Quality over Quantity

Efforts to transform physician reimbursement from fee-for-service to fee-for value fail, but change may be imminent.

After more sound and fury, lawmakers chose to delay what many perceive to be the inevitable. Rather than change the current Medicare system of reimbursing physicians, they essentially tabled the matter for another year.

In what had become an annual springtime ritual, doctors this spring were holding their breath, waiting to see if the federal government would drastically reduce Medicare reimbursement, grant yet another “stay of execution,” or make meaningful changes in the way doctors get paid. They’re off the hook…for now.

Such is the legacy of the Sustainable Growth Rate (SGR) formula, a method of physician reimbursement designed more than 15 years ago to control the cost of physicians’ services, but which most agree has outlived its usefulness – if it ever had any.

The big difference this year was that physicians held hope – at least for a time –– that the damnable formula would be thrown out once and for all, to be replaced by another, value-based system. Not surprisingly, given the political gridlock that characterizes today’s Washington, that didn’t happen.

But many in the industry believe that proposed legislation – even if tabled for now – could signal the future for physician reimbursement.

The legislation that was under consideration –– S. 2110, the “Medicare SGR Repeal and Beneficiary Access Improvement Act of 2014” (and related legislation, H.R. 4015) – would have done the following: 1) end and remove the SGR methodology; 2) freeze the annual update at 0.5 percent for 2014 through 2018 and at 0 percent for 2019 through 2023; and 3) establish an update of 1 percent for health professionals participating in value-based, alternative payment models (APMs) and an update of 0.5 percent for all other health professionals after 2023.

Kick the can
The original idea behind the SGR was this: Tie the rate of doctors’ Medicare Part B reimbursement to the performance of the economy at large. If the economy does well, doctors do well. If the economy does poorly, doctors won’t get a raise.

Problems with the formula soon manifested themselves, however. First, the economy hasn’t done all that well since 2001. And second, policy experts quickly saw that the performance of the economy has little to do with physicians’ activities. As a result, even though the SGR has called for cuts in physicians’ Part B payments steadily over the years, Congress has postponed the cuts with a series of “patches,” a practice that some call “kicking the can forward.”

The key word is “postponed.” In other words, when a cut in reimbursement is put off a year, it is added on to the cuts already put on hold in years past. The slate is never wiped clean. Hence, the draconian 24 percent cut that had loomed effective April 2014 – but that ultimately was delayed until next time.

Physicians appear ready to embrace fee-for-value payment methodologies.

“I think the evidence is fairly clear that while fee-for-service works well for many, there are many other physicians and patients [for whom] it doesn’t work so well,” says Shari Erickson, vice president, governmental and regulatory affairs, American College of Physicians. “The alternative payment models give physicians an opportunity to provide care in a different way, or provide care in the way they are already are, but for which they are not getting paid. We don’t mean to disparage the excellent physicians providing care under fee-for-service. It’s the incentives under the current payment program that we would like to see changed over time.”

The American Medical Association, American College of Physicians, American Academy of Family Physicians, American College of Cardiology, American Congress of Obstetricians and Gynecologists, and many other physician organizations urged lawmakers to pass the proposed legislation. In a March 5 letter to Speaker of the House John Boehner and House Minority Leader Nancy Pelosi, 600 national, state and other physician organizations wrote, “Over the past 12 years, Congress has spent $153.7 billion on 16 SGR patches, far more than the cost of permanently reforming the Medicare physician payment system. Further reliance on legislative patches is fiscally irresponsible. We can no longer afford to spend taxpayer money on stopgap measures that preserve a failed policy.”

A value-based alternative
In a letter to Senate Finance Committee Chairman Ron Wyden, dated February 27, 2014, the Congressional Budget Office summarized the major provisions of the proposed new payment system:

• Payment rates would remain at the current level for services on the physician fee schedule for the rest of calendar year 2014, and would increase 0.5 percent for services furnished during calendar years 2015 through 2018.
• Payment rates for services on the physician fee schedule would remain at the 2018 level through 2023, but the amounts paid to individual providers would be subject to adjustment through one of two mechanisms, depending on whether the physician chose to participate in a Merit-Based Incentive Payment System (MIPS) or an Alternative Payment Model (APM).
• For 2024 and subsequent years, there would be two payment rates for services on the physician fee schedule. For providers paid through the MIPS program, payment rates would be increased each year by 0.5 percent. For providers paid through an APM, payment rates would be increased each year by 1 percent.
• Payments to providers who participate in the MIPS program would be subject to positive or negative performance adjustments. The adjustment for an individual provider would depend on that provider’s performance compared to a threshold. The bill would provide $500 million each year from 2018 to 2023 for an additional adjustment for providers achieving exceptional performance.
• Payments to providers who participate in an APM program (in particular, those who receive a substantial portion of their revenue from alternative payment models) would receive, from 2018 through 2023, a lump-sum payment equal to 5 percent of their Medicare payments in the prior year for services paid according to the physician fee schedule. Providers with revenue close to the APM revenue threshold would receive either no adjustment to their Medicare payments or the MIPS performance adjustment if they reported measures and activities in that program.
• In addition, the bill would eliminate current-law penalties for providers who do not achieve meaningful use of electronic health records (EHR) or satisfactorily report data on quality. However, physicians would have to meet standards for use of EHR and quality as part of the MIPS program. Also, the bill would modify payment rates in certain California counties, adjust relative value units for certain physicians’ services, and require the development of payment codes that would encourage care coordination and the use of medical homes.

The Congress Budget Office estimated that the legislation would have increased direct spending by about $60 billion between 2014 and 2019, and by approximately $138 billion over the 2014-2024 period, assuming enactment this spring. Nearly all of the estimated increase in spending would stem from the specified updates to rates for services paid on the physician fee schedule. In addition, CBO estimated that establishing the MIPS and APM programs, with the opportunity for providers to choose to participate in only one of the programs, would increase Medicare spending by approximately $6 billion through 2024.

Quality over quantity
The legislation called for two approaches to incentivize physicians to provide high-quality care while remaining mindful of the cost

The first, Merit-Based Incentive Payment System, or MIPS, would phase out some Medicare fee-for-service reporting programs and combine them into one reporting and value-based payment program, explains Erickson. The Alternative Payment Model, or APM, would incentivize physicians to move even further into a value-based payment world, she continues. The intent is to encourage accountability for the longitudinal care of patients, that is, the coordination of care by multiple providers. Examples of APM programs are accountable care organizations and patient-centered medical homes.

“The MIPS program is kind of an on-ramp for physicians in areas that don’t have APM models,” she says. “We would hope [MIPS] would give them the opportunity to prepare for alternative payment models, and pay them to provide high quality care.”

Rich Hodge, senior director of Congressional affairs, Health Information and Management Systems Society (HIMSS), defines MIPS as a weighted incentive payment program based on quality, resource use, meaningful use of electronic health records, and clinical practice improvement activities, which would consolidate and replace the current Physician Quality Reporting System (PQRS), value-based modifier (VBM), and electronic health record “meaningful use” (MU) programs. “Each of these programs has has had its own quality measures,” he says. “This is an effort to get them on the same sheet of music.”

The APM, or alternative payment model, would include alternative payment methods to the traditional fee-for-service, volume-driven model, he continues. “APMs would be value-based payment models that incentivize providers on quality, outcomes, and cost containment, such as patient-centered medical homes and Accountable Care Organizations. Assumedly, these would be provider risk-based payment models.”

Incentives for adoption of electronic health records that meet “meaningful use” standards would continue, at least for several years, adds Hodge. “The intent is to render care to all patients –– starting with Medicare patients – in an efficient and effective manner, and that includes adopting electronic health records, because we think it will help patient care and coordination of care.”

Responding to a question from Repertoire, the American Medical Association pointed out that in all APM programs but the medical home, physicians would be at some risk. “If they exceed savings and quality targets that are built into the model, they get bonuses based on the savings,” says the association. “If they fail to meet targets, they will be cut by some share of the excess costs. The five-year update period buys time for some of these models to develop. And 5 percent bonus payments for the first years of APM participation help the physicians learn how to mitigate risk under new models.”

Physicians react
“The American Congress of Obstetricians and Gynecologists appreciates that there’s still a place for fee-for-service in the bill, [as] some ob-gyns can’t transition right away to a merit-based payment system,” said Jeanne A. Conry, MD, PhD, president of the American Congress of Obstetricians and Gynecologists, responding to questions from Repertoire.

“In the long run, we think the APM offers ob-gyn practices the opportunity to be rewarded for continuous quality improvement, which will benefit our specialty and our patients. As an organization, ACOG provides practicing ob-gyns with strong clinical guidelines upon which they can improve quality outcomes. In that respect, this legislation accomplishes our shared goals.

“It is hard to speculate on the long-term implications of the legislation, but it would build on and accelerate other trends already moving physician practices into integrated team-based approaches,” continues Conry. “Ob-gyn practices are already embracing coordinated care, including medical homes, which can work well for our pregnant patients, patients with chronic conditions, and ongoing well-woman care. This legislation can encourage clinical practice guidelines, and ACOG has always provided evidence-based guidelines for our physicians to improve the quality of care they provide.

“Patient-focused and coordinated health care, where we are assessing needs and focusing on outcomes, will be an important change whose time has come. It is the transition and stability during transitions that will be crucial.”

Lawmakers’ reluctance to pass legislation changing Medicare reimbursement methodology for physicians only delays the onset of that transition period.

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Medicare SGR Repeal and Beneficiary Access Improvement Act of 2014

Though S. 2110 (and a related bill, H.R. 4015) was ultimately tabled, its provisions could provide clues to what a new physician payment methodology might look like. The legislation would have done the following:

• Remove sustainable growth rate (SGR) methodology from the determination of annual conversion factors in the formula for payment for physicians’ services; 2) freezes the update to the single conversion factor at 0.5 percent for 2014 through 2018 and at 0 percent for 2019 through 2023; and 3) establishes an update of 1 percent for health professionals participating in alternative payment models (APMs) and an update of 0.5 percent for all other health professionals after 2023.
• Direct the Medicare Payment Advisory Commission (MEDPAC) to report to Congress on the relationship between: 1) physician and other health professional utilization and expenditures (and their rate of increase) of items and services for which Medicare payment is made, and 2) total utilization and expenditures (and their rate of increase) under Medicare parts A, B and D.
• Revise and consolidate components of three existing performance incentive programs into a merit-based incentive payment (MIP) system, which the Secretary of Health and Human Services (HHS) is directed to establish. MIP-eligible professionals (excluding most Alternative-Payment-Model, or APM, participants) would receive annual payment increases or decreases based on their performance.
• Direct HHS to make available on the Physician Compare website certain information, including information regarding the performance of MIP-eligible professionals.
• Require the U.S. Government Accountability Office (GAO) to evaluate the value-based purchasing (VBP) program.
• Direct HHS to draft a plan for development of quality measures to assess professionals, including non-patient-facing professionals.
• Require HHS to establish new Healthcare Common Procedure Coding System (HCPCS) codes for chronic care management services.
• Direct HHS to conduct an education and outreach campaign to inform professionals who furnish items and services under Medicare part B, and part B enrollees, of the benefits of chronic care management services.
• Declare it a national objective to achieve widespread exchange of health information through interoperable certified electronic health records (EHR) technology nationwide by December 31, 2017. Directs HHS to establish related metrics.
• Require EHR professionals and hospitals to demonstrate that they have not knowingly and willfully taken any action to limit or restrict the compatibility or interoperability of the certified EHR technology.
• Direct GAO to study specified telehealth and remote patient monitoring services.
• Direct HHS to provide for the development of one or more quality measures under Medicare to accurately communicate the existence and provide for the transfer of patient health information and patient care preferences when an individual transitions from a hospital to return home or move to other post-acute care settings.
• Direct HHS to conduct remote patient monitoring pilot projects.
• Include podiatrists as physicians under the Medicaid program.

Source: Library of Congress, http://thomas.loc.gov/cgi-bin/bdquery/z?d113:s.2110

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Thumbs-up from primary care group

The American College of Physicians posted on its website a thumbs-up for the SGR Repeal and Medicare Provider Payment Modernization Act (H.R. 4015). Among its reasons:

• After 11 years, 16 patches, and $154 billion wasted, it is time to pass SGR-repeal now.
• The bill establishes stable positive updates of 0.5 percent for the first 5 years (with rates then remaining stable from 2018-2013). The alternative is a nearly 24 percent cut in 2014, followed at best by a freeze in payments, but more likely deeper cuts.
• The existing Medicare quality reporting/incentive programs (Physician Quality Reporting System, or PQRS; value-based modifier (VBM); and electronic health record “meaningful use,” or MU) vary significantly in terms of measures, data submission options, and payment timelines –— which results in significant confusion and hassles for physicians. The new Merit-based Incentive Program (MIPS) program would unify these programs.
• This legislation keeps the money from physician quality incentive program penalties (in 2018 and beyond) in the physician payment pool, significantly increasing the total funds available to pay physicians. This money would be lost if the current system remains in place.
• The new MIPS composite score would allow physicians to more clearly determine their eligibility for incentive payments. In essence, it empowers physicians to set their own individual conversion factor, rather than having it determined by a flawed formula or other external approach. Physicians will be able to proactively review their data in order to set their performance goals. The current Medicare reporting programs are not at all clear, transparent, or aligned in terms of performance thresholds that must be met.
• In the current Medicare reporting/incentive programs, physicians receive little to no incentive payment for engaging in clinical improvement activities. Nor is there any ability for physicians to get credit for transforming to a patient-centered medical home. The MIPS program would change that and give credit for overall improvement from year to year, as well as for engaging in specific clinical improvement activities.
• Additional new money is also allocated specifically to help small practices ($40 million). There is currently no funding assistance available for the Medicare reporting programs and very limited assistance available for Alternative Payment Model (APM) transition (mostly limited to practices participating in CMS Innovation Center projects).
• Those physicians participating in APMs would also receive a 5 percent bonus –—this is entirely new funding and is on top of any current payment structures that are part of their APM (e.g., prospective care coordination fees, shared savings, etc.).
• Through its incentives for APMs, this bill would allow for a more rapid and robust expansion of the patient-centered medical home (PCMH) and PCMH specialty practices (and other evidence-based models) throughout all of Medicare.
• The bill would put the weight of law behind paying for a chronic care management code (or codes) and would ensure that patient-centered medical homes and PCMH-specialty practices could bill for them.

Source: American College of Physicians, http://www.acponline.org/advocacy/where_we_stand/assets/sgr_repeal_bill_top_improvements_2014.pdf