On August 14, the Centers for Medicare and Medicaid Services (CMS) reported that the Physician Group Practice (PGP) demonstration project under the value-based purchasing (VBP) initiative has yielded improved quality of care for patients with congestive heart failure, coronary artery disease and diabetes.

The PGP demonstration is the first pay-for-performance system for physicians under the Medicare program. In addition to improving outcomes for patients with chronic illnesses, the demonstration provided incentive payments to physicians for reducing CMS spending by $17.4 million. The demonstration project has been extended for another year, and will aid in the continued development of a VBP plan for all Medicare spending.

The goal of the VBP initiative is to tie Medicare payments to performance on health care costs and quality measures. VBP is part of CMS’ drive to transform Medicare from a passive payer to an active purchaser of higher quality, more efficient health care.

“We are paying for better outcomes and we are getting higher quality and more value for the Medicare dollar,” said Kerry Weems, acting administrator of CMS.

CMS has led the way in the development of a pay-for-performance system. This demonstration project, as well as many others under the VBP initiative, is being closely monitored by the private sector. Although the demonstration is not designed as a health information technology (IT) demonstration, the medical groups needed to use IT to support better management of their patients’ chronic diseases and to report their performance. NSBA supports the adoption of health IT and pay-for-performance initiatives as a means to lower heath care costs while improving quality of care.