The PQRI Catch-22

Oct. 1, 2007

The CMS 1.5 percent reimbursement may incentivize IT adoption, but will it do so equally, and is it enough?

Earlier this year, the Centers for Medicare and Medicaid Services (CMS) launched its Physician Quality Reporting Initiative (PQRI). Under PQRI, physicians participate in a voluntary quality-reporting program and become eligible to receive a 1.5 percent reimbursement of total allowed charges for Medicare physician fee schedule services. PQRI requires that physicians choose at least three out of a possible 74 measurement codes and report on up to 80 percent of their patients with these three codes. The idea is the better the reporting, the higher the quality of care. The 1.5 percent is the incentive package to get physicians to participate in this new initiative.

The CMS 1.5 percent reimbursement may incentivize IT adoption, but will it do so equally, and is it enough?

Earlier this year, the Centers for Medicare and Medicaid Services (CMS) launched its Physician Quality Reporting Initiative (PQRI). Under PQRI, physicians participate in a voluntary quality-reporting program and become eligible to receive a 1.5 percent reimbursement of total allowed charges for Medicare physician fee schedule services. PQRI requires that physicians choose at least three out of a possible 74 measurement codes and report on up to 80 percent of their patients with these three codes. The idea is the better the reporting, the higher the quality of care. The 1.5 percent is the incentive package to get physicians to participate in this new initiative.

On the surface, this appears to be a “win-win” proposition—the physician wins because they are able to receive what could potentially be a fairly substantial reimbursement, the patients win because they could conceivably receive better care because their physicians will be able to offer treatment based upon evidence that is founded along specific clinical guidelines. If we look deeper, however, another picture begins to emerge.

Historically, these types of programs have been slow to take hold. For example, in 2006, CMS launched the Physician Voluntary Reporting Program (PVRP). PVRP was similar to PQRI, but it did not have the financial incentive. This was one reason why physicians were slow to adopt PVRP, but another, and certainly one that will likely have a bearing on the success of PQRI, was the cost versus benefit of participating in this program.

It’s one year later, and, unfortunately for many practices, not much has changed. While it’s great to have the 1.5 percent reimbursement in place, the reality is that an overwhelming majority of physician practices may not find this to be incentive enough to adequately track and record the data that is necessary to satisfy PQRI requirements.

Perception Versus Reality
 As with many things related to healthcare, the perception of the benefits surrounding PQRI is one thing; the reality of embracing those benefits is another.

Take, for example, the situation surrounding electronic health records (EHR). While everyone from government to the media continues to extol the virtues of healthcare technology, the reality is that there is still a long way to go before EHRs become the norm for many practices. And while it’s not necessary to have an EHR in order to participate in PQRI, it’s certainly helpful, as EHRs provide a database that can easily be modified and culled for data and tools that ensure that coding is correct and submitted in a timely manner. Of note, however, is the fact that EHR adoption within the ambulatory care community is still hovering around 25 percent, according to “Health Information Technology in the United States: The Information Base for Progress,” October, 2006, Robert Wood Johnson Foundation and National Coordinator for Health Information Technology.

Those that have adopted EHR are typically physicians who feel they can make the investment. Many of these are larger practices and healthcare organizations. However, EHR adoption rates are still relatively low despite the fact that many physicians agree that EHR is a benefit. Given this, does PQRI, which is built upon specific and accurate patient data and offers a potentially small return on investment, stand a chance of succeeding with smaller physician practices, or, will hospitals and larger practices be the ones who primarily benefit from PQRI? In effect, will PQRI create a landscape where the “haves” are able to take advantage of PQRI over the “have nots?”

While it’s great to have the 1.5 percent reimbursement in place, the reality is that an overwhelming majority of physician practices may not find this to be incentive enough to adequately track and record the data that is necessary to satisfy PQRI requirements.

Many larger physician practices will benefit from PQRI because the 1.5 percent reimbursement incentive will likely have a positive impact on their bottom lines. It goes without saying that larger organizations tend to see a larger patient population, resulting in the potential for more revenue. For them, the 1.5 percent reimbursement could turn out to be something substantial. They will likely go through whatever extra effort it may take to correctly identify the right codes for the right patients and submit them with their Medicare claims. It is true that these practices will still face challenges as they begin to participate in PQRI. There will likely be a learning curve, and mistakes will undoubtedly be made. Many will find that their Medicare patient load simply isn’t large enough to justify the effort. Those that do participate, however, will likely see some revenue benefits, not to mention potentially helpful data analysis that will enable them to modify patient care.

For smaller practices, PQRI poses something of a catch-22. On the one hand, these are the practices that could stand to benefit the most from a reimbursement. While a potential bonus of, for example, $2,000 may not seem like a significant amount of money, it certainly would help to pay a decent amount of a month’s worth of expenses. On the other hand, these are the same practices that may feel that the cost simply outweighs the benefit. Cost can be measured in a number of ways, but particularly for physicians at smaller practices, who are used to doing things a certain way, it can mean having to really stop and think about how to code each patient. Is the patient I am seeing now a Medicare patient? Are they a Medicare patient with diabetes? How should I code that? These are the questions these physicians will need to be asking. Some may find such activities not worth the effort. As such, these smaller practices will not benefit from PQRI.

The Technology Catch-22
PQRI is not specific to practices using EHR—anyone with a practice management system can report. However, boiled down to its essence, the success of PQRI really does depend on a physician’s ability to capture data as a byproduct of a patient exam. Thus, an EHR, while not a necessity, can certainly help physicians more easily keep track of the appropriate codes for each patient. Many EHR systems will offer coding suggestions based upon a patient’s condition. For example, if a physician is using an EHR system that automatically tracks a particular aspect of a diabetic’s treatment, they will be able to easily find this information through the push of a button.

So, while PQRI doesn’t require use of an EHR, it can certainly help to have one, and, while it’s safe to say that most of the ambulatory care practices in North America would love to implement EHR, it’s also safe to say that many of these deem such an implementation to be cost prohibitive. If this is true, then no amount of incentive short of a double-digit percentage figure is going to aid in convincing those practices that are uninitiated to join the ranks of EHR implementers. Thus, we are presented with another Catch-22: The practices that could most benefit from PQRI and its incentive could very well use technology in order to succeed, but simply cannot afford to implement the technology that would allow them to do so.

Or Can They?
If physicians add up the amount of time they and their staffs spend compiling charts, searching for patient information, and getting back to patients with pertinent data, they are likely to be able to measure the time not in hours, but in days. Simple math says that such practices, many of which have one or two physicians and a small number of support staff, will not be able to grow much beyond the patient base they currently have. In such a case, it could be argued that they cannot afford not to institute EHR. However, the fact that this is a long-term investment with a potentially large short-term expenditure is still a deterrent. Institutions and organizations must do more.

The 1.5 percent PQRI incentive is a nice beginning, but that’s exactly what it must be—a beginning. No one yet knows what percentage is the right incentive that will encourage practices to put in the effort necessary to receive a PQRI reimbursement, or to embrace the technology that will help them to do so (which is, at heart, what CMS would like to see). Perhaps it’s 3 percent—perhaps 10. The point is that CMS should consider the 1.5 percent reimbursement a “test of the waters” over the next six months. By the beginning of 2008 it should be evident whether or not PQRI is going to truly set sail.

Further, the incentives cannot stop there. The government must continue to offer tangible incentives that make it easier for smaller practices to implement technology so that they may better take advantage of programs like PQRI. Recent months have seen the introduction of bills such as The Personalized Health Information Act, sponsored by U.S. Representative Patrick Kennedy, which provides financial incentives for physicians using EHR. Then there is the bi-partisan Wired for Health Care Quality Act of 2007, which seeks to improve patient care and reduce administrative costs through the use of technology. These types of programs, with government seals of approval, do help more physicians consider implementation of EHR, much like consumers have begun to turn to hybrid vehicles for long-term benefits.

If physicians add up the amount of time they and their staffs spend compiling charts, searching for patient information, and getting back to patients with pertinent data, they are likely to be able to measure the time not in hours, but in days.

Finally, vendors must also be held accountable. The healthcare technology market is immensely crowded, and can be overwhelming for physicians whose main goal is to care for their patients, not be IT managers. Vendors need to make things as easy as possible for these physicians. They must clearly explain the benefits of the technology and why physicians should (or should not) implement it. Customer care needs to be foremost; implementations must be as quick and painless as possible; and, vendors must be ready to respond to every question and need.

The cost versus benefit argument that is constantly being waged within the minds of physicians should also be considered. As such, pricing must be reasonable, and vendors should be willing to work with customers based upon their individual situations. First and foremost, the technology should be easy to use, but should also easily help physicians achieve their two biggest goals: Provide the highest quality patient care and be successful enough to continue to do so for years.

With PQRI, CMS has taken a step in the right direction. In order for it to be a significant step, however, others must also move forward. Only then will smaller practices be able to truly enjoy the benefits of this nascent yet promising program.

Paul Stinson is the senior vice president for product management at Sage Software Healthcare Inc. Contact him at [email protected].