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Incentivizing health over fee-for-service

Can the CMS PQRS system encourage real change in physician quality of care?

In 2006, the Centers for Medicare and Medicaid Services started the Physician Quality Reporting System, or PQRS. PQRS operates on the premise that required reporting of specific delivery-of-care metrics will induce the necessary behavioral changes and infrastructural investment to better align delivery of care with evidence based guidelines. This system offers a unique opportunity to eligible physicians allowing them to compare their performance on a given measure to their peers in the market. In 2016, PQRS will move from carrot to stick as financial incentives for participation turn to penalties for those who choose not to report on selected measures appropriate to their practice.

Source: Waldo Jaquith (Flickr/CC)

Source: Waldo Jaquith (Flickr/CC)

At its core, PQRS is a reaction to a systemic flaw. Much like the Affordable Care Act is a reaction to decades of convoluted insurance pricing and coverage determinations, PQRS takes providers to task as more and more concerns about quality emerge and payers begin to ask what the high cost of care is actually returning. PQRS is a response to a system of health care delivery whose status quo has not been based on health per se, but on the treatment of illness with no incentive to prevent it. The result has been an industry with little accountability for the delivery of care and, subsequently, little incentive to change.

Enter quality reporting and its potential to realign care delivery with the production of health: PQRS tracks the behaviors physicians are able to control, but its ultimate goal to hold them accountable for the care they provide has been slower to unfold. Medicare is far from the only payer seeking provider attention to quality. Competing incentives coupled with a nearly two year delay between measurement year and pay rate adjustments make the influence of PQRS impossible to quantify.

The point is this: Those providers driven to improve the health of their patients will do so regardless of incentive or penalty. Those still resistant to change, or who do so based solely on short-term bottom line projections, will invest just enough to meet the imposed requirements. While PQRS may not directly change the behavior of providers, its true potential lies in its ability to differentiate between those seeking to improve health, and those seeking to maintain the status quo.


The U.S. health care system is in the midst of transforming from a fee-for-service system to a value-based system that delivers high quality and cost-effective care. Quality reporting programs and increasing transparency of performance are meant to encourage physicians and hospitals to invest in improving the delivery of care. In 2006, the Centers for Medicare & Medicaid Services implemented the Physician Quality Reporting System (PQRS). The PQRS is an incentive and penalty payment program for eligible professionals who report data on quality measures for covered professional services furnished to Medicare beneficiaries. The program gives eligible professionals the opportunity to assess the quality of care they are providing to their patients and compare their performance on a given measure with their peers. This article discusses the history of PQRS, the 2014 PQRS, and how  it affects other quality programs.

Koltov, MK and Damle, NS. Ann of Intern Med. 2014; E-publication. PMID: 24957469


Patrick Fitzgerald, MPH

Patrick Fitzgerald, MPH
About Patrick Fitzgerald, MPH

Mr. Fitzgerald currently works as an analyst for UCare, a Managed Care Organization serving Medicaid and Medicare recipients in Minnesota and western Wisconsin. Contact: Facebook | More Posts