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Volume performance standards: can they control growth in Medicare services?
1Department of Health Policy and Administration, School of Public Health, University of North Carolina, Chapel Hill 27514.
The Milbank Quarterly
|January 1, 1990
Summary
Congress implemented volume performance standards (VPSs) to control Medicare costs for physician services. This system may be more effective at the state level, requiring careful monitoring of utilization and physician practices.
Area of Science:
- Health Economics
- Public Health Policy
- Healthcare Management
Background:
- Previous cost-containment strategies for Medicare physician services lacked direct provider or consumer incentives, yielding suboptimal results.
- International cost-containment models, particularly from West Germany and Canada, suggest regional approaches may be more effective than national ones.
Purpose of the Study:
- To evaluate the potential effectiveness of volume performance standards (VPSs) for controlling Medicare physician service costs.
- To explore the optimal scope (state vs. national) for implementing VPSs.
- To identify key components for successful VPS implementation.
Main Methods:
- Analysis of the adopted volume performance standards (VPS) system by Congress for Medicare cost control.
- Review of international experiences (West Germany, Canada) with regional cost-containment mechanisms.
- Consideration of necessary components for VPS efficacy, including utilization pattern analysis and professional practice monitoring.
Main Results:
- Volume performance standards (VPSs) represent a shift towards collective incentives to manage Medicare physician service expenditures.
- Evidence suggests that a state-level implementation of VPSs may be more successful than a national approach.
- Effective VPS implementation necessitates diligent analysis of utilization trends and proactive monitoring of physician practices by professional organizations.
Conclusions:
- The volume performance standards (VPS) system offers a novel approach to Medicare cost containment through collective incentives.
- A state-based operational framework for VPS is recommended, drawing from international regional cost-control successes.
- Successful VPS implementation hinges on rigorous utilization analysis and the establishment of state-level practice guidelines by medical organizations.