[Congressional Record Volume 145, Number 49 (Monday, April 12, 1999)]
[Extensions of Remarks]
[Page E604]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        PAYING DOCTORS FOR QUALITY: INTRODUCTION OF LEGISLATION

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                         Monday, April 12, 1999

  Mr. STARK. Mr. Speaker, I am today introducing legislation to reduce 
the ability of Medicare HMO's to use financial incentives to encourage 
doctors to deny care. Instead of letting HMO's just use the stick of 
payment denial, my bill encourages managed care plans to use the carrot 
of bonuses to improve health outcomes and provide more preventive care.
  As a result of legislation I first passed nearly 15 years ago, the 
Secretary of HHS has the authority to limit the amount that an HMO can 
place a doctor at financial risk if he or she orders tests for a 
patient, refers to specialists, or otherwise provides extra care. Using 
this authority, the Secretary has limited the amount that a doctor can 
be liable for such extra care to 25 percent of compensation.
  I have always thought that ``25 percent'' regulation provided too 
much power to HMO's to pressure doctors to deny care.
  Would you fly on an airline which withheld up to 25 percent of their 
mechanics' pay if they spent too much time checking out the airplane? 
No? Well, we allow HMO's to pay doctors that way. My bill reduces the 
25 percent amount to no more than 10 percent over a 3-year period.
  In recent years, there have been a number of studies and reports that 
suggest the 25 percent figure is too high. Other reports have suggested 
that we encourage the payment of HMO doctors for quality of care, for 
the extent they provide preventive care services, and on how well their 
patients like the care they receive. These seem like commonsense ideas. 
They are ideas basic to any service type industry. But unfortunately, 
it looks like we need legislation to move HCFA and the industry in this 
direction.
  I hope my legislation can be considered as we debate managed care 
reform proposals, both for Medicare patients and for the general 
public.
  Following are some examples of how the current payment incentives may 
be bad for our nation's health--and how they can be improved.


       In 1998, 57 percent of primary care physicians in managed-
     care organizations in California reported feeling pressured 
     to limit referrals. . . . From 1943 to 1985, the duration of 
     the average visit to a physician's office fell from 26 to 17 
     minutes. Among family practitioners, the average visit in 
     1985 lasted 14 minutes. Whether or not there have been large 
     reductions in the time physicians spend with patients, 75 
     percent of primary care physicians in managed-care practices 
     in California reported pressure to see more patients per 
     day.--From ``The American Health Care System,'' by Thomas 
     Bodenheimer, in The New England Journal of Medicine, February 
     18, 1999.

       In all capitation agreements, the amount of overall 
     financial risk or gain based on ``withholds'' and bonuses 
     should be small and should be structured to avoid unusually 
     intense conflicts of interest in individual clinical 
     decisions. . . . In a survey of managers of health 
     maintenance organizations, nearly half believed that 
     physicians' decisions regarding the ordering of tests, 
     referrals to specialists, and elective hospitalizations could 
     be noticeably affected at individual risk levels ranging from 
     5 to 15 percent of income [note, the HCFA regulation is 25 
     percent]. In keeping with these views, and in the absence 
     of empirical data, it seems reasonable to consider an 
     aggregate risk of more than 20 percent for an individual 
     physician--or even a group of physicians--as unacceptably 
     high. Moreover, physicians should not be at risk of losing 
     more money than is being withheld. Bonuses and 
     distributions from withheld surpluses should be paid out 
     in percentages of the targets achieved, in installments, 
     or in other ways to avoid the possibility that the entire 
     payment will depend on the health care costs of a few 
     patients at the end of the contract year.--``Ethical 
     Guidelines for Physician Compensation Based on 
     Capitation,'' from The New England Journal of Medicine, 
     September 3, 1998.

       Our results suggest that the goal of providing high-quality 
     care may be better approached by the use of limited financial 
     incentives based on the quality of care and patients' 
     satisfaction than incentives that reward physicians for 
     restricting access to specialty care or for squeezing in a 
     greater number of visits per day. Policies that emphasize the 
     former approach may enhance satisfaction with the U.S. health 
     care system on the part of both patients and their 
     physicians.--``Primary Care Physicians' Experience of 
     Financial Incentives in Managed-Care Systems,'' by Grumbach, 
     et. al., in The New England Journal of Medicine, November 19, 
     1998.

       . . . HMO managers believed that the impact of withhold 
     accounts, bonus payments, and risk pools are subject to 
     thresholds below which little or no effect is expected. For 
     example, more than 90 percent of respondents reported no 
     noticeable effect on the ordering behavior of physicians at 
     risk as individuals if the level of withheld funds is below 5 
     percent of total HMO payment. Conversely, most respondents 
     (nearly four-fifths) believed that there would be a 
     noticeable effect when withholding represents 5-30 percent of 
     total HMO payment. . . .''--``HMO Managers' Views On 
     Financial Incentives And Quality,'' by Hillman, et. al., in 
     Health Affairs, Winter 1991.


                                H.R. --

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. REDUCING THE MAXIMUM FINANCIAL RISK FOR PHYSICIANS 
                   PARTICIPATING IN MEDICARE-CHOICE PLANS.

       Section 1852(j)(4)(A) of the Social Security Act (42 U.S.C. 
     1395w-22(j)(4)(A)) is amended--
       (1) by redesignating clause (iii) as clause (iv); and
       (2) by inserting after clause (ii) the following new 
     clauses:
       ``(iii) The organization does not operate the plan in a 
     manner that places a physician or physician group at a 
     financial risk that exceeds 20 percent as of January 1, 2002, 
     15 percent as January 1, 2002, and 10 percent of January 1, 
     2003, of potential payments.
       ``(iv) Potential payments mean the maximum payments 
     possible to physicians or physician groups including payments 
     for services they furnish directly, and additional payments 
     based on use and costs of referral services, such as 
     withholds, bonuses, capitation, or any other compensation to 
     the Physician or physician group.
       ``(v) Potential payments do not include nuses and other 
     compensation that are based on the quality of care furnished, 
     improved outcomes preventive care rates, patient satisfaction 
     or committee participation.



     

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