Physicians told the GAO that incentives that come quickly work better.

Medicare program managers could get some good ideas for physician performance measurement and incentive programs from private insurers.

James Cosgrove, a director at the U.S. Government Accountability Office (GAO), makes that argument in a summary of results of a GAO look at private health insurers’ quality and efficiency incentive programs.

The GAO reviewed 12 physician incentive programs at nine carriers in response to a provision in the Middle Class Tax Relief and Job Creation Act of 2012. The drafters of the act told the GAO to give congressional leaders ideas about how the Medicare program can use physician incentives to improve the program.

In addition to talking to the insurers, GAO investigators talked to physician groups, state medical societies, and national physician organizations.

The GAO investigators found that the private incentive programs usually base incentive payments on the performance of physician groups rather than of individual physicians.

“Physician organizations favor this approach,” Cosgrove said.

Private insurers also tend to use nationally endorsed performance benchmarks, and both they and the physician groups said they would like to see someone develop a standardized set of performance benchmarks, Cosgrove said.

Private insurers tend to base incentive payments on physician groups’ success at meeting absolute performance standards, or a combination of meeting absolute standards and improving their performance, rather than basing payments on efforts to compare physicians with their peers, Cosgrove said.

Cosgrove noted that the private programs tend to win physicians’ support by sending the incentive payments out within seven months after the end of the performance period measured.

“Physician organizations stated that financial incentives should be distributed soon after the measurement period to have the greatest effect on performance,” Cosgrove said.

The Centers for Medicare & Medicaid Services (CMS) is in a tough position, because federal law requires it to let Medicare patients see any willing provider who is can meet Medicare program rules and will take Medicare reimbursement rates.

If CMS would develop an incentive pay strategy for solo practices and small group practices, that might help, but, before CMS can do that, it must develop a reliable method for measuring the performance of physicians in small group practices, Cosgrove said.

CMS has been rewarding physicians in solo practices and small groups for meeting performance standards but not for improving their performance, Cosgrove said.

“Until CMS provides incentives for improvement, it is likely that few physician groups that are not already high performers will opt to participate in its quality-tiering,” Cosgrove said.

Still another challenge is that CMS takes about a year to send out incentive payments, Cosgrove reported.

“This time lag between performance and payment adjustment may diminish the significance of the incentive to physicians,” he said.

The GAO is recommending that CMS consider rewarding physicians for performance improvement as well as for meeting absolute benchmarks, and also that it consider making more timely incentive payment adjustments. 

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