The Centers for Medicare & Medicaid Services has contracted with one of the largest for-profit government research and consulting firms in the world to create a pay-for-performance demonstration project for skilled nursing facilities, CMS administrator Mark McClellan disclosed in a letter to two House Republicans.

Besides the contract with Abt Associates, he detailed other specifics of a plan to create a pay-for-performance system for Medicare providers. For example, he offered information on the development of quality indicators that would be used as part of the incentive-based system. The letter was sent to House Ways and Means Committee Chair Bill Thomas (R-CA) and Rep. Nancy Johnson (R-CT.)

McClellan said he hopes to develop performance measures for specialties that account for about 90% of Medicare physician spending. Providers might need only a small increase in payment as an incentive to improve quality, he noted.