PRACTICE RESOURCES > Regulation/AUA Positions, Letters, and Talking Points > Alliance of Specialty Medicine Testimony to House Ways & Means Committee on Pay-for-Performance Initiatives

Alliance of Specialty Medicine Testimony to House Ways & Means Committee on Pay-for-Performance Initiatives

House Committee on Ways and Means

Statement of the Alliance of Specialty Medicine

Submitted for the Record
to the Subcommittee on Health
of the House Committee on Ways and Means
March 15, 2005 Hearing on Measuring Physician Quality
and Efficiency of Care for Medicare Beneficiaries

The Alliance of Specialty Medicine is a coalition of 13 physician specialty societies representing over 200,000 specialty physicians. The Alliance's member specialty physician organizations are continually striving to offer the highest specialized quality care to all Medicare beneficiaries. However, with our physicians facing over 30 percent reductions in Medicare reimbursement from 2006 through 2013 compounded by exorbitant liability premium increases, many of these specialty physicians are reconsidering their Medicare participation status. Therefore, the Alliance believes that if Congress is to begin to explore alternative payment requirements – such as pay for performance - then the current unsustainable Medicare physician payment system needs to be fixed.

The Alliance represents 13 physician specialties which are all at varying stages of sophistication regarding pay-for-performance initiatives; therefore, we believe that the following points need to be considered:

Currently, through the use of demonstration projects, CMS is testing various aspects of pay-for-performance programs. However, there must be a transition time to address challenges and questions before pay-for-performance is incorporated fully into the Medicare physician fee schedule, as many physicians are simply not ready for this step. This transition should involve stabilization of the physician payment system first, before any pay for performance initiatives are implemented. Also, pay for performance initiatives can not be a replacement for the current physician payment system, or used as a physician volume control.

MedPAC recommendations

We would also like to address the Medicare Payment Advisory Commission’s (MedPAC) March 2005 recommendations on pay for performance in its Report to the Congress. Without addressing the significant flaws with the SGR and the predicted cuts of 31 percent over the next seven consecutive years, MedPAC instead recommends the implementation of quality improvement measures to encourage individual physicians to control unnecessary volume; for example, implementation of "resource use measurement," pay-for-performance programs, and the rapid adoption of health information technology (HIT) systems.

MedPAC recommends that these measures be implemented in a budget neutral scenario; specifically, by taking 1-2 percent from the physician payment pool and re-distributing those monies to those providers who participate in these quality improvement programs. Those who do not or can not participate in these programs will fund the "bonus" payments for those who can. MedPAC believes that "all physicians are ready" to participate in these pay-for-performance programs.

According to the report, MedPAC suggests that two types of measures are ready to be collected; 1) quality-enhancing functions and outcomes associated with information technology (IT) use, and 2) claims-based process measures. The report notes that CMS should begin collecting both structural and process measures, but only base rewards on the IT structural measures. The Alliance is very concerned with these recommendations, including MedPAC's perception that "all physicians are ready" to participate in these programs. We strongly disagree with this perception and maintain the position that all physicians are not ready.

According to the National Center for Health Statistics (2005), about 17 percent of physicians are using electronic health records in their practices, and the majority of these are group practices. However, more than 50 percent of America’s physicians are small practices with 5 or fewer physicians. With physicians facing steep reductions of 31 percent over the next seven years, it is totally unrealistic to expect that physicians would be able to invest in these expensive IT systems—especially small practices with one or two physicians. Further, without documented national standards for HIT systems in place yet, how can physicians reasonably invest in something that may become obsolete in only a few years?

In terms of claims-based process measures, the Alliance is concerned as to how physicians will be able to report the use of "claims-based process measures" on a CMS-1500 form or the electronic equivalent. What "coding system" exists that would allow providers to report these claims-based process measures? The only available "performance measures " set that are currently available for reporting on the CMS 1500 form are the American Medical Association’s (AMA) Current Procedural Terminology (CPT®) Category II codes—which include a little over a dozen performance measures—most of which do not cross all specialties.


Thank you for the opportunity to submit a statement for this hearing. Congress must rationally implement physician quality initiatives involving pay-for-performance and other untested programs, and the Alliance of Specialty Medicine looks forward to working with you to develop a transition plan that will insure fair reimbursement for physicians and continued beneficiary access to quality specialty healthcare.

Should you have any questions, please contact Nancey McCann, Chair of the Alliance’s Medicare Subcommittee, at 703-591-2220 or Gordon Wheeler, Chair of the Alliance of Specialty Medicine at (202) 728-0610.

Submitted by,

American Academy of Dermatology Association
American Association of Neurological Surgeons
American Association of Orthopaedic Surgeons
American College of Emergency Physicians
American College of Obstetricians and Gynecologists
American Gastroenterological Association
American Society of Cataract and Refractive Surgery
American Society for Therapeutic Radiology and Oncology
American Urological Association
Congress of Neurological Surgeons

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