Working Framework of SGR Package

House Committees on Energy & Commerce and Ways & Means, March 20, 2015

Repeal and Replace Medicare Physician Payment System. The legislation repeals the flawed SGR formula and replaces it with HR 1470, SGR Repeal and Medicare Provider Payment Modernization Act (replaces SGR with MIPS, the Merit-based Incentive Payment System)

Children’s Health Insurance Program (CHIP). This provision preserves and extends CHIP, fully funding the program through September 30, 2017.

Medicare, Medicaid, and Other Health Extenders. The legislation extends all of the extenders included in the Protecting Access to Medicare Act of 2014 (PAMA, the most recent SGR patch) in addition to funding for Community Health Centers through 2017.

Other Medicare Reforms.1) Medicare DMEPOS Competitive Bidding Improvement Act (HR 284). (2) The Protecting Integrity in Medicare Act (HR 1021).

Savings.

(1) Income-related Premium Adjustment. Starting in 2018, this policy would increase the percentage that beneficiaries pay toward their Part B and D premiums in two income brackets (roughly 2 percent of beneficiaries): for individuals with income between $133.5-160K ($267-$320K for a couple), the percent of premium paid increases from 50 percent to 65 percent. For those with income between $160-214K ($320- $428K for a couple), the percent increases from 65 percent to 75 percent.

(2) Medigap Reform. The proposal limits first dollar coverage on certain Medigap plans by prohibiting plans from covering the Part B deductible. Change applies only for future retirees starting in 2020.

(3) Increase Levy Authority on Payments to Medicare Providers with Delinquent Tax Debt.

(4) Hospital Update. Under current law, hospitals will receive a 3.2 percentage point adjustment in addition to their base payment rate in FY18. This policy would phase-in this update incrementally.

(5) Additional Medicaid DSH Savings.

(6) 1 Percent Market Basket Update for Post-Acute Providers

http://waysandmeans.house.gov/uploadedfiles/bipart_topline_summary-032015_final2.pdf

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What Measures Should Be Used to Evaluate Health Care?

By Melinda Beck

The Wall Street Journal, March 22, 2015

There’s little agreement among patients, providers and insurers

http://www.wsj.com/articles/what-quality-measures-should-be-used-to-evaluate-health-care-providers-1427079654

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Primum Non Nocere: Congress’s Inadequate Medicare Physician Payment Fix

By Jeff Goldsmith

Health Affairs Blog, January 24, 2014

With this legislation, Congress is preparing yet again to enshrine in statute another payment strategy that is both unproven and highly controversial.

The proposed legislation casts in concrete an almost laughably complex and expensive clinical record-keeping regime, while preserving the very volume-enhancing features of fee-for-service payment that caused the SGR problem in the first place. The cure is actually worse, and potentially more expensive, than the disease we have now.

If we’re not sure new advanced payment schemes actually work, if we haven’t actually gotten them right, then we have no business compelling or incenting 680 thousand practicing physicians to use them. We’re not going to get clinical practice where we want it to go with an elaborate, individualized operant conditioning schedule with four domains and sixty eight “core measures”, and billions more spent on the IT systems and clerical support to document them. We need to reward teamwork, not box-checking.

It isn’t just physicians that should be guided by Hippocrates’ maxim, “First Do No Harm,” but our policymakers as well.

http://healthaffairs.org/blog/2014/01/24/primum-non-nocere-congresss-inadequate-medicare-physician-payment-fix/

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Comment:

By Don McCanne, MD

We’re there. The SGR extension expires March 31, and Congress is leaving for a two week recess this Friday, March 27. Not only is there strong bipartisan Congressional support for HR 1470, the SGR repeal and replacement act, but there is also overwhelming support from the AMA and other physician societies and from other influential interest groups such as Families USA. The bill will pass this week.

The last two Quote of the Day messages have discussed some serious defects in this legislation, especially the problems with the Merit-based Incentive Payment System (MIPS). But that part of the bill is a given. What is new today is the one page summary of the intended amendments that will be added before enactment of the bill (see “Working Framework of SGR Package,” above).

Two items in these proposed amendments are of particular concern: 1) Means-testing of Medicare Part B and Part D premiums, and 2) Prohibiting Medigap plans from covering the Part D deductible.

Under means-tested premiums, higher-income individuals will be required to pay larger premiums, undermining the support of this influential group for the traditional Medicare program. Since they will be paying higher premiums, many likely would prefer to select their own coverage from a market of private Medicare plans – a goal of those supporting privatization of Medicare through the premium-support model of reform. Thus this provision would be a significant incremental step towards privatization.

Prohibiting Medigap plans from covering Medicare Part B deductibles expands the implementation of consumer-directed approaches to financing health care. It advances the conservative agenda of requiring more personal responsibility on the part of patients, often expressed by the repulsive “skin in the game” rhetoric. Much has been written about the potential adverse consequences of deductibles, but the more ominous portent of this measure is that it establishes the principle that all health care must conform with the consumer-directed model. As we have seen, the use of ever higher deductibles is rapidly expanding in employer-sponsored plans, and this opens the door for the same rapid increase in cost sharing to occur with Medicare.

But back to the basic bill – using the MIPS to replace the SGR. In the last two Quote of the Day messages it was pointed out what an administrative nightmare MIPS would bring us. What should be particularly alarming is that these new required administrative procedures have not been shown to either significantly decrease the volume of medical services, or improve quality – supposedly the two goals of payment reform.

As Jeff Goldsmith states about last year’s version of the same policies, “The proposed legislation casts in concrete an almost laughably complex and expensive clinical record-keeping regime, while preserving the very volume-enhancing features of fee-for-service payment that caused the SGR problem in the first place. The cure is actually worse, and potentially more expensive, than the disease we have now.”

Tune in to C-Span this week for the latest chapter in their epic fiction series: Democracy in America.

Summary of “SGR Repeal and Medicare Provider Payment Modernization Act”

House Committees on Energy & Commerce and Ways & Means, March 19, 2015

Summary: http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/114/Analysis/20150319SGRSectionbySection.pdf
Yesterday’s Quote of the Day: https://www.pnhp.org/news/2015/march/emergency-the-mips-stake-is-plunging-into-the-heart-of-traditional-medicare

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Comment:

By Don McCanne, MD

Yesterday’s Quote of the Day message sounded the alarm on legislation that would replace the flawed Sustainable Growth Rate formula (SGR) for updating Medicare payments with a new Merit-based Incentive Payment System (MIPS) – legislation with strong bipartisan support that will be taken up in Congress this week and is expected to pass.

Yesterday I sent out a link to the actual legislation (minus crucial amendments, likely detrimental, that have not yet been advanced). Since few have the time to plow through the legislative language and make sense of it, I am now providing a link to the eight page summary (above).

Why this concern?

The SGR formula is considered to be flawed primarily because economic factors considered in the formula would result in inappropriate payment reductions in many of the yearly adjustments. Thus there is consensus that the formula should be repealed. However, it did provide an administratively simple process for trying to keep Medicare rates from increasing well beyond the growth in the economy. That is, there was no administrative burden placed on the providers; they merely had to accept adjustments in their payments.

The concern is over its replacement: MIPS. On reading the summary of the “SGR Repeal and Medicare Provider Payment Modernization Act,” you will see that MIPS places a tremendous administrative burden on health care professionals in a health care system that is already overwhelmingly overburdened with administrative excesses. The only way to escape this additional burden is to participate in Alternative Payment Models (APMs) which, in themselves, create further significant administrative burdens (ACOs, PCMHs, etc.). MIPS is an administrative nightmare.

Some might consider the administrative excesses of MIPS to be worth it if it were to result in fair adjustments to Medicare payment rates. But you need to read the “MIPS Payment Adjustment” section of the summary.

Under the MIPS payment system, eligible professionals with higher scores will receive positive payment adjustments (and may be eligible for an additional incentive payment). We have observed repeatedly how such systems are gamed in order to receive these extra payments. The problem is that those who do not game the system, and especially those with practice situations and patient populations that make it very difficult to score higher points, will almost automatically receive performance scores below the threshold since their performances will be compared with the gamers. This will result in negative payment adjustments – reducing payments by up to nine percent. If you think SGR is unfair, MIPS robs from these hard-working professionals who are just trying to make the system work for their patients, and gives the spoils to those who likely have consultants to show them how to game the system. (Consultants? See Sec. 6 that authorizes “qualified entities” to suck more money out of our health care system by selling analyses and claims data to assist providers in their quality improvement activities., i.e., professional gamesters.)

This is serious. And it is being steamrolled through Congress right now! I consider myself an information resource, but I am not an organizer. Those who care about the future of Medicare and who do have organizational skills must immediately inform themselves on what is happening here. Then act. You cannot wait to watch the Congressional vote tally on C-Span, perhaps as early as this week. By then it will be a done deal.

H.R. 1470: “SGR Repeal and Medicare Provider Payment Modernization Act of 2015”

114th Congress

A BILL

To amend title XVIII of the Social Security Act to repeal the Medicare sustainable growth rate and improve Medicare payments for physicians and other professionals, and for other purposes.

TABLE OF CONTENTS.—The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Repealing the sustainable growth rate (SGR) and improving Medicare payment for physicians’ services.

Sec. 3. Priorities and funding for measure development.

Sec. 4. Encouraging care management for individuals with chronic care needs. 

Sec. 5. Empowering beneficiary choices through continued access to information on physicians’ services.

Sec. 6. Expanding availability of Medicare data.

Sec. 7. Reducing administrative burden and other provisions.

Sec. 2 (c) MERIT-BASED INCENTIVE PAYMENT SYSTEM.

         (1) IN GENERAL.—Section 1848 of the Social Security Act (42 U.S.C. 1395w–4) is amended by adding at the end the following new subsection:

   “(q) MERIT-BASED INCENTIVE PAYMENT SYSTEM.—

       “(1) ESTABLISHMENT.—

         “(A) IN GENERAL.—Subject to the succeeding provisions of this subsection, the Secretary shall establish an eligible professional Merit-based Incentive Payment System (in this subsection referred to as the ‘MIPS’) under which the Secretary shall—

             “(i) develop a methodology for assessing the total performance of each MIPS eligible professional according to performance standards under paragraph (3) for a performance period (as established under paragraph (4)) for a year;

             “(ii) using such methodology, provide for a composite performance score in accordance with paragraph (5) for each such professional for each performance period; and

             “(iii) use such composite performance score of the MIPS eligible professional for a performance period for a year to determine and apply a MIPS adjustment factor (and, as applicable, an additional MIPS adjustment factor) under paragraph (6) to the professional for the year.

       “(2) MEASURES AND ACTIVITIES UNDER PERFORMANCE CATEGORIES.—

          “(A) PERFORMANCE CATEGORIES.—Under the MIPS, the Secretary shall use the following performance categories (each of which is referred to in this subsection as a performance category) in determining the composite performance score under paragraph (5):

              “(i) Quality.

              “(ii) Resource use.

              “(iii) Clinical practice improvement activities.

              “(iv) Meaningful use of certified EHR technology

           “(B) MEASURES AND ACTIVITIES SPECIFIED FOR EACH CATEGORY.—For purposes of paragraph (3)(A) and subject to subparagraph (C), measures and activities specified for a performance period (as established under paragraph (4)) for a year are as follows:

              “(i) QUALITY.—For the performance category described in subparagraph (A)(i), the quality measures included in the final measures list published under subparagraph (D)(i) for such year and the list of quality measures described in subparagraph (D)(vi) used by qualified clinical data registries under subsection (m)(3)(E).

              “(ii) RESOURCE USE.—For the performance category described in subparagraph (A)(ii), the measurement of resource use for such period under subsection (p)(3), using the methodology under subsection (r) as appropriate, and, as feasible and applicable, accounting for the cost of drugs under part D.

              “(iii) CLINICAL PRACTICE IMPROVEMENT ACTIVITIES.—For the performance category described in subparagraph (A)(iii), clinical practice improvement activities (as defined in subparagraph (C)(v)(III)) under subcategories specified by the Secretary for such period, which shall include at least the following:

                 “(I) The subcategory of expanded practice access, such as same day appointments for urgent needs and after hours access to clinician advice.

                 “(II) The subcategory of population management, such as monitoring health conditions of individuals to provide timely health care interventions or participation in a qualified clinical data registry.

                  “(III) The subcategory of care coordination, such as timely communication of test results, timely exchange of clinical information to patients and other providers, and use of remote monitoring or telehealth.

                  “(IV) The subcategory of beneficiary engagement, such as the establishment of care plans for individuals with complex care needs, beneficiary self-management assessment and training, and using shared decision-making mechanisms.

                  “(V) The subcategory of patient safety and practice assessment, such as through use of clinical or surgical checklists and practice assessments related to maintaining certification.

                  “(VI) The subcategory of participation in an alternative payment model (as defined in section 1833(z)(3)(C)).

              In establishing activities under this clause, the Secretary shall give consideration to the circumstances of small practices (consisting of 15 or fewer professionals) and practices located in rural areas and in health professional shortage areas (as designated under section 332(a)(1)(A) of the Public Health Service Act).

              “(iv) MEANINGFUL EHR USE.—For the performance category described in sub-paragraph (A)(iv), the requirements established for such period under subsection (o)(2) for determining whether an eligible professional is a meaningful EHR user.

Sec. 2(e)(6) INTEGRATING MEDICARE ADVANTAGE ALTERNATIVE PAYMENT MODELS.—Not later than July 1, 2016, the Secretary of Health and Human Services shall submit to Congress a study that examines the feasibility of integrating alternative payment models in the Medicare Advantage payment system. The study shall include the feasibility of including a value-based modifier and whether such modifier should be budget neutral.

https://www.congress.gov/bill/114th-congress/house-bill/1470/text

GPO pdf of H.R. 1470: https://www.congress.gov/114/bills/hr1470/BILLS-114hr1470ih.pdf

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Comment:

By Don McCanne, MD

It is URGENT that everyone who cares about the future of Medicare understands what is happening here.

H.R. 1470, the “SGR Repeal and Medicare Provider Payment Modernization Act of 2015,” was formally introduced in the House of Representatives only yesterday (3/19/15), with strong bipartisan support. The 158 pages (GPO pdf) introduced so far provide a mechanism for replacing the Medicare Sustainable Growth Rate (SGR) for determining Medicare payments, with a new Merit-based Incentive Payment System (MIPS).

Next week it is anticipated that the House will act on amendments that allegedly will help offset the cost of canceling payment reductions that would have taken place under the SGR system. Today’s message is limited to the new MIPS, but everyone should be alarmed about the amendments that are to be considered next week. Just two of them – greater means testing of Part B premiums, and requiring Medigap enrollees to start paying deductibles – will be very damaging to the egalitarian nature of our Medicare program.

The excerpts from H.R. 1470,  above, reveal how the government intends to fulfill its goal of supposedly converting Medicare from a system that pays based on volume to a system that is based on value. Since the excerpts represent only a small sampling of this bill, it would be wise to download the full bill. You can gain a better understanding of the bill by skimming through the 158 pages, reading only the lines in full capital letters, while reading in full any section that piques your interest. It takes just a few minutes. That’s too much? Remember, this bill is about to become law and we will have to live with it perhaps for decades (the scorned SGR has been with us for 18 years).

One ominous clause in the bill is Sec. 2(e)(6) on page 101 of the GPO version. It calls for a study of “the feasibility of integrating alternative payment models in the Medicare Advantage payment system.” That is code language to clarify that these onerous requirements of MIPS apply only to the traditional Medicare program and not to the private Medicare Advantage plans. Why is that important?

The House budget introduced this week once again calls for the end of the traditional Medicare program and replacing it with a market of private plans. Although this has been a Republican goal, many Democrats now agree to this MIPS legislation that moves in that direction, and it has the strong support of the AMA and other physician organizations. While loudly proclaiming that we finally have a “doc fix” for the SGR, they are moving forward with changes that will lead us much closer to Medicare privatization, using the excuse that compromise is the way the legislative process works.

Physicians will be mortified by the new requirements and administrative burdens of MIPS. They will be looking for a way out. For those not able to retire, there may be a mass exodus of physicians from the traditional Medicare program into the Medicare Advantage plans. Included in H.R. 1470 is even a ruling change that simplifies the requirements for a physician totally opting out of Medicare indefinitely.

This process is being steamrolled. The bill will pass this month, unless Congress is deafened by a roaring protest.

Are you just going to sit there?

Unions, retirees blast Jerry Brown’s state worker medical plan

By Jon Ortiz
The Sacramento Bee, March 18, 2015

Unions lined up Wednesday to oppose Gov. Jerry Brown’s proposal to offer high-deductible medical coverage to state employees, suggesting it could hurt workers’ health instead of improving it.

“We think that high-deductible plans are a very bad thing,” SEIU Local 1000 President Yvonne Walker said during a Senate subcommittee hearing into Brown’s plan.

Meanwhile, state experts said it’s not clear whether a plan with high-monthly premiums and a tax-advantaged health savings account would save money in the long run. The most comprehensive studies take in only three years, not nearly long enough to establish a reliable trend.

Brown wants to add at least one health plan to the state’s menu that would give subscribers lower monthly premiums and a tax-advantaged health-savings account in exchange for higher co-pays for visits to doctor significantly larger deductibles for treatments, hospitalization and drugs.

High-deductible plans and health-savings accounts have become common in the private sector as a way for employers to shift more health care cost to their employees. This year the state will pay about $3 billion for employee medical benefits.

CalPERS, which is dominated by union members and politicians with labor ties, has stayed away from offering the kind of low-premium high-deductible health plan Brown has proposed, said Ann Boynton, who is responsible for the fund’s health plan contracting.

For reference, she noted that the lowest-premium plan CalPERS offers members now, PERS Select, has just 17,000 subscribers, fewest of any of its preferred-provider organization plans.

Member surveys show those subscribers are the most dissatisfied with their coverage, Boynton said, due to the steep co-pays and how hospitals in the preferred networks price services.

http://www.sacbee.com/news/politics-government/the-state-worker/article15302201.html

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Retirees Could Lose their ‘Guaranteed’ Health-Care Benefits

By Allison Schrager
Bloomberg Business, March 18, 2015

California’s struggling to pay for health care for retired state employees, with an estimated $72 billion in medical costs coming in the next 30 years. Governor Jerry Brown’s solution: Make workers start contributing money to pay for the health care they’ll need after retiring.

Until recently, the courts had regularly said that health-care benefits must be honored. In January, that changed: The Supreme Court unanimously decided that retiree health benefits are not necessarily guaranteed.

Since 1992, private companies have had to list health-care obligations as a liability on their balance sheets. Being forced to disclose health-care costs led many employers to ditch retiree health care. A Kaiser Foundation report speculates that the remaining plans may soon be eliminated, too.

The Supreme Court’s ruling may finally signal the end of private-sector retirement health benefits. What it means for public-sector retirees is still an open question, although some lawyers say the same ruling will apply. If that’s the case, the consequences may be more far-reaching. Employer health coverage among public-sector retirees is still common. From 2006 to 2010, health plans covered two-thirds of Medicare eligible and three-quarters of early retirees.

http://www.bloomberg.com/news/articles/2015-03-18/retirees-could-lose-their-guaranteed-health-care-benefits

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Comment:

By Don McCanne, MD

Private employers have taken the initiative in slowing the cost increases in their health benefit programs. They have been reducing or terminating their retiree health plans. They have also greatly expanded the use of high-deductible health plans which shift costs of care to their employees. Public employees have been relatively insulated from these reductions, largely due to more favorable plans negotiated by their unions. California’s Governor Jerry Brown is now attempting address the state’s budget issues by reducing the state’s contribution to these plans.

These were not free benefits that the unions negotiated. They were paid for by forgoing wage increases. To reduce these benefits without compensatory wage increases amounts to significant pay cuts for the government employees. That is not right.

Also, high-deductible health plans clearly reduce access to appropriate health care primarily because health care becomes less affordable when the patient is faced with greater out-of-pocket costs. CalPERS has confirmed what was already well known about the high-deductible plans: subscribers to these plans are the most dissatisfied. Today’s payers, whether the government or the private sector, are taking it out on their employees through these undesirable reductions in benefits that create potential financial hardships for their employees.

It would be far better to remove the employer, public or private, from the role of being keeper of the health benefits, and to restore, in full, the wage and salary increases that have been forgone to pay for these programs.

With a publicly-financed and publicly-administered single payer program – an improved Medicare for all – there would be no need for employer-sponsored plans for either active or retired employees. Also, the public program would be designed for the benefit of patients needing care, rather than being used inappropriately as a tool to balance public or private budgets.

With billions in the bank, Blue Shield of California loses its state tax-exempt status

By Chad Terhune
Los Angeles Times, March 18, 2015

Authorities have revoked the tax-exempt status of nonprofit Blue Shield of California, potentially putting it on the hook for tens of millions of dollars in state taxes each year.

The move by the California Franchise Tax Board comes as the state’s third-largest health insurer faces fresh criticism over its rate hikes, executive pay and $4.2 billion in financial reserves.

The highly unusual action comes after a lengthy state audit that looked at the justification for Blue Shield’s taxpayer subsidy.

Now, a company insider has sided with critics. Michael Johnson, who resigned as public policy director last week after 12 years at the company, said the insurer has been “shortchanging the public” for years by shirking its responsibility to Californians and operating too much like its for-profit competitors.

On Wednesday, Johnson plans to launch a public campaign calling on executives to convert the insurer into a for-profit company and return billions of dollars to the public that could be used to bolster the state’s healthcare safety net. He estimates the company could be worth as much as $10 billion.

In 1996, a similar conversion of Blue Cross of California — now part of Anthem — generated $3 billion to establish the California Endowment and the California HealthCare Foundation.

The company defends its work on behalf of Californians. It cites its long-standing support of health reform and numerous efforts to make coverage more affordable.

“Blue Shield as a company and management team firmly believes it is fulfilling its not-for-profit mission and commitment to the community,” said company spokesman Steve Shivinsky.

In 2011, amid a backlash over rate increases, the insurer capped its profits at 2% of annual revenue and gave back about $560 million to customers and community groups from 2010 to 2012. Blue Shield has also contributed more than $325 million over the last decade to its own charitable foundation.

But some consumer advocates and health-policy experts say those gestures are lacking in light of the company’s stockpile of cash.

Blue Shield’s surplus of $4.2 billion at the end of 2014 is four times as much as the Blue Cross and Blue Shield Assn. requires its member insurers to hold to cover future claims.

Critics also note the company hasn’t served the state’s poorest residents on Medi-Cal and it has frequently run afoul of state regulators. The 2011 disclosure of a nearly $5-million salary for its former chief executive drew protests.

Some consumer groups have also questioned whether certain Blue Shield spending is out of line with its nonprofit mission.

For instance, the company contributed about $10 million to defeat a ballot measure last year seeking rate regulation. It spent $2.5 million for a luxury box at the new professional football stadium in Santa Clara, Calif.

Critics have also long complained about Blue Shield’s lack of disclosure.

Blue Shield was founded by the California Medical Assn. as part of a national movement by hospitals and doctors to form prepaid health plans.

The company is a “mutual benefit” nonprofit — “dedicated to charitable, religious or public purposes,” according to California corporation law.

http://www.latimes.com/business/la-fi-blue-shield-california-20150318-story.html

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Comment:

By Don McCanne, MD

Many of us in California were very upset when Blue Cross of California converted to a for-profit (WellPoint, then Anthem) and immediately changed its behavior to fulfill its responsibilities to its shareholders as a profit-making business. We immediately saw “insurance innovations” that redirected its business goals from taking care of patients to taking care of shareholders.

It was particularly disappointing to see non-profit Blue Shield of California adopt similar insurance innovations in order to remain competitive in the California insurance market. From the perspective of health care “consumers,” Blue Shield and Blue Cross remained virtually indistinguishable.

Blue Shield of California has annihilated the dream of those who believed that the United States could adopt a universal system of private, non-profit insurance companies like they have in Switzerland. There are many serious problems with the Swiss model, but some believed that a market of well-regulated, non-profit insurers would make optimal patient care a priority. Blue Shield of California has now demonstrated to us that this pipe dream would only become another nightmare in the saga of private insurance markets in the U.S.

We need to banish them and establish our own public program – an improved Medicare for all.

A Boehner-Pelosi prescription for Medicare doc fixes

By Jennifer Haberkorn and David Rogers
Politico, March 15, 2015

In a rare display of bipartisanship, House leaders are actively pursuing a deal to permanently change the way Medicare pays doctors and to extend a children’s health program for two years.

While details are still being ironed out, the basic contours are clear: The plan would permanently eliminate the Sustainable Growth Rate, the outdated formula that calls for frequent and deep cuts to Medicare providers, and replace it with a new payment system. This is a priority for both parties to end the need for frequent “doc fixes.”

The replacement policy agreed to by the House Energy and Commerce and Ways and Means committees and the Senate Finance Committee would move away from volume-based payments, in which physicians are paid based on the number of tests or procedures ordered, into a value-based system. That would reward them with higher payments when they meet performance thresholds on improved care and quality.

This new system would set up a series of quality measures that physicians will have to meet and would incentivize care coordination, particularly for patients with chronic care needs in which multiple doctors are involved.

The replacement policy is widely supported by medical organizations. But some critics argue the bill is too vague and that its reporting requirements could be ruinous to small practices.

“Aspirationally, it is correct, but we don’t know enough about how to measure value,” said Robert Berenson, the former vice chairman of the Medicare Payment Advisory Commission. “This could mean the end of small general practices for all practical purposes.”

http://www.politico.com/story/2015/03/medicare-doctors-john-boehner-nancy-pelosi-116097.html

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Comment:

By Don McCanne, MD

The rhetoric sounds great. We are moving away from paying for the volume of health care provided, and we are going to pay for value instead.

In reality, volume will always be an important factor in determining health care costs. Maybe there are marginal expenses that can be reduced, but most services are clinically appropriate and do have relatively fixed costs involved. Reducing volume has really been code language for using various schemes such as accountable care organizations and bundling of payments to reduce prices. These schemes have an almost negligible impact on reducing volume.

What is this increased value that the industry envisions? Usually they are referring to quality measures. Yet those measurements are very primitive. As Robert Berenson says, “we don’t know enough about how to measure value.” Yet reducing payments for volume and giving rewards for Mickey Mouse quality scores increases administrative complexity – increasing busy work without increasing value.

Do we really want to do this? Again, quoting Robert Berenson, “This could mean the end of small general practices for all practical purposes.” My personal primary care physician is a solo practitioner. I should have to give him up simply because some policy people believe that we should continue down this path when there is very little support that these measures will either reduce costs or increase quality?

What the policy people do know is that an improved Medicare that covered everyone for the same amount that we are spending today is the most effective way to improve value. We should go where the action is. Once there, we can tweak the system for quality and volume.