There is already a marked and growing nationwide shortage of geriatricians and other professionals trained to meet the unique health care needs of the elderly. That said, we think the proposed legislation is a sign of progress in the pay-for-performance debate, and we are working with the bill’s sponsors, other Congressional offices, the Centers for Medicare & Medicaid Services, and other stakeholders to further this debate.

Congress must act to improve the quality of care for older and disabled Americans. And health care professionals must do the same. Once again, it’s crucial that those in the field play a role in ensuring that pending legislation accomplishes its intended goal. We encourage you to get, and stay, involved. For more on grassroots involvement, visit www. americangeriatrics.org/staging/portal/grassroots/role_internet.shtml.

Regards,
Linda Hiddemen
Executive Vice-President