Medicare and P4P
David B. Nash, MD, MBA
t has not resulted in much fanfare yet, • encourage the most rapid, feasible formance data to ensure that the informa-
but I am sure that it will. I am speak- per formance improvement by all tion pertaining to their performance is
ing of the latest report from the Insti- health care providers. transparent and is made public so that it
tute of Medicine (IOM) in its series • support innovation and constructive is meaningful and understandable to
called “Pathways to Quality Health Care.” change throughout the health care consumers. The repor t also recom-
The most recent report is called Reward- system. mends that all Medicare providers sub-
ing Provider Performance: Aligning Incen- • promote better outcomes of care, espe- mit performance measures for public
tives in Medicare.1 cially through coordination of care for reporting and that they participate in a
First, I’d like to summarize some of all providers and at all times. P4P program as soon as possible.
the main messages in the new IOM Although the IOM recognizes that the
report and give our readers a sense of its The IOM calls for an initial phased initial measurement requirements might
potential impact on P&T committees approach to implement this P4P pro- be narrow, it understands that the pace
nationwide. In 1970, the National Acad- gram. Specifically, the organization rec- of expanding the measurement sets
emy of Sciences established the IOM in ommends that Congress derive initial needs to be sensitive to the operational
order to: funding (over the next three to five challenges faced by health care pro-
years) for a P4P program in Medicare viders who work in many different kinds
secure the services of eminent members of largely from existing funds and that it of practice settings. That is why the IOM
appropriate professions in the examination create provider-specific pools from a re- is requesting an implementation period
of policy matters pertaining to the health of duction in base Medicare payments for of three to five years starting immedi-
the public. The Institute acts under the each class of providers. These would in- ately.
responsibility given to the National Acad- clude hospitals, skilled nursing facilities, Once again, this is an extraordinary
emy of Sciences by its congressional Medicare advantage plans, dialysis facil- challenge for every P&T committee in
charter to be an advisor to the federal ities, home health agencies, and physi- almost every hospital that treats Medi-
government and upon its own initiative to cians. In essence, the IOM is suggesting care patients.
identify issues of medical care, research, that we implement a Medicare-wide P4P Are you ready to monitor the quality
and education.2 program by reducing the monies we and safety of medical care in your insti-
currently pay to everyone throughout tution more effectively and efficiently?
You can read more about the IOM at its the system! Do you have the appropriate personnel
Web site, www.national-academies.org. The IOM goes on to recommend that currently on the team ready to meet such
Of course, it was the IOM that nearly Congress give the Department of Health potential challenges posed by the IOM?
six years ago brought us the famous and and Human Ser vices the authority to It has been more that five years since
important report, Crossing the Quality aggregate the pools for different care the publication of Crossing the Quality
Chasm.3 This 2001 report outlined the settings into one consolidated pool. From Chasm. Although progress is being
critical quality deficiencies in the health this single pool, all providers would be made, it is painfully slow, as we try to
care system and was generally regarded rewarded when the development of new create the patient-centered, transparent,
as the follow-up report to the infamous performance measures allows for shared effective, and timely health care system
To Err is Human, first published in 1999.4 accountability and more coordinated of the future.
Most P&T committee members by now, care for all health care provider settings. P&T committees will play a critical
I hope, are familiar with both of these If this were to occur, it would represent role in this transformation. I sense that
reports. a dramatic change in the overarching the leadership at the IOM—and within
This current report, Rewarding Pro- structure and function of the reimburse- the CMS—is becoming impatient with
vider Performance,1 I believe, is a water- ment activities for the Centers for the pace of reform. It is our responsibil-
shed event in the history of the Medicare Medicare & Medicaid Services (CMS). ity not only to monitor the work of the
program. It recommends a national The experts who formed the panel of IOM but also to be prepared to enact the
design and implementation of a pay-for- authors of this report are intelligent; they inevitable reforms necessary.
per formance (P4P) program for the know that this is a huge political battle, Readers can review the entire IOM
entire Medicare system. The IOM one that demands complete transforma- report at the National Academies Press’
believes that paying health care pro- tion of the payment procedures for the Web site (www.nap.edu/catalogue/
viders for higher-quality care, as meas- CMS. However, other aspects of the 11723.html).
ured by selected standards and pro- report are equally challenging. As usual, I am interested in your views.
cedures, will allow us to accomplish the The IOM report wants incentives to I can be reached at my e-mail address,
following: health care providers who submit per- firstname.lastname@example.org.
continued on page 181
Vol. 32 No. 3 • March 2007 • P&T® 123
continued from page 123
1. Committee on Redesigning Health Insurance Performance
Measures, 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:
3. Institute of Medicine. Crossing the Quality Chasm: A New System
for the 21st Century. Washington, DC: National Academies Press;
4. Kohn LT, Corrigan JM, Donaldson, MS, eds. Committee on
Quality of Health Care in America. To Err Is Human: Building a
Safer Health System. Washington, DC: National Academies Press;
Vol. 32 No. 3 • March 2007 • P&T® 181