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					1a. The bill establishes a budget neutral value-based purchasing (VBP) program for hospital payments beginning in 2013. 1b. Hospitals financially rewarded for performance rather than for simply reporting quality data. 1c. We strongly support policies that link payment to quality outcomes. 1d. Reward either attaining a certain performance or making improvements relative to a previous performance period. 1e. Ninety to 180 days would be more appropriate prior notice before new measures are rolled out 1f. Quality measures used in the program should be endorsed by NQF. The NQF consensus process ensures that these measures are evidence-based, statistically valid, and developed through a transparent process.

2a. Physician Quality Reporting Initiative (PQRI) require timely feedback to providers on their performance, establish an appeals process, and allow eligible professionals to receive incentive payments if they participate in a qualified American Board of Medical Specialties maintenance of certification program. 2b. SHM favors extending the current PQRI bonus payment of 2% through 2012. 2c. Bonus payments will sequentially decrease, ultimately culminating in financial penalties of 1.5% for non-reporting beginning in 2013. 2d. Since the PQRI’s inception two years ago, physicians have reported significant obstacles to successful participation and not all physicians can participate due to lack of approved measures for their service mix. As a result, it is premature to impose financial penalties for non-reporting until these issues have been addressed.

3a. Beginning in 2012, the Secretary would be required to provide feedback reports to physicians that compare their resource use with that of other physicians or groups of physicians caring for patients with similar conditions.

3b. Feedback reports would be based on an episode-grouper methodology established by the Secretary that would combine separate but clinically-related services into an episode of care for which the physician is accountable. 3c. Beginning in 2014, physician payment would be reduced by five percent if the physician's resource use is at or above the 90th percentile of national utilization. 3d. Beginning in 2019, the Secretary would have the authority to convert the 90th percentile threshold for payment reductions to a standard measure of utilization, such as deviations from the national mean. 3e. SHM believes that it is premature (given the limited experience CMS has had implementing the provider resource use reports) to impose financial penalties on physicians identified as outliers. 3f. Accurate attribution of physician resource use in the clinical care of complex patients is imprecise and difficult to measure. 3g. Congress would benefit from the GAO's study of the Physician Feedback Program, mandated under MIPAA, and due to Congress by March 1, 2011.

4a. Apply a separate, budget-neutral payment modifier to the fee-for- service physician payment formula. 4b. Pay physicians or groups of physicians differentially based upon the relative quality of care they achieve for Medicare beneficiaries relative to cost. 4c. Attribution of the care provided to a particular patient will be difficult to determine, especially in the inpatient setting. 4d. More details on how this provision would implemented are needed in order to fully assess the feasibility of this approach.

5a. The Finance Committee bill creates a 1% penalty by 2014 for hospitals within the highest quartile of HACs. 5b. SHM favors 1% penalty to hospitals within the highest quartile of HACs and a 1% bonus to hospitals within the lowest quartile HAC.

5c. The performance bar may ultimately be raised to the point that hospitals in the lowest performance quartile could still have extremely low absolute HAC event rates. 5d. This provision must be modified to match the payment methodology defined in the hospital VBP proposals, which also awards attainment of absolute performance targets that are independent of changes in national hospital performance.

6a. The bill provides additional funds for developing and testing effective quality measures, i.e. $75 million annually from 2010-2014, and would use consensus-based entities (such as NQF) to develop performance measures. 6b. Work with stakeholder groups like the AMA's Physician Consortium for Performance Improvement, and then use CMS and AHRQ to implement the performance measures. 6c. Specific targeted measure areas mentioned in the bill: patient outcomes/ functional status; coordination of care and care transitions; and safety, timeliness, effectiveness, patient/family centeredness, appropriateness (STEEPE) of care. 6d. Reviewing and updating the national performance strategy every three years.

7a. Voluntary participation by physicians and hospitals in Accountable Care Organizations. 7b. ACOs have significant potential to improve health care delivery by aligning physician and hospital incentives. 7c. New payment models that provide strong incentives for providers to deliver more efficient, coordinated care should be an integral part of health care reform legislation 7d. We have long-standing policy supporting changes in law that would allow hospitals and physicians to share savings resulting from efforts that improve performance and quality and reduce costs.

8a. Create by 2011 a new Innovation Center within CMS to test new payment methodologies aimed at improving quality and reducing costs (which will improve the agency's ability to more quickly develop and expand them nationwide). 8b. Favor models that foster care coordination for high-cost, chronically ill Medicare beneficiaries who are at highest risk for hospitalization or readmission as well as rely on a team-based approach to interventions. 8c. Requirement that the Center consult regularly with outside experts and stakeholders

9a. Bundled payments have the potential to align incentives across healthcare silos and improve care coordination. 9b. Bundling methodologies should be tested in voluntary pilot projects before national implementation 9c. Currently CMS has just one active bundling demonstration, the Medicare Acute Care Episode (ACE) Demonstration, involving bundled payments for hospital and physician services for a limited set of surgical episodes of care. 9d. We strongly believe that bundled payments must be tested with a variety of diagnoses and in a variety of settings before the concept is either mandated or broadly applied. 9e. Important to ensure that stakeholders have significant opportunity for input in all phases of the pilot program, including its design, implementation, and evaluation. 9f. If a pilot program improves patient outcomes, reduces costs, and improves efficiency: the Secretary would be required to submit an implementation plan to Congress in FY 2016 on making the pilot permanent in FY 2018.

10. SHM strongly supports the provisions in the bill designed to reduce hospital readmissions

11a. Three-year pilot program to help eligible hospitals implement programs to reduce avoidable readmissions. 11b. eligible hospitals would appear to be able to obtain funding to implement Project BOOST

12a. The bill does not permanently repeal the sustainable growth rate (SGR) where massive reimbursement cuts loom on the horizon year after year. 12b. The legislation would replace a scheduled 21 percent cut in Medicare payments in January with a 0.5 percent update 12c. We urge the Senate to adopt provisions similar to those approved in the House, which would eliminate the accumulated SGR cuts and substitute more favorable expenditure targets for Medicare physician updates.

13a. Encourages states to develop and test alternatives to the current civil litigation system. 13b. SHM urges the Senate to go further and enact legislation to specifically authorize federally funded state demonstration projects to develop and test alternative tort reforms, as the House bill does.

14a. The bill would require the Secretary to screen all providers and suppliers before granting billing privileges. 14b. How will duplication of state or other credentialing background checks be avoided? Is there any consideration of a single national provider credentialing process/database? Will the screening fee cover all of the “screens” (e.g., fingerprinting, child abuse inquiry database, etc.), or will there be extra charges? Will there be an appeals process for providers who fail the screen? Finally, as with any screening program, it needs to be clear what will happen with the information. Will providers denied participation in Medicare have access to a hearing, appeal or some other due process? 14c. Currently providers are allowed to back-bill for services provided up to 30 days prior to submission of a Medicare enrollment application. The bill implies that a provider must already be fully enrolled

14d. Physicians cannot enroll until they provide valid licensure, but many states do not grant graduating residents licensure until after they complete their training. Practices and hospitals will be unable to hire physicians if they cannot reliably submit their services for reimbursement. The net effect of this provision is that it may delay new physicians from deploying into the workforce by four to six months, exacerbating already serious physician staffing shortages in many communities. This will have a chilling effect on hiring young physicians, and will disproportionately impact physicians entering low-reimbursement fields such as primary care.

15a. Requirement that Medicare and Medicaid providers and suppliers be required to implement compliance programs as a Condition of Participation. 15b. However, we have concerns about the requirement that physicians must keep documentation on referrals to programs at high risk of fraud and abuse. How would this be defined, and how would the provider know whether the program they are referring to is at high risk?

16a. Provide primary care physicians with a ten percent Medicare bonus payment for select evaluation and management codes. 16b. We are concerned, however, that the bonus payment terminates after five years.

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