Part of the equation: a sober assessment of the CMS PQRI initiative reveals a promising future for the program.

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July 1, 2008 marked the first anniversary of the Physician Quality Reporting Initiative (PQRI), the pay-for-performance (P4P) program of the Centers for Medicare & Medicaid Services (CMS). Though some checks are probably still in the mail, CMS was expected to begin issuing bonus payments in July; it's time for an assessment.

PQRI participants are rewarded with incentive payments from CMS if they report their performance of certain evidence-based quality measures. Down the road, this information will be used to reward quality care and, perhaps, to inform patients' choices. PQRI is intended, ultimately, to promote "value-based purchasing." In a February letter to Senator Max Baucus, chairman of the Senate Finance Committee, CMS Administrator Kerry Weems wrote that the idea is to shift Medicare away "from paying providers based solely on volume of services [and toward creating] appropriate incentives to reward providers for providing high-quality care." For now, however, it's pay-for-reporting and not pay-for-performance. Most of the debate has revolved around two issues; the ease--or difficulty--of participating and the amount of the bonus.

So, one year later, where do we stand? In the same letter to the Finance Committee, CMS' Weems offered an optimistic assessment and some revealing details, some of which are now available on the official PQRI Web site: 16 percent of eligible professionals--about 99,000--submitted data at least once during the 2007 reporting period, July through December 2007. Though only slightly more than half were on track to satisfy the requirement of reporting on three measures and applying each one to at least 80 percent of the patients who fit that category, 93 percent were successful in submitting at least one quality data code. Given that data for December was not included and that participation rates trended upward throughout the reporting period, final participation rates are expected to rise.

Further Expectations

Of course, one might expect optimism from CMS spokespersons. But even outside of the nation's capital, PQRI participants are positive. PQRI's acceptance has far outstripped that of the Physician Voluntary Reporting Initiative (PVRI), the PQRI predecessor that saw almost no participation. According to a survey by the Medical Group Management Association (MGMA)--conducted only three months into PQRI in September and October of 2007--PQRI participation is four times higher than was PVRI. Faced with steady downward pressure on Medicare reimbursements and a host of other ongoing challenges, the medical groups we work with are looking forward to receiving their incentive payments, but not necessarily because 1.5 percent of their physicians' Medicare billings represent a windfall. People are giving a variety of reasons why they've opted-in. The incentive will be adequate, if not generous.

When comparing time and effort against revenue, David Doane, director of reimbursement at Dallas Nephrology, Dallas, sees it as a wash. "For 2007, we'll probably just break even," he says. "In 2008, we'll definitely make some money off it because the reimbursement is so much greater."

PQRI may not be a goldmine, but it's not insignificant, either. In 2005, Medicare spent $94.5 billion on physician services including incidental charges such as those for laboratory tests and physician-administered medications, according to Congressional Budget Office testimony. If, as Medicare has stated, 15.74 percent of eligible healthcare professionals equates to 99,319, then there are 630,997 providers eligible to participate.

Conservatively, the average Medicare reimbursement per provider therefore comes to $149,763. The average 12-month 2008 incentive payment would be 1.5 percent of that ($2,246). These figures will vary by specialty and geography, of course. But many estimates, such as one from the Ohio Academy of Family Physicians for the six-month 2007 PQRI period, are in this range. An average eight-provider group could expect to collect almost $18,000 per year or more, considering that the incentive calculations include all deductibles, co-pays and overall charges when Medicare is the secondary insurance.

More Than Just the Incentive

In 2008, PQRI participation will be stronger and reimbursement higher. "I'm a member of RBMA [Radiology Business Management Association], and I think a majority of us are participating in PQRI," says Pat Kinsley, RT, coding and compliance manager for Suburban Radiologic Consultants, which serves the Minneapolis-St. Paul area. "There were some people who felt like it was going to be a lot of extra work for little benefit. Now, a lot of those people are participating in 2008." For several reasons, 2008 participation should grow. First, there will be no payment cap limiting the 1.5 percent calculation. The 2007 incentive was subject to a limit based on national averages. Second, there are several reporting options for 2008. Providers can use third-party registries, for example, so they can opt not to tie their reporting to claims. There is an alternate reporting period, July through December 2008, for those whose started late. And, rather than reporting on 80 percent of the population for a given measure, providers can report on 15 consecutive patients for certain designated measures.

Third, providers have more options. They can report on 119 measures in 2008, a substantial increase over the 2007 number, 74. Fourth, any uncertainty as to whether PQRI will be funded in the future was effectively eliminated with the Medicare, Medicaid and SCHIP Extension Act of 2007, enacted in December. Preparation for next year is already underway; CMS was expected to publish 2009 measures last month. "The revenue potential for 2008 is great," says Doane. But there's a larger issue: "You really need to prepare your billing shops for whatever is coming. I think pay-for-performance is definitely going to be something that's part of the equation. I wanted my staff to be able to understand the logic behind it and where they'd have to go to get the data."

Questions as to whether a 1.5 percent bonus provides adequate motivation, while important, miss the point in a way because while incentive payments may increase in the future, other providers may be penalized based on quality. "Incentives" may also come in the form of reimbursement reductions avoided; however, whatever shape it takes, P4P seems inevitable. Kinsley echoes the sentiment: "The money was not the main reason for us. We anticipate that this program will continue, and at some point it won't be voluntary. So we might as well figure out how to participate before we're required to."

PQRI's underlying objective of improving outcomes for Medicare patients sometimes gets lost in the shuffle. "Even though this is strictly a Medicare process," says Kinsley, "I believe it's good for healthcare as a whole because it will help spread the influences of evidence-based medicine."

Decisions, Decisions

In retrospect, another motivator for some might have been that participation was fairly straightforward. Dallas Nephrology collaborated with a technology partner to update its claims editor. "Our hard costs were almost non-existent," says Doane. "We already had the methodologies and software in place. All of our costs were soft costs; the time to look for additional material, time to program our software--and those costs were relatively small." The experience at Suburban Radiologic was similar. "The cost was really just some additional time," says Kinsley. "We had to figure out the process and had to train the people involved. After the first couple of weeks it was really a piece of cake."

However, there is room for improvement. Though the MGMA survey reported 44 percent participation, it did uncover "significant concerns" relating to the burdens on administrative staff. About 22 percent of respondents, for example, reported needing additional staff support. Changes for 2008 are removing some of the challenges. In addition, many healthcare professionals with practice management systems (PM) and a claims editing function should be able to simply "turn on" PQRI editing for the measures they want to submit. But regardless of approach, there are some strategic and tactical steps providers can take to ease the transition. The first step with PQRI is simply to secure agreement on the financial and clinical sides--all clinical departments will want, and should have, a say. And with the new reporting options for 2008, coding and billing staffs will have more options--and more decisions to make.

Administrators and clinicians, together, must initially decide which measures to report. Generally, that task will be simpler for specialists, who will have fewer options. PQRI teams should develop a precise idea of what workflow changes physicians and healthcare professionals will experience. Whether they'll be making notes on a paper-based superbill addendum or stepping through another window in an EMR, the process of setting clinicians' expectations early is key to consistent participation later. Also, EMRs are perfectly suited to non-disruptive, accurate PQRI data capture. The efficiency of a structured EMR encounter capture need not be compromised, and providers do not have to make a mental note to remember to document certain items they have not documented in the past.

Key Links in the IT Chain

EMRs help in another, more basic way. Mere use of an EMR system is a PQRI measure that providers can count toward their requirement. For some specialties--such as radiologists, who rely on referring physicians--an EMR is helpful but not essential. "You can't do this without some sort of technology, unless you're a very small practice," says Doane. "But the technology is relatively cheap, and it's probably embedded in something you should already be using anyway. Your return on a claim scrubber product, for example, even excluding the PQRI, is incredible. You need to take advantage of technology to survive in these days of tight reimbursement; never mind the additional bonus you get with something like this." If using a PM system or billing system, the first step is to verify that it can accept alphanumeric CPT II or G codes. Some older systems may need an update to do this.

The PM system must also allow zero-dollar line items for PQRI-relevant claims. You may be able to make the required edits, but most vendors are now ready to help with this transition if necessary. In the meantime, practices may implement a workaround by inserting a nominal amount, say one cent, for these claims. Lastly, very basic claims editing can have a great impact on PQRI success because the most common kinds of reporting errors are easily corrected. In the 2007 PQRI results, about 10 percent of claims simply were missing the required National Provider Identifier number, for example. Since it's required on all claims as of May 23, 2008, this deficiency should be eliminated from that point forward. Also, looking at 2007 preliminary data, the American Academy of Family Physicians reported that for one diabetes measure, almost half were invalidated due to "denominator mismatches" involving age or gender. When an additional code or modifier is necessary, the edit in your PM system should suggest possible codes to the biller, further streamlining the process.

"I would encourage people to [participate in PQRI] and to educate their physicians right now," concludes Kinsley. "As we continue to see decreases in reimbursement, I think everybody will need as much income as possible." Given its momentum and rapid pace of change, PQRI is not going away. Pronouncements from both CMS and Senate leadership have hospitals pondering the implications of value-based purchasing programs. "Somehow, pay-for-performance will be incorporated long-term into Medicare reimbursement," says Doane. "So the sooner you get on it, the better prepared you'll be when it happens."

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Jan E. Powell is

co-founder,

president and CEO

of MEGAS Corp.

Contact her at

jpowell@megas, net

or 850-668-3922,

ext. 113.

Rex A. Stanley, RN, is CEO of Unicor Medical, Inc.

Contact him at rstanley@unicormed.com or

800-825-7421.