Joyce Frieden

As the public focuses on problems with the safety and cost of prescription drugs, insurers are training their sights on a different cost issue: imaging procedures.

On average, costs of imaging—especially high-tech procedures, such as MRI, CT, and magnetic resonance angiograms—have been going up 20% per year for the last several years, according to Thomas Dehn, M.D., cofounder of National Imaging Associates, a radiology utilization-management firm in Hackensack, N.J.

“Some will say it's the aging of the population, but the key issue is really demand,” said Dr. Dehn, the company's executive vice president and chief medical officer. “Patients are bright. They're good consumers. They want a shoulder MRI if their shoulder hurts.”

Physician demand is also an important part of the equation, he said. “If you have physicians who want increased [patient volume] in their offices, it is possible that rather than spending cognitive time, for which they're poorly reimbursed, they may choose to use a technical alternative.”

For example, a doctor trying to figure out the source of a patient's chronic headaches “may get frustrated and refer the patient for an MRI of the brain, just to show them they're normal,” Dr. Dehn said. “The treating physician knows in the back of his mind that there isn't going to be anything [there], but it will calm the patient down.”

As to which physicians are responsible for the increase in imaging, the answer depends on whom you ask. The American College of Radiology contends that the growth is largely due to self-referral by nonradiologists who have bought their own imaging equipment. But others say that all specialties are doing more imaging, largely because of improved technology and the improvement in care that it brings.

Whatever the reason that more scans are being done, insurers have decided they've had enough. Take Highmark Blue Cross and Blue Shield, a Pittsburgh-based insurer whose imaging costs have risen to $500 million annually in the last few years.

One Highmark strategy for paring down its imaging costs is to develop a smaller network of imaging providers. To be included in Highmark's network, outpatient imaging centers must now offer multiple imaging modalities, such as mammography, MRIs, CTs, and bone densitometry.

“We were seeing many facilities that were single modality—just CT or just MRI,” said Cary Vinson, M.D., Highmark's vice president of quality and medical performance management. “They were being set up by for-profit companies to siphon away high-margin procedures from hospitals and other multimodality freestanding facilities. We were seeing access problems for referring physicians because the single modality centers were outcompeting the multimodality centers, and they couldn't keep up.”

In addition to credentialing the imaging centers, Highmark is going to start requiring providers to preauthorize all CT, MRI, and PET scans. At first, while everyone adapts to the new system, the preauthorization procedure will be voluntary and no procedures will be denied. But eventually—perhaps by the end of this year—the preauthorization will become mandatory, Dr. Vinson said.

Harvard Pilgrim Health Care (HPHC) of Wellesley, Mass., is taking a slightly different approach. Instead of mandatory preauthorization, HPHC is using a “soft denial” process in which physicians must call for imaging preauthorization, but they can overrule a negative decision if they want to.

“We made a decision based on our network being a very sophisticated, highly academic referral environment, that a hard denial program might not be best way to go,” said William Corwin, M.D., the plan's medical director for utilization management and clinical policy. “Instead, we elected to use a more consultative approach.” The program started in July, so no concrete results are available yet, he noted.

Plans that start a preauthorization program must first figure out who should be authorized to perform scans. At Highmark, the plan tried to be as inclusive as possible, Dr. Vinson said.

“In some cases within a specialty, we tried to determine who was qualified and who was not,” he said. “For instance, for breast ultrasound, we listed radiologists, but we also included surgeons with breast ultrasound certification from the American Society of Breast Surgeons.”

Highmark ran into a turf battle as it tried to credential providers. In this case, the American College of Cardiology and the American College of Radiology “definitely have differences of opinion about who's qualified and who's not” when it comes to cardiology-related imaging exams, Dr. Vinson said. “Highmark took the approach of accepting either society's qualifications. They clearly wanted us to decide between the two, and we would not do that.”

To design their preauthorization programs, both Highmark and Harvard Pilgrim worked with National Imaging Associates, which now has “more than two dozen” clients nationwide and is active in 32 states, according to Dr. Dehn.

He predicts at least one more specialty will join in, as more molecular imaging is done to design tumor-specific antibodies. “You may have immunologists who are doing diagnostic imaging,” he said.

As the public focuses on problems with the safety and cost of prescription drugs, insurers are training their sights on a different cost issue: imaging procedures.

On average, costs of imaging—especially high-tech procedures, such as MRI, CT, and magnetic resonance angiograms—have been going up 20% per year for the last several years, according to Thomas Dehn, M.D., cofounder of National Imaging Associates, a radiology utilization-management firm in Hackensack, N.J.

“Some will say it's the aging of the population, but the key issue is really demand,” said Dr. Dehn, the company's executive vice president and chief medical officer. “Patients are bright. They're good consumers. They want a shoulder MRI if their shoulder hurts.”

Physician demand is also an important part of the equation, he said. “If you have physicians who want increased [patient volume] in their offices, it is possible that rather than spending cognitive time, for which they're poorly reimbursed, they may choose to use a technical alternative.”

For example, a doctor trying to figure out the source of a patient's chronic headaches “may get frustrated and refer the patient for an MRI of the brain, just to show them they're normal,” Dr. Dehn said. “The treating physician knows in the back of his mind that there isn't going to be anything [there], but it will calm the patient down.”

As to which physicians are responsible for the increase in imaging, the answer depends on whom you ask. The American College of Radiology contends that the growth is largely due to self-referral by nonradiologists who have bought their own imaging equipment. But others say that all specialties are doing more imaging, largely because of improved technology and the improvement in care that it brings.

Whatever the reason that more scans are being done, insurers have decided they've had enough. Take Highmark Blue Cross and Blue Shield, a Pittsburgh-based insurer whose imaging costs have risen to $500 million annually in the last few years.

One Highmark strategy for paring down its imaging costs is to develop a smaller network of imaging providers. To be included in Highmark's network, outpatient imaging centers must now offer multiple imaging modalities, such as mammography, MRIs, CTs, and bone densitometry.

“We were seeing many facilities that were single modality—just CT or just MRI,” said Cary Vinson, M.D., Highmark's vice president of quality and medical performance management. “They were being set up by for-profit companies to siphon away high-margin procedures from hospitals and other multimodality freestanding facilities. We were seeing access problems for referring physicians because the single modality centers were outcompeting the multimodality centers, and they couldn't keep up.”

In addition to credentialing the imaging centers, Highmark is going to start requiring providers to preauthorize all CT, MRI, and PET scans. At first, while everyone adapts to the new system, the preauthorization procedure will be voluntary and no procedures will be denied. But eventually—perhaps by the end of this year—the preauthorization will become mandatory, Dr. Vinson said.

Harvard Pilgrim Health Care (HPHC) of Wellesley, Mass., is taking a slightly different approach. Instead of mandatory preauthorization, HPHC is using a “soft denial” process in which physicians must call for imaging preauthorization, but they can overrule a negative decision if they want to.

“We made a decision based on our network being a very sophisticated, highly academic referral environment, that a hard denial program might not be best way to go,” said William Corwin, M.D., the plan's medical director for utilization management and clinical policy. “Instead, we elected to use a more consultative approach.” The program started in July, so no concrete results are available yet, he noted.

Plans that start a preauthorization program must first figure out who should be authorized to perform scans. At Highmark, the plan tried to be as inclusive as possible, Dr. Vinson said.

“In some cases within a specialty, we tried to determine who was qualified and who was not,” he said. “For instance, for breast ultrasound, we listed radiologists, but we also included surgeons with breast ultrasound certification from the American Society of Breast Surgeons.”

Highmark ran into a turf battle as it tried to credential providers. In this case, the American College of Cardiology and the American College of Radiology “definitely have differences of opinion about who's qualified and who's not” when it comes to cardiology-related imaging exams, Dr. Vinson said. “Highmark took the approach of accepting either society's qualifications. They clearly wanted us to decide between the two, and we would not do that.”

To design their preauthorization programs, both Highmark and Harvard Pilgrim worked with National Imaging Associates, which now has “more than two dozen” clients nationwide and is active in 32 states, according to Dr. Dehn.

He predicts at least one more specialty will join in, as more molecular imaging is done to design tumor-specific antibodies. “You may have immunologists who are doing diagnostic imaging,” he said.

As the public focuses on problems with the safety and cost of prescription drugs, insurers are training their sights on a different cost issue: imaging procedures.

On average, costs of imaging—especially high-tech procedures, such as MRI, CT, and magnetic resonance angiograms—have been going up 20% per year for the last several years, according to Thomas Dehn, M.D., cofounder of National Imaging Associates, a radiology utilization-management firm in Hackensack, N.J.

“Some will say it's the aging of the population, but the key issue is really demand,” said Dr. Dehn, the company's executive vice president and chief medical officer. “Patients are bright. They're good consumers. They want a shoulder MRI if their shoulder hurts.”

Physician demand is also an important part of the equation, he said. “If you have physicians who want increased [patient volume] in their offices, it is possible that rather than spending cognitive time, for which they're poorly reimbursed, they may choose to use a technical alternative.”

For example, a doctor trying to figure out the source of a patient's chronic headaches “may get frustrated and refer the patient for an MRI of the brain, just to show them they're normal,” Dr. Dehn said. “The treating physician knows in the back of his mind that there isn't going to be anything [there], but it will calm the patient down.”

As to which physicians are responsible for the increase in imaging, the answer depends on whom you ask. The American College of Radiology contends that the growth is largely due to self-referral by nonradiologists who have bought their own imaging equipment. But others say that all specialties are doing more imaging, largely because of improved technology and the improvement in care that it brings.

Whatever the reason that more scans are being done, insurers have decided they've had enough. Take Highmark Blue Cross and Blue Shield, a Pittsburgh-based insurer whose imaging costs have risen to $500 million annually in the last few years.

One Highmark strategy for paring down its imaging costs is to develop a smaller network of imaging providers. To be included in Highmark's network, outpatient imaging centers must now offer multiple imaging modalities, such as mammography, MRIs, CTs, and bone densitometry.

“We were seeing many facilities that were single modality—just CT or just MRI,” said Cary Vinson, M.D., Highmark's vice president of quality and medical performance management. “They were being set up by for-profit companies to siphon away high-margin procedures from hospitals and other multimodality freestanding facilities. We were seeing access problems for referring physicians because the single modality centers were outcompeting the multimodality centers, and they couldn't keep up.”

In addition to credentialing the imaging centers, Highmark is going to start requiring providers to preauthorize all CT, MRI, and PET scans. At first, while everyone adapts to the new system, the preauthorization procedure will be voluntary and no procedures will be denied. But eventually—perhaps by the end of this year—the preauthorization will become mandatory, Dr. Vinson said.

Harvard Pilgrim Health Care (HPHC) of Wellesley, Mass., is taking a slightly different approach. Instead of mandatory preauthorization, HPHC is using a “soft denial” process in which physicians must call for imaging preauthorization, but they can overrule a negative decision if they want to.

“We made a decision based on our network being a very sophisticated, highly academic referral environment, that a hard denial program might not be best way to go,” said William Corwin, M.D., the plan's medical director for utilization management and clinical policy. “Instead, we elected to use a more consultative approach.” The program started in July, so no concrete results are available yet, he noted.

Plans that start a preauthorization program must first figure out who should be authorized to perform scans. At Highmark, the plan tried to be as inclusive as possible, Dr. Vinson said.

“In some cases within a specialty, we tried to determine who was qualified and who was not,” he said. “For instance, for breast ultrasound, we listed radiologists, but we also included surgeons with breast ultrasound certification from the American Society of Breast Surgeons.”

Highmark ran into a turf battle as it tried to credential providers. In this case, the American College of Cardiology and the American College of Radiology “definitely have differences of opinion about who's qualified and who's not” when it comes to cardiology-related imaging exams, Dr. Vinson said. “Highmark took the approach of accepting either society's qualifications. They clearly wanted us to decide between the two, and we would not do that.”

To design their preauthorization programs, both Highmark and Harvard Pilgrim worked with National Imaging Associates, which now has “more than two dozen” clients nationwide and is active in 32 states, according to Dr. Dehn.

He predicts at least one more specialty will join in, as more molecular imaging is done to design tumor-specific antibodies. “You may have immunologists who are doing diagnostic imaging,” he said.

WASHINGTON — A congressional committee wrestled with whether or how much to regulate or impose standards on imaging procedures at a hearing on managing Medicare's imaging costs.

“I'm concerned about putting in a whole group of new structures [to monitor imaging procedures] because the system is structure-heavy already,” said Rep. Nancy Johnson (R-Conn.), chair of the health subcommittee of the House Ways and Means Committee. “I'm not sure putting in more oversight is really what we need.”

Mark Miller, Ph.D., executive director of the Medicare Payment Advisory Commission (MedPAC), testified that the growth in the volume of imaging services such as PET scans, CT scans, and MRIs performed on Medicare beneficiaries “is growing at twice the rate of all physician services.” And what worries MedPAC, he continued, is that increasing the amount of imaging being done does not necessarily mean the quality of care is getting any better.

“There is a threefold variation in the use of these services among the Medicare population, and it's not linked to health care quality,” Dr. Miller said. “It's more [related to the] availability of services and practice style.”

MedPAC also is concerned about the wide variability in imaging quality, he said. “There is variation in the quality of the images produced and in the quality of image interpretation.” He said the 17 MedPAC commissioners would like to see the Department of Health and Human Services set quality standards for imaging providers (INTERNAL MEDICINE NEWS, March 1, 2005, p. 77).

“Some people characterize this recommendation as directed toward limiting imaging to radiologists only and billing for imaging to radiologists only,” Dr. Miller said, alluding to the perceived “turf war” going on between radiologists and other imaging providers. “That is not correct. We believe the standard should apply to all physicians” who do imaging.

Subcommittee member Rep. Jim Ramstad (R-Minn.) said he was happy to hear that imaging would not be restricted to radiologists. “I would hate to see this become nothing more than a turf battle,” he said. “It seems to me that overutilization is a complex issue, involving factors like defensive medicine, provider preference, and consumer demand for the best test.”

The subcommittee also heard from representatives for cardiology and radiology groups, each of which took opposing positions on the increase in imaging volume. “We are deeply concerned with the exponential growth in office-based imaging by those who may lack the education, training, equipment, and clinical personnel to safely and effectively use these studies,” said James Borgstede, M.D., chair of the American College of Radiology's board of chancellors. “For this reason, the ACR supports many of the MedPAC recommendations that link Medicare reimbursement to quality, safety, and training standards for physicians and facilities which provide medical imaging services.”

Kim Williams, M.D., speaking on behalf of the American College of Cardiology, said there was “no credible evidence” to support the idea that office-based imaging was of poor quality. “Patients are really the issue, not the turf wars frequently discussed in the literature of the American College of Radiology,” he said.

Cardiologists are especially concerned about a MedPAC recommendation involving ownership of imaging equipment. Under the current laws against physician self-referral, physicians cannot refer patients to an imaging center in which they have direct ownership. Dr. Williams urged the subcommittee not to remove a provision in the law that exempts nuclear medicine.

The subcommittee also considered the issue of whether to lower reimbursement for multiple imaging procedures performed in the same visit—specifically, lowering the amount paid for each subsequent image after the first one. Dr. Borgstede noted that the American Medical Association's CPT Editorial Panel has recommended such a reduction, but it will apply to the first image as well. That change will take effect next January, he said.

“We're at a stage where we have to rethink the way we pay physicians,” Rep. Johnson said to the two physicians on the panel. “Think about it, and get back to us about what you'd like to see in terms of … steps in the quality ladder.”

WASHINGTON — A congressional committee wrestled with whether or how much to regulate or impose standards on imaging procedures at a hearing on managing Medicare's imaging costs.

“I'm concerned about putting in a whole group of new structures [to monitor imaging procedures] because the system is structure-heavy already,” said Rep. Nancy Johnson (R-Conn.), chair of the health subcommittee of the House Ways and Means Committee. “I'm not sure putting in more oversight is really what we need.”

Mark Miller, Ph.D., executive director of the Medicare Payment Advisory Commission (MedPAC), testified that the growth in the volume of imaging services such as PET scans, CT scans, and MRIs performed on Medicare beneficiaries “is growing at twice the rate of all physician services.” And what worries MedPAC, he continued, is that increasing the amount of imaging being done does not necessarily mean the quality of care is getting any better.

“There is a threefold variation in the use of these services among the Medicare population, and it's not linked to health care quality,” Dr. Miller said. “It's more [related to the] availability of services and practice style.”

MedPAC also is concerned about the wide variability in imaging quality, he said. “There is variation in the quality of the images produced and in the quality of image interpretation.” He said the 17 MedPAC commissioners would like to see the Department of Health and Human Services set quality standards for imaging providers (INTERNAL MEDICINE NEWS, March 1, 2005, p. 77).

“Some people characterize this recommendation as directed toward limiting imaging to radiologists only and billing for imaging to radiologists only,” Dr. Miller said, alluding to the perceived “turf war” going on between radiologists and other imaging providers. “That is not correct. We believe the standard should apply to all physicians” who do imaging.

Subcommittee member Rep. Jim Ramstad (R-Minn.) said he was happy to hear that imaging would not be restricted to radiologists. “I would hate to see this become nothing more than a turf battle,” he said. “It seems to me that overutilization is a complex issue, involving factors like defensive medicine, provider preference, and consumer demand for the best test.”

The subcommittee also heard from representatives for cardiology and radiology groups, each of which took opposing positions on the increase in imaging volume. “We are deeply concerned with the exponential growth in office-based imaging by those who may lack the education, training, equipment, and clinical personnel to safely and effectively use these studies,” said James Borgstede, M.D., chair of the American College of Radiology's board of chancellors. “For this reason, the ACR supports many of the MedPAC recommendations that link Medicare reimbursement to quality, safety, and training standards for physicians and facilities which provide medical imaging services.”

Kim Williams, M.D., speaking on behalf of the American College of Cardiology, said there was “no credible evidence” to support the idea that office-based imaging was of poor quality. “Patients are really the issue, not the turf wars frequently discussed in the literature of the American College of Radiology,” he said.

Cardiologists are especially concerned about a MedPAC recommendation involving ownership of imaging equipment. Under the current laws against physician self-referral, physicians cannot refer patients to an imaging center in which they have direct ownership. Dr. Williams urged the subcommittee not to remove a provision in the law that exempts nuclear medicine.

The subcommittee also considered the issue of whether to lower reimbursement for multiple imaging procedures performed in the same visit—specifically, lowering the amount paid for each subsequent image after the first one. Dr. Borgstede noted that the American Medical Association's CPT Editorial Panel has recommended such a reduction, but it will apply to the first image as well. That change will take effect next January, he said.

“We're at a stage where we have to rethink the way we pay physicians,” Rep. Johnson said to the two physicians on the panel. “Think about it, and get back to us about what you'd like to see in terms of … steps in the quality ladder.”

WASHINGTON — A congressional committee wrestled with whether or how much to regulate or impose standards on imaging procedures at a hearing on managing Medicare's imaging costs.

“I'm concerned about putting in a whole group of new structures [to monitor imaging procedures] because the system is structure-heavy already,” said Rep. Nancy Johnson (R-Conn.), chair of the health subcommittee of the House Ways and Means Committee. “I'm not sure putting in more oversight is really what we need.”

Mark Miller, Ph.D., executive director of the Medicare Payment Advisory Commission (MedPAC), testified that the growth in the volume of imaging services such as PET scans, CT scans, and MRIs performed on Medicare beneficiaries “is growing at twice the rate of all physician services.” And what worries MedPAC, he continued, is that increasing the amount of imaging being done does not necessarily mean the quality of care is getting any better.

“There is a threefold variation in the use of these services among the Medicare population, and it's not linked to health care quality,” Dr. Miller said. “It's more [related to the] availability of services and practice style.”

MedPAC also is concerned about the wide variability in imaging quality, he said. “There is variation in the quality of the images produced and in the quality of image interpretation.” He said the 17 MedPAC commissioners would like to see the Department of Health and Human Services set quality standards for imaging providers (INTERNAL MEDICINE NEWS, March 1, 2005, p. 77).

“Some people characterize this recommendation as directed toward limiting imaging to radiologists only and billing for imaging to radiologists only,” Dr. Miller said, alluding to the perceived “turf war” going on between radiologists and other imaging providers. “That is not correct. We believe the standard should apply to all physicians” who do imaging.

Subcommittee member Rep. Jim Ramstad (R-Minn.) said he was happy to hear that imaging would not be restricted to radiologists. “I would hate to see this become nothing more than a turf battle,” he said. “It seems to me that overutilization is a complex issue, involving factors like defensive medicine, provider preference, and consumer demand for the best test.”

The subcommittee also heard from representatives for cardiology and radiology groups, each of which took opposing positions on the increase in imaging volume. “We are deeply concerned with the exponential growth in office-based imaging by those who may lack the education, training, equipment, and clinical personnel to safely and effectively use these studies,” said James Borgstede, M.D., chair of the American College of Radiology's board of chancellors. “For this reason, the ACR supports many of the MedPAC recommendations that link Medicare reimbursement to quality, safety, and training standards for physicians and facilities which provide medical imaging services.”

Kim Williams, M.D., speaking on behalf of the American College of Cardiology, said there was “no credible evidence” to support the idea that office-based imaging was of poor quality. “Patients are really the issue, not the turf wars frequently discussed in the literature of the American College of Radiology,” he said.

Cardiologists are especially concerned about a MedPAC recommendation involving ownership of imaging equipment. Under the current laws against physician self-referral, physicians cannot refer patients to an imaging center in which they have direct ownership. Dr. Williams urged the subcommittee not to remove a provision in the law that exempts nuclear medicine.

The subcommittee also considered the issue of whether to lower reimbursement for multiple imaging procedures performed in the same visit—specifically, lowering the amount paid for each subsequent image after the first one. Dr. Borgstede noted that the American Medical Association's CPT Editorial Panel has recommended such a reduction, but it will apply to the first image as well. That change will take effect next January, he said.

“We're at a stage where we have to rethink the way we pay physicians,” Rep. Johnson said to the two physicians on the panel. “Think about it, and get back to us about what you'd like to see in terms of … steps in the quality ladder.”

WASHINGTON — The Centers for Medicare and Medicaid Services is jumping on the pay-for-performance bandwagon, but members of a physician advisory group warned CMS officials to be careful how they go about it.

"I'm only hoping that you'll structure this so that the quality indicators will be that you've [performed] certain processes, not necessarily the outcome [of them]," said Laura B. Powers, M.D., a Knoxville, Tenn. neurologist and member of the Practicing Physicians Advisory Council.

For example, outcomes are not good in terminal patients, Dr. Powers told this newspaper. "What outcome are they going to measure with an amyotrophic lateral sclerosis patient who is definitely going to die?" she said. Instead, Medicare should assess whether appropriate standards of care are followed for terminal patients.

Trent Haywood, M.D., acting deputy chief clinical officer at the agency, said CMS has debated that very issue. "There has been a lot of discussion about what is the right thing [to measure]. We've always said that we think it's both," he said. "We definitely want process measures … and the current financial structure is also easier for measuring processes, because that's the way we traditionally pay people."

However, he added, "our goal is toward getting some evidence of outcomes. The process measures we normally collect are always related to outcomes."

Council member Peter Grimm, D.O., a radiation oncologist in Seattle, said outcomes are the most important indicator. "You have to have outcomes as the bottom line," said Dr. Grimm, who runs a quality assurance business involving 300 physicians.

In testimony to the council, Dr. Haywood outlined steps Medicare is taking to introduce pay for performance into physician reimbursement, including demonstration projects with hospitals and group practices. But Dr. Grimm was not satisfied.

"One thing I didn't hear is how you verify this [performance] data," he said. "You have to have a third party evaluate it."

Geraldine O'Shea, D.O., an internist in Jackson, Calif., said that she is concerned about the impact of pay for performance on the doctor-patient relationship.

"Could it discourage physicians from caring for noncompliant patients?" she asked. "And how do these programs ensure the most up-to-date guidelines are being used? How can we get this out to know that this is the benchmark we're going to be measured at?"

There are different ways to address patient compliance, Dr. Haywood said. "If you lean more heavily on process measures, that takes care of part of that problem, because those process measures look at whether you prescribed something or did something. But because we still want to look at outcomes measurement, we also talk about ways in which you allow that patient to be excluded. You can have documentation saying, 'Provided counseling and patient refused.'"

Council member Barbara McAneney, M.D., an oncologist in Albuquerque, said she was concerned about the expense of the computer system that would be required to keep track of outcomes data.

"The electronic medical record (EMR) that our practice purchased some years ago is now completely inadequate because it's not searchable for tumor stage, size, or treatment," she said.

"The most recent quote I got for the EMR that can provide the functions I want … for a practice of nine physicians, they want $400,000," she said. "Well, my Medicare drug money just went away, the physician fee schedule is going down, and the [Medicare payment formula] is going to nail us 30% over the next 6 years. Where am I going to find $400,000 to put in an EMR that I can search and find all stage II breast cancer patients, and see whether they got their chemotherapy, and how they are doing, and by the way, how many of them are on Vioxx, and I have got to call them up and get them off it? All these kinds of issues are really going to have to be addressed."

WASHINGTON — The Centers for Medicare and Medicaid Services is jumping on the pay-for-performance bandwagon, but members of a physician advisory group warned CMS officials to be careful how they go about it.

"I'm only hoping that you'll structure this so that the quality indicators will be that you've [performed] certain processes, not necessarily the outcome [of them]," said Laura B. Powers, M.D., a Knoxville, Tenn. neurologist and member of the Practicing Physicians Advisory Council.

For example, outcomes are not good in terminal patients, Dr. Powers told this newspaper. "What outcome are they going to measure with an amyotrophic lateral sclerosis patient who is definitely going to die?" she said. Instead, Medicare should assess whether appropriate standards of care are followed for terminal patients.

Trent Haywood, M.D., acting deputy chief clinical officer at the agency, said CMS has debated that very issue. "There has been a lot of discussion about what is the right thing [to measure]. We've always said that we think it's both," he said. "We definitely want process measures … and the current financial structure is also easier for measuring processes, because that's the way we traditionally pay people."

However, he added, "our goal is toward getting some evidence of outcomes. The process measures we normally collect are always related to outcomes."

Council member Peter Grimm, D.O., a radiation oncologist in Seattle, said outcomes are the most important indicator. "You have to have outcomes as the bottom line," said Dr. Grimm, who runs a quality assurance business involving 300 physicians.

In testimony to the council, Dr. Haywood outlined steps Medicare is taking to introduce pay for performance into physician reimbursement, including demonstration projects with hospitals and group practices. But Dr. Grimm was not satisfied.

"One thing I didn't hear is how you verify this [performance] data," he said. "You have to have a third party evaluate it."

Geraldine O'Shea, D.O., an internist in Jackson, Calif., said that she is concerned about the impact of pay for performance on the doctor-patient relationship.

"Could it discourage physicians from caring for noncompliant patients?" she asked. "And how do these programs ensure the most up-to-date guidelines are being used? How can we get this out to know that this is the benchmark we're going to be measured at?"

There are different ways to address patient compliance, Dr. Haywood said. "If you lean more heavily on process measures, that takes care of part of that problem, because those process measures look at whether you prescribed something or did something. But because we still want to look at outcomes measurement, we also talk about ways in which you allow that patient to be excluded. You can have documentation saying, 'Provided counseling and patient refused.'"

Council member Barbara McAneney, M.D., an oncologist in Albuquerque, said she was concerned about the expense of the computer system that would be required to keep track of outcomes data.

"The electronic medical record (EMR) that our practice purchased some years ago is now completely inadequate because it's not searchable for tumor stage, size, or treatment," she said.

"The most recent quote I got for the EMR that can provide the functions I want … for a practice of nine physicians, they want $400,000," she said. "Well, my Medicare drug money just went away, the physician fee schedule is going down, and the [Medicare payment formula] is going to nail us 30% over the next 6 years. Where am I going to find $400,000 to put in an EMR that I can search and find all stage II breast cancer patients, and see whether they got their chemotherapy, and how they are doing, and by the way, how many of them are on Vioxx, and I have got to call them up and get them off it? All these kinds of issues are really going to have to be addressed."

WASHINGTON — The Centers for Medicare and Medicaid Services is jumping on the pay-for-performance bandwagon, but members of a physician advisory group warned CMS officials to be careful how they go about it.

"I'm only hoping that you'll structure this so that the quality indicators will be that you've [performed] certain processes, not necessarily the outcome [of them]," said Laura B. Powers, M.D., a Knoxville, Tenn. neurologist and member of the Practicing Physicians Advisory Council.

For example, outcomes are not good in terminal patients, Dr. Powers told this newspaper. "What outcome are they going to measure with an amyotrophic lateral sclerosis patient who is definitely going to die?" she said. Instead, Medicare should assess whether appropriate standards of care are followed for terminal patients.

Trent Haywood, M.D., acting deputy chief clinical officer at the agency, said CMS has debated that very issue. "There has been a lot of discussion about what is the right thing [to measure]. We've always said that we think it's both," he said. "We definitely want process measures … and the current financial structure is also easier for measuring processes, because that's the way we traditionally pay people."

However, he added, "our goal is toward getting some evidence of outcomes. The process measures we normally collect are always related to outcomes."

Council member Peter Grimm, D.O., a radiation oncologist in Seattle, said outcomes are the most important indicator. "You have to have outcomes as the bottom line," said Dr. Grimm, who runs a quality assurance business involving 300 physicians.

In testimony to the council, Dr. Haywood outlined steps Medicare is taking to introduce pay for performance into physician reimbursement, including demonstration projects with hospitals and group practices. But Dr. Grimm was not satisfied.

"One thing I didn't hear is how you verify this [performance] data," he said. "You have to have a third party evaluate it."

Geraldine O'Shea, D.O., an internist in Jackson, Calif., said that she is concerned about the impact of pay for performance on the doctor-patient relationship.

"Could it discourage physicians from caring for noncompliant patients?" she asked. "And how do these programs ensure the most up-to-date guidelines are being used? How can we get this out to know that this is the benchmark we're going to be measured at?"

There are different ways to address patient compliance, Dr. Haywood said. "If you lean more heavily on process measures, that takes care of part of that problem, because those process measures look at whether you prescribed something or did something. But because we still want to look at outcomes measurement, we also talk about ways in which you allow that patient to be excluded. You can have documentation saying, 'Provided counseling and patient refused.'"

Council member Barbara McAneney, M.D., an oncologist in Albuquerque, said she was concerned about the expense of the computer system that would be required to keep track of outcomes data.

"The electronic medical record (EMR) that our practice purchased some years ago is now completely inadequate because it's not searchable for tumor stage, size, or treatment," she said.

"The most recent quote I got for the EMR that can provide the functions I want … for a practice of nine physicians, they want $400,000," she said. "Well, my Medicare drug money just went away, the physician fee schedule is going down, and the [Medicare payment formula] is going to nail us 30% over the next 6 years. Where am I going to find $400,000 to put in an EMR that I can search and find all stage II breast cancer patients, and see whether they got their chemotherapy, and how they are doing, and by the way, how many of them are on Vioxx, and I have got to call them up and get them off it? All these kinds of issues are really going to have to be addressed."

WASHINGTON — People who have suffered adverse outcomes due to drugs or medical devices may face more delays in suing manufacturers for damages now that federal class-action lawsuit legislation has been signed into law.

The law, known as the Class Action Fairness Act of 2005, would move from state court to federal court any class-action lawsuit in which the amount of damages claimed was greater than $5 million and involved citizens in different states. The law also outlines circumstances in which federal courts can decline to hear class-action cases.

Proponents of the law, which passed in both the House and Senate in record time, say that it will help decrease the number of "junk lawsuits" that are clogging up the state courts.

"America's employers and consumers are the big winners," Tom Donohue, president and CEO of the U.S. Chamber of Commerce, said in a statement. "Reform of the class action lawsuit system will reduce frivolous lawsuits, spur business investment, and help restore sanity to our nation's legal system."

Critics of the bill, however, say that it will deprive citizens of their right to sue when they are injured by a defective product. "There are only 678 federal trial judges in the system, but there are 9,200 state judges in courts of general jurisdiction," said Jillian Aldebron, counsel and communications coordinator for Public Citizen's Congress Watch, a citizen watchdog group. "So you're talking about cases ordinarily divided up among 9,200 judges and squeezing them into the courtrooms of 678 judges. Even if they are willing to hear the cases, it's going to take years, and these cases take years in state court [already]."

Many physician organizations, including the American Medical Association and the American College of Physicians, have declined to take a stand on the bill; their efforts are more focused on tort reform legislation affecting malpractice cases.

Senior citizens' lobby AARP opposed the bill. "We felt that there wasn't an adequate basis for consumers no longer having the option of bringing a multistate case in state court," said Larry White, senior legislative representative. "We acknowledge there are abuses on both sides in the system, but when you in essence say that the federal courts will have jurisdiction of these cases … knowing the federal courts oftentimes don't certify those cases, you're in essence saying people who have been genuinely harmed don't have options."

The Bush administration stated the law will help consumers. "The bill will remove significant burdens on class-action litigants and provide greater protections for the victims whom the class-action device originally was designed to benefit," the administration said in a statement.

The law would affect only cases filed after the bill was signed, noted Ms. Aldebron.

WASHINGTON — People who have suffered adverse outcomes due to drugs or medical devices may face more delays in suing manufacturers for damages now that federal class-action lawsuit legislation has been signed into law.

The law, known as the Class Action Fairness Act of 2005, would move from state court to federal court any class-action lawsuit in which the amount of damages claimed was greater than $5 million and involved citizens in different states. The law also outlines circumstances in which federal courts can decline to hear class-action cases.

Proponents of the law, which passed in both the House and Senate in record time, say that it will help decrease the number of "junk lawsuits" that are clogging up the state courts.

"America's employers and consumers are the big winners," Tom Donohue, president and CEO of the U.S. Chamber of Commerce, said in a statement. "Reform of the class action lawsuit system will reduce frivolous lawsuits, spur business investment, and help restore sanity to our nation's legal system."

Critics of the bill, however, say that it will deprive citizens of their right to sue when they are injured by a defective product. "There are only 678 federal trial judges in the system, but there are 9,200 state judges in courts of general jurisdiction," said Jillian Aldebron, counsel and communications coordinator for Public Citizen's Congress Watch, a citizen watchdog group. "So you're talking about cases ordinarily divided up among 9,200 judges and squeezing them into the courtrooms of 678 judges. Even if they are willing to hear the cases, it's going to take years, and these cases take years in state court [already]."

Many physician organizations, including the American Medical Association and the American College of Physicians, have declined to take a stand on the bill; their efforts are more focused on tort reform legislation affecting malpractice cases.

Senior citizens' lobby AARP opposed the bill. "We felt that there wasn't an adequate basis for consumers no longer having the option of bringing a multistate case in state court," said Larry White, senior legislative representative. "We acknowledge there are abuses on both sides in the system, but when you in essence say that the federal courts will have jurisdiction of these cases … knowing the federal courts oftentimes don't certify those cases, you're in essence saying people who have been genuinely harmed don't have options."

The Bush administration stated the law will help consumers. "The bill will remove significant burdens on class-action litigants and provide greater protections for the victims whom the class-action device originally was designed to benefit," the administration said in a statement.

The law would affect only cases filed after the bill was signed, noted Ms. Aldebron.

WASHINGTON — People who have suffered adverse outcomes due to drugs or medical devices may face more delays in suing manufacturers for damages now that federal class-action lawsuit legislation has been signed into law.

The law, known as the Class Action Fairness Act of 2005, would move from state court to federal court any class-action lawsuit in which the amount of damages claimed was greater than $5 million and involved citizens in different states. The law also outlines circumstances in which federal courts can decline to hear class-action cases.

Proponents of the law, which passed in both the House and Senate in record time, say that it will help decrease the number of "junk lawsuits" that are clogging up the state courts.

"America's employers and consumers are the big winners," Tom Donohue, president and CEO of the U.S. Chamber of Commerce, said in a statement. "Reform of the class action lawsuit system will reduce frivolous lawsuits, spur business investment, and help restore sanity to our nation's legal system."

Critics of the bill, however, say that it will deprive citizens of their right to sue when they are injured by a defective product. "There are only 678 federal trial judges in the system, but there are 9,200 state judges in courts of general jurisdiction," said Jillian Aldebron, counsel and communications coordinator for Public Citizen's Congress Watch, a citizen watchdog group. "So you're talking about cases ordinarily divided up among 9,200 judges and squeezing them into the courtrooms of 678 judges. Even if they are willing to hear the cases, it's going to take years, and these cases take years in state court [already]."

Many physician organizations, including the American Medical Association and the American College of Physicians, have declined to take a stand on the bill; their efforts are more focused on tort reform legislation affecting malpractice cases.

Senior citizens' lobby AARP opposed the bill. "We felt that there wasn't an adequate basis for consumers no longer having the option of bringing a multistate case in state court," said Larry White, senior legislative representative. "We acknowledge there are abuses on both sides in the system, but when you in essence say that the federal courts will have jurisdiction of these cases … knowing the federal courts oftentimes don't certify those cases, you're in essence saying people who have been genuinely harmed don't have options."

The Bush administration stated the law will help consumers. "The bill will remove significant burdens on class-action litigants and provide greater protections for the victims whom the class-action device originally was designed to benefit," the administration said in a statement.

The law would affect only cases filed after the bill was signed, noted Ms. Aldebron.

WASHINGTON — Consumer-driven health care may be all the rage right now, but there's no single cure for the nation's ailing health care system, several experts said at a health care congress sponsored by the Wall Street Journal and CNBC.

“There are no silver bullets,” said Douglas Holtz-Eakin, Ph.D., director of the Congressional Budget Office (CBO). “There is no single item—technology, disease management, tort law—that is likely to prove to be the answer to aligning incentives, providing high-quality care at reasonable costs, and financing it in a way that's economically viable. More likely, we'll have a series of incremental changes” that will shore up the system.

“Rising health care costs represent the central domestic issue at this time,” Dr. Holtz-Eakin said. For example, over the next 50 years, if nothing is done, “the cost of Medicare and Medicaid will rise from 4% of the gross domestic product to 20%—the current size of the entire federal budget.”

Robert Reischauer, Ph.D., a former CBO director who is now president of the Urban Institute, noted that Medicare was a particular concern, since Medicare spending is expected to grow very rapidly over the next 10 years. He listed four possible solutions for the Medicare budget crisis.

The first possibility is to reduce the scope of coverage, but “that isn't a practical course of action,” he said. “All forces are moving in just the opposite direction.”

Another option is to restrain the growth in payments to providers, but already, Medicare is considered “not too generous,” compared with private payers, since it pays on average only about 80% of the private rate. “[Payment restraint] is clearly not going to happen,” he said.

The third option is to make beneficiaries pay more for care in the form of higher premiums, deductibles, and cost sharing.

“Some people think that will cause beneficiaries to purchase more rationally and cut out low-value services, but we have to remember, the vast bulk of spending is on individuals who are very sick, have many chronic conditions, and aren't in a position to comparison-shop,” he said. “Moreover, the services that they're purchasing are extremely complex and confusing, and providers play a very significant role in determining the demand for and type of services received by beneficiaries.

“Before we bet the ranch on this approach,” he continued, “we're going to have to see what happens to spending patterns among the under-65 population as they are faced with high-deductible plans, health savings accounts, consumer-driven health plans, and other approaches to incentivize them to purchase more rationally. If this proves to be a successful approach for the under-65 population, one can see it gradually angling into the bag of tools that Medicare has.”

However, Dr. Reischauer noted, the potential for shifting more costs onto beneficiaries is limited, “because they already spend a considerable amount of their incomes on Medicare cost-sharing of one sort or another. By 2025, the average 65-year-old Medicare beneficiary will be paying more than the size of their Social Security check in cost-sharing and deductibles.”

A fourth approach is to restructure Medicare in ways to generate competition among providers, Dr. Reischauer said. This would mean emphasizing technologies that improve efficiency, such as electronic health records and electronic prescribing. It also would involve decreasing the volume of unneeded services being provided.

Gail Wilensky, a former administrator of the Centers for Medicare and Medicaid Services who is now a senior fellow at Project HOPE, in Bethesda, Md., expressed disappointment that Congress did not do more to address the issue of rising costs when it passed the Medicare Modernization Act of 2003.

That law “is a good example of eating dessert first,” she said. “There was an opportunity to try and slow down spending in a significant way while a new benefit was being introduced, but primarily, what [the law] does is provide a new benefit and some additional payments to providers of services, but not very much in terms of trying to restructure Medicare for the future.”

One little-known provision of the law does attempt to address the cost issue, she added. “Starting in 2007, Part B will be much more related to income. The subsidy will start declining significantly for those with higher incomes. As the baby boomers begin to retire, some of them with higher incomes and assets, this is at least one opportunity” to help with the cost problem.

“A couple of weeks ago, [Rep.] Bill Thomas [R-Calif.] talked about the need to think about Social Security and Medicare together. Both represent transfers from the working population to the dependent, nonworking population. To begin thinking about this as a joint issue may allow us to make more sensible decisions,” she said.

For example, Americans should consider “how we can change both fiscal policies and cultural expectations so our whole concept of retirement begins to … reflect the increasing longevity and, for many individuals, the increased well-being and health status they have at age 65 relative to what 65 meant when Medicare was introduced in 1965,” she said. “We need to think about fiscal policies to encourage continued labor force participation for people at 65 and 70.”

WASHINGTON — Consumer-driven health care may be all the rage right now, but there's no single cure for the nation's ailing health care system, several experts said at a health care congress sponsored by the Wall Street Journal and CNBC.

“There are no silver bullets,” said Douglas Holtz-Eakin, Ph.D., director of the Congressional Budget Office (CBO). “There is no single item—technology, disease management, tort law—that is likely to prove to be the answer to aligning incentives, providing high-quality care at reasonable costs, and financing it in a way that's economically viable. More likely, we'll have a series of incremental changes” that will shore up the system.

“Rising health care costs represent the central domestic issue at this time,” Dr. Holtz-Eakin said. For example, over the next 50 years, if nothing is done, “the cost of Medicare and Medicaid will rise from 4% of the gross domestic product to 20%—the current size of the entire federal budget.”

Robert Reischauer, Ph.D., a former CBO director who is now president of the Urban Institute, noted that Medicare was a particular concern, since Medicare spending is expected to grow very rapidly over the next 10 years. He listed four possible solutions for the Medicare budget crisis.

The first possibility is to reduce the scope of coverage, but “that isn't a practical course of action,” he said. “All forces are moving in just the opposite direction.”

Another option is to restrain the growth in payments to providers, but already, Medicare is considered “not too generous,” compared with private payers, since it pays on average only about 80% of the private rate. “[Payment restraint] is clearly not going to happen,” he said.

The third option is to make beneficiaries pay more for care in the form of higher premiums, deductibles, and cost sharing.

“Some people think that will cause beneficiaries to purchase more rationally and cut out low-value services, but we have to remember, the vast bulk of spending is on individuals who are very sick, have many chronic conditions, and aren't in a position to comparison-shop,” he said. “Moreover, the services that they're purchasing are extremely complex and confusing, and providers play a very significant role in determining the demand for and type of services received by beneficiaries.

“Before we bet the ranch on this approach,” he continued, “we're going to have to see what happens to spending patterns among the under-65 population as they are faced with high-deductible plans, health savings accounts, consumer-driven health plans, and other approaches to incentivize them to purchase more rationally. If this proves to be a successful approach for the under-65 population, one can see it gradually angling into the bag of tools that Medicare has.”

However, Dr. Reischauer noted, the potential for shifting more costs onto beneficiaries is limited, “because they already spend a considerable amount of their incomes on Medicare cost-sharing of one sort or another. By 2025, the average 65-year-old Medicare beneficiary will be paying more than the size of their Social Security check in cost-sharing and deductibles.”

A fourth approach is to restructure Medicare in ways to generate competition among providers, Dr. Reischauer said. This would mean emphasizing technologies that improve efficiency, such as electronic health records and electronic prescribing. It also would involve decreasing the volume of unneeded services being provided.

Gail Wilensky, a former administrator of the Centers for Medicare and Medicaid Services who is now a senior fellow at Project HOPE, in Bethesda, Md., expressed disappointment that Congress did not do more to address the issue of rising costs when it passed the Medicare Modernization Act of 2003.

That law “is a good example of eating dessert first,” she said. “There was an opportunity to try and slow down spending in a significant way while a new benefit was being introduced, but primarily, what [the law] does is provide a new benefit and some additional payments to providers of services, but not very much in terms of trying to restructure Medicare for the future.”

One little-known provision of the law does attempt to address the cost issue, she added. “Starting in 2007, Part B will be much more related to income. The subsidy will start declining significantly for those with higher incomes. As the baby boomers begin to retire, some of them with higher incomes and assets, this is at least one opportunity” to help with the cost problem.

“A couple of weeks ago, [Rep.] Bill Thomas [R-Calif.] talked about the need to think about Social Security and Medicare together. Both represent transfers from the working population to the dependent, nonworking population. To begin thinking about this as a joint issue may allow us to make more sensible decisions,” she said.

For example, Americans should consider “how we can change both fiscal policies and cultural expectations so our whole concept of retirement begins to … reflect the increasing longevity and, for many individuals, the increased well-being and health status they have at age 65 relative to what 65 meant when Medicare was introduced in 1965,” she said. “We need to think about fiscal policies to encourage continued labor force participation for people at 65 and 70.”

WASHINGTON — Consumer-driven health care may be all the rage right now, but there's no single cure for the nation's ailing health care system, several experts said at a health care congress sponsored by the Wall Street Journal and CNBC.

“There are no silver bullets,” said Douglas Holtz-Eakin, Ph.D., director of the Congressional Budget Office (CBO). “There is no single item—technology, disease management, tort law—that is likely to prove to be the answer to aligning incentives, providing high-quality care at reasonable costs, and financing it in a way that's economically viable. More likely, we'll have a series of incremental changes” that will shore up the system.

“Rising health care costs represent the central domestic issue at this time,” Dr. Holtz-Eakin said. For example, over the next 50 years, if nothing is done, “the cost of Medicare and Medicaid will rise from 4% of the gross domestic product to 20%—the current size of the entire federal budget.”

Robert Reischauer, Ph.D., a former CBO director who is now president of the Urban Institute, noted that Medicare was a particular concern, since Medicare spending is expected to grow very rapidly over the next 10 years. He listed four possible solutions for the Medicare budget crisis.

The first possibility is to reduce the scope of coverage, but “that isn't a practical course of action,” he said. “All forces are moving in just the opposite direction.”

Another option is to restrain the growth in payments to providers, but already, Medicare is considered “not too generous,” compared with private payers, since it pays on average only about 80% of the private rate. “[Payment restraint] is clearly not going to happen,” he said.

The third option is to make beneficiaries pay more for care in the form of higher premiums, deductibles, and cost sharing.

“Some people think that will cause beneficiaries to purchase more rationally and cut out low-value services, but we have to remember, the vast bulk of spending is on individuals who are very sick, have many chronic conditions, and aren't in a position to comparison-shop,” he said. “Moreover, the services that they're purchasing are extremely complex and confusing, and providers play a very significant role in determining the demand for and type of services received by beneficiaries.

“Before we bet the ranch on this approach,” he continued, “we're going to have to see what happens to spending patterns among the under-65 population as they are faced with high-deductible plans, health savings accounts, consumer-driven health plans, and other approaches to incentivize them to purchase more rationally. If this proves to be a successful approach for the under-65 population, one can see it gradually angling into the bag of tools that Medicare has.”

However, Dr. Reischauer noted, the potential for shifting more costs onto beneficiaries is limited, “because they already spend a considerable amount of their incomes on Medicare cost-sharing of one sort or another. By 2025, the average 65-year-old Medicare beneficiary will be paying more than the size of their Social Security check in cost-sharing and deductibles.”

A fourth approach is to restructure Medicare in ways to generate competition among providers, Dr. Reischauer said. This would mean emphasizing technologies that improve efficiency, such as electronic health records and electronic prescribing. It also would involve decreasing the volume of unneeded services being provided.

Gail Wilensky, a former administrator of the Centers for Medicare and Medicaid Services who is now a senior fellow at Project HOPE, in Bethesda, Md., expressed disappointment that Congress did not do more to address the issue of rising costs when it passed the Medicare Modernization Act of 2003.

That law “is a good example of eating dessert first,” she said. “There was an opportunity to try and slow down spending in a significant way while a new benefit was being introduced, but primarily, what [the law] does is provide a new benefit and some additional payments to providers of services, but not very much in terms of trying to restructure Medicare for the future.”

One little-known provision of the law does attempt to address the cost issue, she added. “Starting in 2007, Part B will be much more related to income. The subsidy will start declining significantly for those with higher incomes. As the baby boomers begin to retire, some of them with higher incomes and assets, this is at least one opportunity” to help with the cost problem.

“A couple of weeks ago, [Rep.] Bill Thomas [R-Calif.] talked about the need to think about Social Security and Medicare together. Both represent transfers from the working population to the dependent, nonworking population. To begin thinking about this as a joint issue may allow us to make more sensible decisions,” she said.

For example, Americans should consider “how we can change both fiscal policies and cultural expectations so our whole concept of retirement begins to … reflect the increasing longevity and, for many individuals, the increased well-being and health status they have at age 65 relative to what 65 meant when Medicare was introduced in 1965,” she said. “We need to think about fiscal policies to encourage continued labor force participation for people at 65 and 70.”

WASHINGTON — Congress is considering giving the Food and Drug Administration more authority over the pharmaceutical companies it deals with, but some legislators are warning against doing too much too fast.

“Changes to drug safety … must be carefully considered to make sure they don't unduly impact patient access,” Sen. Mike Enzi (R-Wyo.), chair of the Senate Health, Education, Labor, and Pensions Committee, said at a hearing on FDA oversight. “Congress needs to engage in strong oversight to maintain public confidence in the FDA.”

Sandra Kweder, M.D., deputy director of the Office of New Drugs at the FDA's Center for Drug Evaluation and Research, told the Senate committee that in order to ensure drug safety, it would be helpful if the FDA had more clout. She noted that it took a lot of back-and-forth haggling just to get some earlier warnings added to the label.

“The most important lapse [with the safety concerns surrounding Vioxx] was the delay it took to get the information into the labeling; it took over a year,” she said.

The committee's ranking member, Sen. Edward Kennedy (D-Mass.), also spoke in favor of giving the agency greater labeling authority. “The FDA needs clear authority to require relabeling of a drug after approval once a risk is found,” he said. “Negotiations with the drug company should never delay [that].”

Some observers said that although giving the agency more authority over label changes is a good idea, it only goes so far. “We all know product labeling does not change provider behavior very much,” said Arthur Levin, director of the Center for Medical Consumers in New York and the consumer representative on the FDA's Drug Safety and Risk Management advisory committee. Even if FDA does get more labeling authority, “we shouldn't count on it protecting the public from harm,” Mr. Levin said at a teleconference announcing the release of a new survey on consumer attitudes toward the FDA.

The survey of 1,000 adults nationwide was performed by pollster Celinda Lake and sponsored by a coalition of consumer groups. The results showed that only 14% of respondents had a great deal of confidence in the agency's ability to ensure the safety of prescription drugs. And 48% of respondents believed the FDA was too influenced by the industries over which it has jurisdiction.

Another subject discussed at the Senate hearing was the secrecy of clinical trial data. “I'd like to emphasize the importance of open access to data from clinical trials, including negative trials and unpublished research,” said David Fassler, M.D., a child and adolescent psychiatrist in Burlington, Vt., who testified on behalf of the American Academy of Child and Adolescent Psychiatry and the American Psychiatric Association.

In 2004, when Dr. Fassler testified on the question of whether there was a link between selective serotonin reuptake inhibitors (SSRIs) and suicide, “there were only four studies in the published literature on [the use of] SSRIs in adolescents. But I later learned that there were 11 unpublished studies whose results had been submitted to FDA.”

WASHINGTON — Congress is considering giving the Food and Drug Administration more authority over the pharmaceutical companies it deals with, but some legislators are warning against doing too much too fast.

“Changes to drug safety … must be carefully considered to make sure they don't unduly impact patient access,” Sen. Mike Enzi (R-Wyo.), chair of the Senate Health, Education, Labor, and Pensions Committee, said at a hearing on FDA oversight. “Congress needs to engage in strong oversight to maintain public confidence in the FDA.”

Sandra Kweder, M.D., deputy director of the Office of New Drugs at the FDA's Center for Drug Evaluation and Research, told the Senate committee that in order to ensure drug safety, it would be helpful if the FDA had more clout. She noted that it took a lot of back-and-forth haggling just to get some earlier warnings added to the label.

“The most important lapse [with the safety concerns surrounding Vioxx] was the delay it took to get the information into the labeling; it took over a year,” she said.

The committee's ranking member, Sen. Edward Kennedy (D-Mass.), also spoke in favor of giving the agency greater labeling authority. “The FDA needs clear authority to require relabeling of a drug after approval once a risk is found,” he said. “Negotiations with the drug company should never delay [that].”

Some observers said that although giving the agency more authority over label changes is a good idea, it only goes so far. “We all know product labeling does not change provider behavior very much,” said Arthur Levin, director of the Center for Medical Consumers in New York and the consumer representative on the FDA's Drug Safety and Risk Management advisory committee. Even if FDA does get more labeling authority, “we shouldn't count on it protecting the public from harm,” Mr. Levin said at a teleconference announcing the release of a new survey on consumer attitudes toward the FDA.

The survey of 1,000 adults nationwide was performed by pollster Celinda Lake and sponsored by a coalition of consumer groups. The results showed that only 14% of respondents had a great deal of confidence in the agency's ability to ensure the safety of prescription drugs. And 48% of respondents believed the FDA was too influenced by the industries over which it has jurisdiction.

Another subject discussed at the Senate hearing was the secrecy of clinical trial data. “I'd like to emphasize the importance of open access to data from clinical trials, including negative trials and unpublished research,” said David Fassler, M.D., a child and adolescent psychiatrist in Burlington, Vt., who testified on behalf of the American Academy of Child and Adolescent Psychiatry and the American Psychiatric Association.

In 2004, when Dr. Fassler testified on the question of whether there was a link between selective serotonin reuptake inhibitors (SSRIs) and suicide, “there were only four studies in the published literature on [the use of] SSRIs in adolescents. But I later learned that there were 11 unpublished studies whose results had been submitted to FDA.”

WASHINGTON — Congress is considering giving the Food and Drug Administration more authority over the pharmaceutical companies it deals with, but some legislators are warning against doing too much too fast.

“Changes to drug safety … must be carefully considered to make sure they don't unduly impact patient access,” Sen. Mike Enzi (R-Wyo.), chair of the Senate Health, Education, Labor, and Pensions Committee, said at a hearing on FDA oversight. “Congress needs to engage in strong oversight to maintain public confidence in the FDA.”

Sandra Kweder, M.D., deputy director of the Office of New Drugs at the FDA's Center for Drug Evaluation and Research, told the Senate committee that in order to ensure drug safety, it would be helpful if the FDA had more clout. She noted that it took a lot of back-and-forth haggling just to get some earlier warnings added to the label.

“The most important lapse [with the safety concerns surrounding Vioxx] was the delay it took to get the information into the labeling; it took over a year,” she said.

The committee's ranking member, Sen. Edward Kennedy (D-Mass.), also spoke in favor of giving the agency greater labeling authority. “The FDA needs clear authority to require relabeling of a drug after approval once a risk is found,” he said. “Negotiations with the drug company should never delay [that].”

Some observers said that although giving the agency more authority over label changes is a good idea, it only goes so far. “We all know product labeling does not change provider behavior very much,” said Arthur Levin, director of the Center for Medical Consumers in New York and the consumer representative on the FDA's Drug Safety and Risk Management advisory committee. Even if FDA does get more labeling authority, “we shouldn't count on it protecting the public from harm,” Mr. Levin said at a teleconference announcing the release of a new survey on consumer attitudes toward the FDA.

The survey of 1,000 adults nationwide was performed by pollster Celinda Lake and sponsored by a coalition of consumer groups. The results showed that only 14% of respondents had a great deal of confidence in the agency's ability to ensure the safety of prescription drugs. And 48% of respondents believed the FDA was too influenced by the industries over which it has jurisdiction.

Another subject discussed at the Senate hearing was the secrecy of clinical trial data. “I'd like to emphasize the importance of open access to data from clinical trials, including negative trials and unpublished research,” said David Fassler, M.D., a child and adolescent psychiatrist in Burlington, Vt., who testified on behalf of the American Academy of Child and Adolescent Psychiatry and the American Psychiatric Association.

In 2004, when Dr. Fassler testified on the question of whether there was a link between selective serotonin reuptake inhibitors (SSRIs) and suicide, “there were only four studies in the published literature on [the use of] SSRIs in adolescents. But I later learned that there were 11 unpublished studies whose results had been submitted to FDA.”

WASHINGTON — Despite their growing popularity, health savings accounts are not a good solution to the problem of rising health care costs, at least not for California state employees and retirees, Fred Buenrostro said at a health care congress sponsored by the Wall Street Journal and CNBC.

Mr. Buenrostro is chief executive officer at the California Public Employees' Retirement System (CalPERS), the second largest health care purchaser in the country. CalPERS, based in Sacramento, provides health benefits to more than 1.2 million employees, retirees, and family members.

In California, out-of-pocket health care premiums have nearly tripled in 5 years, and Gov. Arnold Schwarzenegger (R) is seeking to cut the amount of premium assistance the state gives to employees and retirees. So “CalPERS, like other employers, is hearing the call of consumer-driven health care,” including health savings accounts, Mr. Buenrostro said.

“We are resisting it because we don't want our highway workers, our police officers, our firefighters, our office workers to switch from our defined benefits health care model to a defined contribution model. We oppose putting our members at risk in such a complex, broken market,” he said.

Under a defined benefit plan like those that CalPERS offers, employers agree to pay for a particular level of benefits, no matter what the cost of the plan is. But under a defined contribution plan, the employer pays only a certain amount toward the cost of an insurance policy; any additional costs must be paid by the enrollee.

So CalPERS is trying other ways to cut health care costs. One technique is to avoid doing business with providers that the plan perceives to be too high cost. “Two years ago, we dropped two big HMO partners because their prices went over the top,” Mr. Buenrostro said.

The plan is also using generic drugs in 95% of cases, and giving members incentives to buy mail-order drugs. CalPERS has extended the length of its PPO contracts to improve its negotiating position, and is encouraging members to use “centers of excellence” for various procedures.

CalPERS also is talking with other purchasers about price inequities of health care in local markets, and plans to convene a conference of purchasers on this issue later in the year, Mr. Buenrostro said.

One big part of controlling CalPERS' costs has been getting the best price for hospital services. Between 2001 and 2003, hospital prices rose 60%, which was “just unaffordable,” he said. CalPERS partnered with California Blue Shield to do an analysis of the costs.

“Blue Shield came up with what was then a shocking discovery: In many cases there was no correlation between price and quality,” he continued. “I thought they were kidding.” For example, they found that the cost of chemotherapy could range from $135,000 to $300,000.

As a result of the analysis, CalPERS notified 38 hospitals and 17 physician practices that they were in danger of being dropped from CalPERS' provider network unless they dropped their costs and agreed to undergo performance assessments. The proposed change would have saved the plan $36 million in the first year and $50 million for the next few years.

After negotiations with the hospitals and scrutiny from the state insurance department, CalPERS ended up dropping 24 hospitals and several physician practices as of January, forcing 32,000 members to switch their primary care physicians. Although the move resulted in complaints from members as well as the California legislature, Mr. Buenrostro has no regrets.

“It will save tens of millions of dollars for our members and the taxpayers [who pay our salaries], and the decision helped us keep our HMO and PPO premium increases for members under 65 at 9.9% without any takeaways or any increases in copays or deductibles,” he said. “We're pretty proud of that.”

WASHINGTON — Despite their growing popularity, health savings accounts are not a good solution to the problem of rising health care costs, at least not for California state employees and retirees, Fred Buenrostro said at a health care congress sponsored by the Wall Street Journal and CNBC.

Mr. Buenrostro is chief executive officer at the California Public Employees' Retirement System (CalPERS), the second largest health care purchaser in the country. CalPERS, based in Sacramento, provides health benefits to more than 1.2 million employees, retirees, and family members.

In California, out-of-pocket health care premiums have nearly tripled in 5 years, and Gov. Arnold Schwarzenegger (R) is seeking to cut the amount of premium assistance the state gives to employees and retirees. So “CalPERS, like other employers, is hearing the call of consumer-driven health care,” including health savings accounts, Mr. Buenrostro said.

“We are resisting it because we don't want our highway workers, our police officers, our firefighters, our office workers to switch from our defined benefits health care model to a defined contribution model. We oppose putting our members at risk in such a complex, broken market,” he said.

Under a defined benefit plan like those that CalPERS offers, employers agree to pay for a particular level of benefits, no matter what the cost of the plan is. But under a defined contribution plan, the employer pays only a certain amount toward the cost of an insurance policy; any additional costs must be paid by the enrollee.

So CalPERS is trying other ways to cut health care costs. One technique is to avoid doing business with providers that the plan perceives to be too high cost. “Two years ago, we dropped two big HMO partners because their prices went over the top,” Mr. Buenrostro said.

The plan is also using generic drugs in 95% of cases, and giving members incentives to buy mail-order drugs. CalPERS has extended the length of its PPO contracts to improve its negotiating position, and is encouraging members to use “centers of excellence” for various procedures.

CalPERS also is talking with other purchasers about price inequities of health care in local markets, and plans to convene a conference of purchasers on this issue later in the year, Mr. Buenrostro said.

One big part of controlling CalPERS' costs has been getting the best price for hospital services. Between 2001 and 2003, hospital prices rose 60%, which was “just unaffordable,” he said. CalPERS partnered with California Blue Shield to do an analysis of the costs.

“Blue Shield came up with what was then a shocking discovery: In many cases there was no correlation between price and quality,” he continued. “I thought they were kidding.” For example, they found that the cost of chemotherapy could range from $135,000 to $300,000.

As a result of the analysis, CalPERS notified 38 hospitals and 17 physician practices that they were in danger of being dropped from CalPERS' provider network unless they dropped their costs and agreed to undergo performance assessments. The proposed change would have saved the plan $36 million in the first year and $50 million for the next few years.

After negotiations with the hospitals and scrutiny from the state insurance department, CalPERS ended up dropping 24 hospitals and several physician practices as of January, forcing 32,000 members to switch their primary care physicians. Although the move resulted in complaints from members as well as the California legislature, Mr. Buenrostro has no regrets.

“It will save tens of millions of dollars for our members and the taxpayers [who pay our salaries], and the decision helped us keep our HMO and PPO premium increases for members under 65 at 9.9% without any takeaways or any increases in copays or deductibles,” he said. “We're pretty proud of that.”

WASHINGTON — Despite their growing popularity, health savings accounts are not a good solution to the problem of rising health care costs, at least not for California state employees and retirees, Fred Buenrostro said at a health care congress sponsored by the Wall Street Journal and CNBC.

Mr. Buenrostro is chief executive officer at the California Public Employees' Retirement System (CalPERS), the second largest health care purchaser in the country. CalPERS, based in Sacramento, provides health benefits to more than 1.2 million employees, retirees, and family members.

In California, out-of-pocket health care premiums have nearly tripled in 5 years, and Gov. Arnold Schwarzenegger (R) is seeking to cut the amount of premium assistance the state gives to employees and retirees. So “CalPERS, like other employers, is hearing the call of consumer-driven health care,” including health savings accounts, Mr. Buenrostro said.

“We are resisting it because we don't want our highway workers, our police officers, our firefighters, our office workers to switch from our defined benefits health care model to a defined contribution model. We oppose putting our members at risk in such a complex, broken market,” he said.

Under a defined benefit plan like those that CalPERS offers, employers agree to pay for a particular level of benefits, no matter what the cost of the plan is. But under a defined contribution plan, the employer pays only a certain amount toward the cost of an insurance policy; any additional costs must be paid by the enrollee.

So CalPERS is trying other ways to cut health care costs. One technique is to avoid doing business with providers that the plan perceives to be too high cost. “Two years ago, we dropped two big HMO partners because their prices went over the top,” Mr. Buenrostro said.

The plan is also using generic drugs in 95% of cases, and giving members incentives to buy mail-order drugs. CalPERS has extended the length of its PPO contracts to improve its negotiating position, and is encouraging members to use “centers of excellence” for various procedures.

CalPERS also is talking with other purchasers about price inequities of health care in local markets, and plans to convene a conference of purchasers on this issue later in the year, Mr. Buenrostro said.

One big part of controlling CalPERS' costs has been getting the best price for hospital services. Between 2001 and 2003, hospital prices rose 60%, which was “just unaffordable,” he said. CalPERS partnered with California Blue Shield to do an analysis of the costs.

“Blue Shield came up with what was then a shocking discovery: In many cases there was no correlation between price and quality,” he continued. “I thought they were kidding.” For example, they found that the cost of chemotherapy could range from $135,000 to $300,000.

As a result of the analysis, CalPERS notified 38 hospitals and 17 physician practices that they were in danger of being dropped from CalPERS' provider network unless they dropped their costs and agreed to undergo performance assessments. The proposed change would have saved the plan $36 million in the first year and $50 million for the next few years.

After negotiations with the hospitals and scrutiny from the state insurance department, CalPERS ended up dropping 24 hospitals and several physician practices as of January, forcing 32,000 members to switch their primary care physicians. Although the move resulted in complaints from members as well as the California legislature, Mr. Buenrostro has no regrets.

“It will save tens of millions of dollars for our members and the taxpayers [who pay our salaries], and the decision helped us keep our HMO and PPO premium increases for members under 65 at 9.9% without any takeaways or any increases in copays or deductibles,” he said. “We're pretty proud of that.”

WASHINGTON — Medicare providers in California, Florida, and New York, beware: Someone may be watching you.

This month, the Centers for Medicare and Medicaid Services (CMS) starts its recovery audit demonstration project, a three-state experiment using outside contractors to spot Medicare overpayments and underpayments.

“My understanding is that these are contractors who will look at Medicare claims and find claims which were inappropriately paid, and the monies recovered will mostly return to Medicare, but a percentage will be paid to the contractors,” William Rogers, M.D., director of CMS's Physician Regulatory Issues Team, said at a meeting of the Practicing Physicians Advisory Council (PPAC). Medicare “is going to see if it's a helpful addition to our current efforts to prevent fraud,” he said.

Members of PPAC, which advises Medicare on physician issues, wanted more information. “If it's going to become more widespread, I'd like to hear more about it,” said Robert L. Urata, M.D., a family physician in Juneau, Alaska. CMS officials told council members that more information would be forthcoming at a future meeting.

Dr. Urata isn't the only one with questions. The American College of Physicians is apprehensive about the project. “We are concerned that the financial incentive for the contractor is to find errors and to recoup money—that whole bounty hunter approach,” said Brett Baker, the ACP's director of regulatory affairs. “That may cause a lot of disruption to a lot of people who may not have billed in error but still have to go through a disruption for that decision to be made.”

According to the demonstration project's “statement of work,” contractors may look for both overpayments and underpayments, noncovered or incorrectly coded services, and duplicate services.

However, contractors are not to look for overpayments or underpayments that stem from miscoding of the evaluation and management service, for example, billing for a level 4 visit when the medical record only supports a level 3 visit). Instead, they are to look for incorrect payments arising from evaluation and management services that are not reasonable and necessary, and violations of Medicare's global surgery payment rules even in cases involving evaluation and management services.

Mr. Baker said ACP “appreciates the sensitivity to the complexity in selecting the level of service, since it's been demonstrated that informed and knowledgeable people can have differences of opinion on what is an appropriate level of service.”

He also praised CMS for the improvements it has made in its own auditing process. “Years ago, Medicare would look at a small number of claims and then extrapolate errors and say, 'You owe us $100,000,'” he said. “They have since improved that process.”

Now the agency conducts an analysis of physicians' billing profiles and looks for statistical outliers. Mr. Baker said the ACP is encouraging CMS to become more sophisticated in its analysis—for example, by looking at factors such as the number of hospitalizations a particular patient has had—to see whether there might be reasons for that bill to be outside the norm.

Mr. Baker said that physicians are also concerned that the pilot program may spread to other states. “We're in the process of pulling together information on the program, which will probably result in a letter to CMS saying, 'If it's the law to do this, we want you to implement this in as fair a way as possible.'”

The new program may be low risk to CMS, since it pays only if money is recovered, “but everyone has an incentive to avoid reverting back to what was a very antagonistic relationship between Medicare and the physician,” he added.

WASHINGTON — Medicare providers in California, Florida, and New York, beware: Someone may be watching you.

This month, the Centers for Medicare and Medicaid Services (CMS) starts its recovery audit demonstration project, a three-state experiment using outside contractors to spot Medicare overpayments and underpayments.

“My understanding is that these are contractors who will look at Medicare claims and find claims which were inappropriately paid, and the monies recovered will mostly return to Medicare, but a percentage will be paid to the contractors,” William Rogers, M.D., director of CMS's Physician Regulatory Issues Team, said at a meeting of the Practicing Physicians Advisory Council (PPAC). Medicare “is going to see if it's a helpful addition to our current efforts to prevent fraud,” he said.

Members of PPAC, which advises Medicare on physician issues, wanted more information. “If it's going to become more widespread, I'd like to hear more about it,” said Robert L. Urata, M.D., a family physician in Juneau, Alaska. CMS officials told council members that more information would be forthcoming at a future meeting.

Dr. Urata isn't the only one with questions. The American College of Physicians is apprehensive about the project. “We are concerned that the financial incentive for the contractor is to find errors and to recoup money—that whole bounty hunter approach,” said Brett Baker, the ACP's director of regulatory affairs. “That may cause a lot of disruption to a lot of people who may not have billed in error but still have to go through a disruption for that decision to be made.”

According to the demonstration project's “statement of work,” contractors may look for both overpayments and underpayments, noncovered or incorrectly coded services, and duplicate services.

However, contractors are not to look for overpayments or underpayments that stem from miscoding of the evaluation and management service, for example, billing for a level 4 visit when the medical record only supports a level 3 visit). Instead, they are to look for incorrect payments arising from evaluation and management services that are not reasonable and necessary, and violations of Medicare's global surgery payment rules even in cases involving evaluation and management services.

Mr. Baker said ACP “appreciates the sensitivity to the complexity in selecting the level of service, since it's been demonstrated that informed and knowledgeable people can have differences of opinion on what is an appropriate level of service.”

He also praised CMS for the improvements it has made in its own auditing process. “Years ago, Medicare would look at a small number of claims and then extrapolate errors and say, 'You owe us $100,000,'” he said. “They have since improved that process.”

Now the agency conducts an analysis of physicians' billing profiles and looks for statistical outliers. Mr. Baker said the ACP is encouraging CMS to become more sophisticated in its analysis—for example, by looking at factors such as the number of hospitalizations a particular patient has had—to see whether there might be reasons for that bill to be outside the norm.

Mr. Baker said that physicians are also concerned that the pilot program may spread to other states. “We're in the process of pulling together information on the program, which will probably result in a letter to CMS saying, 'If it's the law to do this, we want you to implement this in as fair a way as possible.'”

The new program may be low risk to CMS, since it pays only if money is recovered, “but everyone has an incentive to avoid reverting back to what was a very antagonistic relationship between Medicare and the physician,” he added.

WASHINGTON — Medicare providers in California, Florida, and New York, beware: Someone may be watching you.

This month, the Centers for Medicare and Medicaid Services (CMS) starts its recovery audit demonstration project, a three-state experiment using outside contractors to spot Medicare overpayments and underpayments.

“My understanding is that these are contractors who will look at Medicare claims and find claims which were inappropriately paid, and the monies recovered will mostly return to Medicare, but a percentage will be paid to the contractors,” William Rogers, M.D., director of CMS's Physician Regulatory Issues Team, said at a meeting of the Practicing Physicians Advisory Council (PPAC). Medicare “is going to see if it's a helpful addition to our current efforts to prevent fraud,” he said.

Members of PPAC, which advises Medicare on physician issues, wanted more information. “If it's going to become more widespread, I'd like to hear more about it,” said Robert L. Urata, M.D., a family physician in Juneau, Alaska. CMS officials told council members that more information would be forthcoming at a future meeting.

Dr. Urata isn't the only one with questions. The American College of Physicians is apprehensive about the project. “We are concerned that the financial incentive for the contractor is to find errors and to recoup money—that whole bounty hunter approach,” said Brett Baker, the ACP's director of regulatory affairs. “That may cause a lot of disruption to a lot of people who may not have billed in error but still have to go through a disruption for that decision to be made.”

According to the demonstration project's “statement of work,” contractors may look for both overpayments and underpayments, noncovered or incorrectly coded services, and duplicate services.

However, contractors are not to look for overpayments or underpayments that stem from miscoding of the evaluation and management service, for example, billing for a level 4 visit when the medical record only supports a level 3 visit). Instead, they are to look for incorrect payments arising from evaluation and management services that are not reasonable and necessary, and violations of Medicare's global surgery payment rules even in cases involving evaluation and management services.

Mr. Baker said ACP “appreciates the sensitivity to the complexity in selecting the level of service, since it's been demonstrated that informed and knowledgeable people can have differences of opinion on what is an appropriate level of service.”

He also praised CMS for the improvements it has made in its own auditing process. “Years ago, Medicare would look at a small number of claims and then extrapolate errors and say, 'You owe us $100,000,'” he said. “They have since improved that process.”

Now the agency conducts an analysis of physicians' billing profiles and looks for statistical outliers. Mr. Baker said the ACP is encouraging CMS to become more sophisticated in its analysis—for example, by looking at factors such as the number of hospitalizations a particular patient has had—to see whether there might be reasons for that bill to be outside the norm.

Mr. Baker said that physicians are also concerned that the pilot program may spread to other states. “We're in the process of pulling together information on the program, which will probably result in a letter to CMS saying, 'If it's the law to do this, we want you to implement this in as fair a way as possible.'”

The new program may be low risk to CMS, since it pays only if money is recovered, “but everyone has an incentive to avoid reverting back to what was a very antagonistic relationship between Medicare and the physician,” he added.

WASHINGTON — The Centers for Medicare and Medicaid Services is jumping on the pay-for-performance bandwagon, but members of a physician advisory group warned CMS officials to be careful how they go about it.

“I'm only hoping that you'll structure this so that the quality indicators will be that you've [performed] certain processes, not necessarily the outcome” of them,” said Laura B. Powers, M.D., a Knoxville, Tenn. neurologist and member of the Practicing Physicians Advisory Council.

For example, outcomes are not good in terminal patients, Dr. Powers told this newspaper. “What outcome are they going to measure with an amyotrophic lateral sclerosis patient who is definitely going to die?” she said.

Instead, Medicare should assess whether the physician has followed appropriate standards of care for terminal patients.

Trent Haywood, M.D., acting deputy chief medical officer at the agency, said CMS has debated that very issue. “There has been a lot of discussion about what is the right thing [to measure]. We've always said that we think it's both,” he said. “We definitely want process measures … and the current financial structure is also easier for measuring processes, because that's the way we traditionally pay people.”

However, he added, “our goal is toward getting some evidence of outcomes. The process measures we normally collect are always related to outcomes.”

Council member Peter Grimm, D.O., a radiation oncologist in Seattle, said he believes that outcomes are the most important thing to measure. “You have to have outcomes as the bottom line,” said Dr. Grimm, who runs a quality assurance business involving 300 physicians. “I don't care how people get there. I just care that they get there.”

In his testimony to the council, Dr. Haywood outlined the various steps Medicare is taking to introduce pay for performance into physician reimbursement, including demonstration projects with hospitals and group practices. But Dr. Grimm still was not satisfied.

“One thing I didn't hear is how you verify this [performance] data,” he said. “You have to have a third party evaluate it.”

Geraldine O'Shea, D.O., an internist in Jackson, Calif., said that she is concerned about the impact of pay for performance on the doctor-patient relationship.

“Could it discourage physicians from caring for noncompliant patients?” she asked. “And how do these programs ensure the most up-to-date guidelines are being used? How can we get this out to know that this is the benchmark we're going to be measured at?”

There are different ways to address patient compliance, Dr. Haywood said. “If you lean more heavily on process measures, that takes care of part of that problem, because those process measures look at whether you prescribed something or did something. But because we still want to look at outcomes measurement, we also talk about ways in which you allow that patient to be excluded. You can have documentation saying, 'Provided counseling and patient refused.'”

Council member Barbara McAneney, M.D., an oncologist in Albuquerque, N.M., said she was concerned about the expense of the computer system that would be required for physicians to keep track of their outcomes data.

“The electronic medical record (EMR) that our practice purchased some years ago is now completely inadequate because it's not searchable for tumor stage, size, or treatment,” she said. “So I have been shopping for an EMR.

“The most recent quote I got for the EMR that can provide the functions I want … for a practice of nine physicians, they want $400,000,” she continued. “Well, my Medicare drug money just went away, the physician fee schedule is going down, and the [Medicare payment formula] is going to nail us 30% over the next 6 years. Where am I going to find $400,000 to put in an EMR that I can search and find all stage II breast cancer patients, and see whether they got their chemotherapy, and how they are doing, and by the way, how many of them are on Vioxx, and I have got to call them up and get them off it? All these kinds of issues are really going to have to be addressed.”

Dr. Haywood agreed. “You're articulating some of the barriers we face as we continue to try to work through this process,” he said. “We've started to map out strategies to address some of those issues.” Right now the agency is discussing the idea of certifying EMR systems to help physicians decide which ones to purchase, he noted.

WASHINGTON — The Centers for Medicare and Medicaid Services is jumping on the pay-for-performance bandwagon, but members of a physician advisory group warned CMS officials to be careful how they go about it.

“I'm only hoping that you'll structure this so that the quality indicators will be that you've [performed] certain processes, not necessarily the outcome” of them,” said Laura B. Powers, M.D., a Knoxville, Tenn. neurologist and member of the Practicing Physicians Advisory Council.

For example, outcomes are not good in terminal patients, Dr. Powers told this newspaper. “What outcome are they going to measure with an amyotrophic lateral sclerosis patient who is definitely going to die?” she said.

Instead, Medicare should assess whether the physician has followed appropriate standards of care for terminal patients.

Trent Haywood, M.D., acting deputy chief medical officer at the agency, said CMS has debated that very issue. “There has been a lot of discussion about what is the right thing [to measure]. We've always said that we think it's both,” he said. “We definitely want process measures … and the current financial structure is also easier for measuring processes, because that's the way we traditionally pay people.”

However, he added, “our goal is toward getting some evidence of outcomes. The process measures we normally collect are always related to outcomes.”

Council member Peter Grimm, D.O., a radiation oncologist in Seattle, said he believes that outcomes are the most important thing to measure. “You have to have outcomes as the bottom line,” said Dr. Grimm, who runs a quality assurance business involving 300 physicians. “I don't care how people get there. I just care that they get there.”

In his testimony to the council, Dr. Haywood outlined the various steps Medicare is taking to introduce pay for performance into physician reimbursement, including demonstration projects with hospitals and group practices. But Dr. Grimm still was not satisfied.

“One thing I didn't hear is how you verify this [performance] data,” he said. “You have to have a third party evaluate it.”

Geraldine O'Shea, D.O., an internist in Jackson, Calif., said that she is concerned about the impact of pay for performance on the doctor-patient relationship.

“Could it discourage physicians from caring for noncompliant patients?” she asked. “And how do these programs ensure the most up-to-date guidelines are being used? How can we get this out to know that this is the benchmark we're going to be measured at?”

There are different ways to address patient compliance, Dr. Haywood said. “If you lean more heavily on process measures, that takes care of part of that problem, because those process measures look at whether you prescribed something or did something. But because we still want to look at outcomes measurement, we also talk about ways in which you allow that patient to be excluded. You can have documentation saying, 'Provided counseling and patient refused.'”

Council member Barbara McAneney, M.D., an oncologist in Albuquerque, N.M., said she was concerned about the expense of the computer system that would be required for physicians to keep track of their outcomes data.

“The electronic medical record (EMR) that our practice purchased some years ago is now completely inadequate because it's not searchable for tumor stage, size, or treatment,” she said. “So I have been shopping for an EMR.

“The most recent quote I got for the EMR that can provide the functions I want … for a practice of nine physicians, they want $400,000,” she continued. “Well, my Medicare drug money just went away, the physician fee schedule is going down, and the [Medicare payment formula] is going to nail us 30% over the next 6 years. Where am I going to find $400,000 to put in an EMR that I can search and find all stage II breast cancer patients, and see whether they got their chemotherapy, and how they are doing, and by the way, how many of them are on Vioxx, and I have got to call them up and get them off it? All these kinds of issues are really going to have to be addressed.”

Dr. Haywood agreed. “You're articulating some of the barriers we face as we continue to try to work through this process,” he said. “We've started to map out strategies to address some of those issues.” Right now the agency is discussing the idea of certifying EMR systems to help physicians decide which ones to purchase, he noted.

WASHINGTON — The Centers for Medicare and Medicaid Services is jumping on the pay-for-performance bandwagon, but members of a physician advisory group warned CMS officials to be careful how they go about it.

“I'm only hoping that you'll structure this so that the quality indicators will be that you've [performed] certain processes, not necessarily the outcome” of them,” said Laura B. Powers, M.D., a Knoxville, Tenn. neurologist and member of the Practicing Physicians Advisory Council.

For example, outcomes are not good in terminal patients, Dr. Powers told this newspaper. “What outcome are they going to measure with an amyotrophic lateral sclerosis patient who is definitely going to die?” she said.

Instead, Medicare should assess whether the physician has followed appropriate standards of care for terminal patients.

Trent Haywood, M.D., acting deputy chief medical officer at the agency, said CMS has debated that very issue. “There has been a lot of discussion about what is the right thing [to measure]. We've always said that we think it's both,” he said. “We definitely want process measures … and the current financial structure is also easier for measuring processes, because that's the way we traditionally pay people.”

However, he added, “our goal is toward getting some evidence of outcomes. The process measures we normally collect are always related to outcomes.”

Council member Peter Grimm, D.O., a radiation oncologist in Seattle, said he believes that outcomes are the most important thing to measure. “You have to have outcomes as the bottom line,” said Dr. Grimm, who runs a quality assurance business involving 300 physicians. “I don't care how people get there. I just care that they get there.”

In his testimony to the council, Dr. Haywood outlined the various steps Medicare is taking to introduce pay for performance into physician reimbursement, including demonstration projects with hospitals and group practices. But Dr. Grimm still was not satisfied.

“One thing I didn't hear is how you verify this [performance] data,” he said. “You have to have a third party evaluate it.”

Geraldine O'Shea, D.O., an internist in Jackson, Calif., said that she is concerned about the impact of pay for performance on the doctor-patient relationship.

“Could it discourage physicians from caring for noncompliant patients?” she asked. “And how do these programs ensure the most up-to-date guidelines are being used? How can we get this out to know that this is the benchmark we're going to be measured at?”

There are different ways to address patient compliance, Dr. Haywood said. “If you lean more heavily on process measures, that takes care of part of that problem, because those process measures look at whether you prescribed something or did something. But because we still want to look at outcomes measurement, we also talk about ways in which you allow that patient to be excluded. You can have documentation saying, 'Provided counseling and patient refused.'”

Council member Barbara McAneney, M.D., an oncologist in Albuquerque, N.M., said she was concerned about the expense of the computer system that would be required for physicians to keep track of their outcomes data.

“The electronic medical record (EMR) that our practice purchased some years ago is now completely inadequate because it's not searchable for tumor stage, size, or treatment,” she said. “So I have been shopping for an EMR.

“The most recent quote I got for the EMR that can provide the functions I want … for a practice of nine physicians, they want $400,000,” she continued. “Well, my Medicare drug money just went away, the physician fee schedule is going down, and the [Medicare payment formula] is going to nail us 30% over the next 6 years. Where am I going to find $400,000 to put in an EMR that I can search and find all stage II breast cancer patients, and see whether they got their chemotherapy, and how they are doing, and by the way, how many of them are on Vioxx, and I have got to call them up and get them off it? All these kinds of issues are really going to have to be addressed.”

Dr. Haywood agreed. “You're articulating some of the barriers we face as we continue to try to work through this process,” he said. “We've started to map out strategies to address some of those issues.” Right now the agency is discussing the idea of certifying EMR systems to help physicians decide which ones to purchase, he noted.

WASHINGTON — The Centers for Medicare and Medicaid Services is experimenting with pay-for-performance programs, and observers say it looks as if the agency is really serious about it this time.

“This is not the first time that CMS has come around saying they wanted to pay for performance,” Denis Cortese, M.D., said at a health care congress sponsored by the Wall Street Journal and CNBC. “It's the third time that we've been involved in that in 10 years. The other two faded away. This one looks real … and I think Congress is interested in seeing something happen. [But] whether they'll put additional money on the table to make it work has yet to be seen.”

Earlier at the same meeting, CMS administrator Mark McClellan, M.D., announced that the agency was implementing its pilot pay-for-performance project. Under the project, 10 large physician group practices will be rewarded by the agency for improving outcomes among Medicare beneficiaries.

The physicians will continue to be paid on a fee-for-service basis as usual, but CMS also will make additional payments based on quality and outcome measures for patients with chronic illnesses such as congestive heart failure, coronary artery disease, diabetes, and hypertension. The agency also will look at the practices' use of preventive services such as influenza and pneumococcal vaccinations, as well as the prevention of complications in patients with chronic illnesses.

Dr. McClellan emphasized that he was not suggesting that physician spending was a major cost problem for Medicare.

“Physicians account for a small fraction of total costs, but doctors have a lot of good ideas and they have the knowledge it takes to get more results for what we actually spend,” he said. “I think [pay for performance] can potentially save significant amounts of money. At the same time, we're also going to be paying attention to clinical quality, so for diabetic patients, we'll be looking at hemoglobin A1c levels and other well-validated measures of quality. Those will be included along with financial performance measures.”

Dr. Cortese, president and CEO of the Mayo Clinic, Rochester, Minn., expressed some skepticism about the way pay for performance will be implemented. “I noticed that performance was defined as reducing costs,” he said. “I was tempted to ask, 'What happens if the quality goes up and the cost goes up with it?' If the value rises higher than cost, are they really going to pay for it? I don't believe they will.”

Other groups also offered mixed reactions. Robert Doherty, senior vice president for governmental affairs and public policy for the American College of Physicians, said CMS should be commended on its efforts to test physician performance and provide a model to improve care of chronic disease.

The problem is that some of these demonstration projects are limited in scope, he said during a press briefing to release the ACP's 2005 policy framework. For example, the new physician group practice demonstration project “puts all of its eggs” in one basket by focusing solely on large group practices, he said.

ACP is advocating that Congress authorize a pilot test of a new model for improving the care of patients with chronic diseases in small and medium-sized practices, where patients with chronic diseases would be encouraged to select a physician as their medical “home.”

The Medicare Modernization Act of 2003 authorized a performance-based demonstration project for small physician practices, although the project is limited to just a few hundred practices in four states. “Expanding the program will give CMS a much larger universe of experience and evidence on how to tailor physician incentive programs to be most effective,” Mr. Doherty said.

Physicians are not the only recipients of Medicare funds to be affected by the move toward pay-for-performance programs. CMS also is changing to performance-based incentives for its claims processors, beginning in fiscal 2005. The agency also plans to reduce the number of processors from 51 to 23 and have all contractors processing both Part A and Part B claims.

“CMS will develop performance requirements and standards for Medicare administrative contractors through consultations with providers and beneficiaries, which will help ensure that the requirements produce desired results,” the agency said in a report on Medicare contracting reform submitted to Congress last month.

Jennifer Silverman, Associate Editor, Practice Trends, contributed to this report.

WASHINGTON — The Centers for Medicare and Medicaid Services is experimenting with pay-for-performance programs, and observers say it looks as if the agency is really serious about it this time.

“This is not the first time that CMS has come around saying they wanted to pay for performance,” Denis Cortese, M.D., said at a health care congress sponsored by the Wall Street Journal and CNBC. “It's the third time that we've been involved in that in 10 years. The other two faded away. This one looks real … and I think Congress is interested in seeing something happen. [But] whether they'll put additional money on the table to make it work has yet to be seen.”

Earlier at the same meeting, CMS administrator Mark McClellan, M.D., announced that the agency was implementing its pilot pay-for-performance project. Under the project, 10 large physician group practices will be rewarded by the agency for improving outcomes among Medicare beneficiaries.

The physicians will continue to be paid on a fee-for-service basis as usual, but CMS also will make additional payments based on quality and outcome measures for patients with chronic illnesses such as congestive heart failure, coronary artery disease, diabetes, and hypertension. The agency also will look at the practices' use of preventive services such as influenza and pneumococcal vaccinations, as well as the prevention of complications in patients with chronic illnesses.

Dr. McClellan emphasized that he was not suggesting that physician spending was a major cost problem for Medicare.

“Physicians account for a small fraction of total costs, but doctors have a lot of good ideas and they have the knowledge it takes to get more results for what we actually spend,” he said. “I think [pay for performance] can potentially save significant amounts of money. At the same time, we're also going to be paying attention to clinical quality, so for diabetic patients, we'll be looking at hemoglobin A1c levels and other well-validated measures of quality. Those will be included along with financial performance measures.”

Dr. Cortese, president and CEO of the Mayo Clinic, Rochester, Minn., expressed some skepticism about the way pay for performance will be implemented. “I noticed that performance was defined as reducing costs,” he said. “I was tempted to ask, 'What happens if the quality goes up and the cost goes up with it?' If the value rises higher than cost, are they really going to pay for it? I don't believe they will.”

Other groups also offered mixed reactions. Robert Doherty, senior vice president for governmental affairs and public policy for the American College of Physicians, said CMS should be commended on its efforts to test physician performance and provide a model to improve care of chronic disease.

The problem is that some of these demonstration projects are limited in scope, he said during a press briefing to release the ACP's 2005 policy framework. For example, the new physician group practice demonstration project “puts all of its eggs” in one basket by focusing solely on large group practices, he said.

ACP is advocating that Congress authorize a pilot test of a new model for improving the care of patients with chronic diseases in small and medium-sized practices, where patients with chronic diseases would be encouraged to select a physician as their medical “home.”

The Medicare Modernization Act of 2003 authorized a performance-based demonstration project for small physician practices, although the project is limited to just a few hundred practices in four states. “Expanding the program will give CMS a much larger universe of experience and evidence on how to tailor physician incentive programs to be most effective,” Mr. Doherty said.

Physicians are not the only recipients of Medicare funds to be affected by the move toward pay-for-performance programs. CMS also is changing to performance-based incentives for its claims processors, beginning in fiscal 2005. The agency also plans to reduce the number of processors from 51 to 23 and have all contractors processing both Part A and Part B claims.

“CMS will develop performance requirements and standards for Medicare administrative contractors through consultations with providers and beneficiaries, which will help ensure that the requirements produce desired results,” the agency said in a report on Medicare contracting reform submitted to Congress last month.

Jennifer Silverman, Associate Editor, Practice Trends, contributed to this report.

WASHINGTON — The Centers for Medicare and Medicaid Services is experimenting with pay-for-performance programs, and observers say it looks as if the agency is really serious about it this time.

“This is not the first time that CMS has come around saying they wanted to pay for performance,” Denis Cortese, M.D., said at a health care congress sponsored by the Wall Street Journal and CNBC. “It's the third time that we've been involved in that in 10 years. The other two faded away. This one looks real … and I think Congress is interested in seeing something happen. [But] whether they'll put additional money on the table to make it work has yet to be seen.”

Earlier at the same meeting, CMS administrator Mark McClellan, M.D., announced that the agency was implementing its pilot pay-for-performance project. Under the project, 10 large physician group practices will be rewarded by the agency for improving outcomes among Medicare beneficiaries.

The physicians will continue to be paid on a fee-for-service basis as usual, but CMS also will make additional payments based on quality and outcome measures for patients with chronic illnesses such as congestive heart failure, coronary artery disease, diabetes, and hypertension. The agency also will look at the practices' use of preventive services such as influenza and pneumococcal vaccinations, as well as the prevention of complications in patients with chronic illnesses.

Dr. McClellan emphasized that he was not suggesting that physician spending was a major cost problem for Medicare.

“Physicians account for a small fraction of total costs, but doctors have a lot of good ideas and they have the knowledge it takes to get more results for what we actually spend,” he said. “I think [pay for performance] can potentially save significant amounts of money. At the same time, we're also going to be paying attention to clinical quality, so for diabetic patients, we'll be looking at hemoglobin A1c levels and other well-validated measures of quality. Those will be included along with financial performance measures.”

Dr. Cortese, president and CEO of the Mayo Clinic, Rochester, Minn., expressed some skepticism about the way pay for performance will be implemented. “I noticed that performance was defined as reducing costs,” he said. “I was tempted to ask, 'What happens if the quality goes up and the cost goes up with it?' If the value rises higher than cost, are they really going to pay for it? I don't believe they will.”

Other groups also offered mixed reactions. Robert Doherty, senior vice president for governmental affairs and public policy for the American College of Physicians, said CMS should be commended on its efforts to test physician performance and provide a model to improve care of chronic disease.

The problem is that some of these demonstration projects are limited in scope, he said during a press briefing to release the ACP's 2005 policy framework. For example, the new physician group practice demonstration project “puts all of its eggs” in one basket by focusing solely on large group practices, he said.

ACP is advocating that Congress authorize a pilot test of a new model for improving the care of patients with chronic diseases in small and medium-sized practices, where patients with chronic diseases would be encouraged to select a physician as their medical “home.”

The Medicare Modernization Act of 2003 authorized a performance-based demonstration project for small physician practices, although the project is limited to just a few hundred practices in four states. “Expanding the program will give CMS a much larger universe of experience and evidence on how to tailor physician incentive programs to be most effective,” Mr. Doherty said.

Physicians are not the only recipients of Medicare funds to be affected by the move toward pay-for-performance programs. CMS also is changing to performance-based incentives for its claims processors, beginning in fiscal 2005. The agency also plans to reduce the number of processors from 51 to 23 and have all contractors processing both Part A and Part B claims.

“CMS will develop performance requirements and standards for Medicare administrative contractors through consultations with providers and beneficiaries, which will help ensure that the requirements produce desired results,” the agency said in a report on Medicare contracting reform submitted to Congress last month.

Jennifer Silverman, Associate Editor, Practice Trends, contributed to this report.