Elder Law FAX The October 23, 2006, issue of Elder Law FAX, a free newsletter published every other Monday by the Elder Law Practice of Timothy L. Takacs. Medicare Experiment Seeks to Improve Physician Care for People with Chronic Illnesses Almost everyone knows that the 2003 Medicare law put into a place a new voluntary prescription drug benefit, often referred to as "Medicare Part D." Since then, the term "doughnut hole" has become known for more than just a breakfast confection.   A little known part of the 2003 Medicare law, however, are the demonstration projects that Congress required the U. S. Centers for Medicare & Medicaid Services (CMS), the federal agency that runs the Medicare program, to conduct. (CMS calls them "Medicare demonstrations.")   What is a "Demonstration Project"? Health care is big business in the United States, and change happens incrementally (if it happens at all). The single largest payor for health care in the United States is the federal government, mainly through the Medicare program. Because the government pays so much money for health care, it has a keen interest in getting its money's worth.   Even though CMS presumably has the ear of Congress, and could get legislation enacted that it wanted in order to save money and improve care of Medicare beneficiaries, it is not always so easy either to change the law or to determine what would be improvement. For that reason, CMS regularly conducts experiments involving a limited cohort of Medicare providers and beneficiaries.   Recently, Congress and CMS has been focused on what is called "pay for performance." In other words, there is a sense among policy makers that Medicare providers--hospitals, physicians, home health agencies, and others who provide health care to Medicare beneficiaries--ought not to be financially rewarded simply by conducting more procedures, scheduling more office visits, or ordering more tests. Rather, the government wants to pay for quality.   As a result of this interest in pay for performance, the federal government has been conducting Medicare demonstrations aimed at hospitals, physician groups, and disease management programs.   Earlier this month, CMS announced a new Medicare demonstration called the "Medicare Care Management Performance Demonstration." Doctors in small to medium sized practices who meet clinical performance measure standards will receive a bonus payment for managing the care of eligible Medicare beneficiaries. The demonstration will be implemented in California, Arkansas, Massachusetts and Utah.   "We intend to provide better financial support for quality care," said former CMS Administrator Mark B. McClellan. "Through this demonstration and the rest of our set of value-based payment demonstrations, we are finding better approaches to doing that than ever before.  This is another important step toward paying for what we really want:  better care at a lower cost, not simply the amount of care provided," Dr. McClellan said.   Approximately 800 physician practices in the four states will be recruited to participate in this three-year demonstration.  In order to be eligible to participate, physicians must be the main provider of primary care to at least 50 fee-for-service Medicare beneficiaries in a solo or small to medium-sized group practice.   Under this Medicare demonstration, physician groups will continue to be paid on a fee-for-service basis. Participating physicians will submit data annually on up to 26 quality measures related to the care of patients with diabetes, congestive heart failure, and coronary artery disease, as well as the provision of preventive health services such as immunizations and cancer screenings to high risk patients with a range of chronic diseases.   Based on their performance on the quality measures, practices will be eligible to earn an annual incentive of up to $10,000 per physician and up to $50,000 per practice year.   Included among the quality measures are the percentage of diabetic patients whose cholesterol is under control and who are getting appropriate foot and eye exams, the percentage of congestive heart failure and coronary artery disease patients receiving appropriate medication therapy, and the percentage of high risk patients with chronic diseases getting appropriate immunizations and cancer screenings.   More information on the CMS Medicare Care Management Performance Demonstration is available on the CMS Web site at http://www.cms.hhs.gov.