CMS unveils new physician quality incentive demo program

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The Centers for Medicare & Medicaid Services (CMS) last week announced a three-year program that will test whether hospitals can provide financial incentives to physicians for quality care will improve patient outcomes but not drive up costs. The program is known as the Physician-Hospital Collaboration Demonstration (PHCD).
   
The model would see hospitals paid its usual inpatient rate for the patient’s care, but would pay doctors a portion of the savings resulting from quality improvement and efficiency efforts that they have undertaken. Each payment would have to be documented and the care improvements and savings would have to be significant, CMS said.
   
“The most costly and intensive physician services are provided in hospitals, yet our payment systems do not support steps by hospitals and doctors to work together to improve care,” said Mark B. McClellan, outgoing CMS Administrator. “This demonstration program will support efforts to track and improve the overall episode of patient care, including follow-up and longer-term outcomes.”
   
The program is intended to focus on the entire scope of health care for a surgical episode or other episode of illness involving hospital care.  It will encompass physician groups and up to 72 hospitals in a limited number of geographic areas across the country. The program will have the additional objective of saving hospital and Medicare costs.
   
The demonstration also requires tracking patients for an entire episode of care, CMS said.
   
CMS will support projects submitted by consortia, comprised of physician groups and their affiliated hospitals in improving quality and reducing overall costs for the episode of care.
   
“We will give preference to proposals submitted by a health care group consortium, composed of health care groups and affiliated hospitals, because we need a sufficiently large demonstration size to reliably measure impacts on longer-term patient results and overall Medicare costs,” McClellan said. “This is very different from traditional ‘gainsharing’ with its short-term focus.  We are aiming to support the best efforts of physicians and hospitals to improve quality and efficiency in the overall care for their patients.” A consortium may consist of health care groups and up to 12 of their affiliated hospitals in a single geographic area comprising no more than one state.