Is Pay for Performance Illegal???

Today’s news from CMA clips, The New York Times and other reliable sources reveals an impending tsunami, or at least a sea-change in the way medicare proposes to reimburse providers. Pay for performance and also Pay for Population Health care as quoted in some recent journal articles opens a whole new bag of worms. While some insurance carriers and private payors have done some initial studies and give groups incentives for following certain practice guidelines, there are serious questions and doubts amongst physicians, the AMA, CMA and even some senators and congressmen who have typically been pro-active about regulating reimbursement using a stick rather than a carrot.
Headlines read “Government will offer a carrot, rather than a stick” to control rising medical costs.
First of all the original Medicare law passed in 1964 expressly forbids Medicare from passing laws as to how medicine is to be practiced. ““Nothing in this title shall be construed to authorize any federal officer or employee to exercise any supervision or control over the practice of medicine.”
Mr. Moffit of the Heritage Foundation said the new initiative was “a backdoor attempt to repeal” this guarantee.
“It’s pay for compliance, not pay for performance,” Mr. Moffit said. “Doctors will be financially pressured to comply with government guidelines and standards. The integrity and independence of the medical profession could be compromised.”

Medicare in the past ten years has struggled to contain costs by using a flawed sustained growth rate formula (SGR) attempting to cut physician reimbursement by 3 to 6% each year. This was built into law about ten years ago, and each year at the 11th hour congress must struggle with modifying or eliminating or postponing the fee cut.
Pay for performance offers a “carrot” of 1.5% increase for providers to report their “compliance” with a practice pattern derived by their specialty organizations, or some other benchmark provided by a heath insurance carrier. The amount of paperwork, or computer investment to provide these numbers far exceeds the increase in payments. Perhaps there are some groups large enough who already have such systems in place. They were given special grants to develop these as “pilot programs”.
Representative Stark said, “Doctors and others who like pay-for-performance have to remember that it’s a zero-sum game.” As a result, he said, most doctors will have to accept lower fees if Medicare is to pay bonuses to the best performers.
What Medicare is doing may be “illegal”. I am surprised that this has not been challenged in the courts. Previous actions by medicare merely provided lack of payments and restricted benefits to reign in costs.
Providing incentives is definitely an inducement to “practice differently”
Other strong arguments are that practice patterns, pharmacology change fairly rapidly. Keeping up with the codification and timely documentation will remove assets from patient care to provide more bureaucracy.
As a believer in “open source” and development of regional health information organizations some are attempting to use P4P as an incentive for RHIO funding and development. I believe this is a very bad idea…the flow of private patient information even if “stripped” of identifying information should not be conveyed by RHIO data infrastructure. Open source refers to “code” and computer language, not patient information.
Later this week
The demise of HMOs, , PPOs and their replacement by “consumer drive plans”
Gary L