Tag: sustainable growth rate (SGR)

Unpacking the Doc Fix

Mar 30, 2014• 8

By BILLY WYNNE

If you blinked on Thursday, you might’ve missed the House passing the latest Medicare’doc fix’ (see here for its 30-seconds of deliberation).

After posting the bill in the wee hours of Wednesday morning, House leaders faced opposition over its stop-gap approach and some of the cuts employed to offset the cost of the bill. With some arm-twisting, they managed to suppress objections for the handful of seconds necessary to hammer the gavel and call it done.

The Senate is due to take the bill up Monday evening, and it is highly likely to pass (this time it should actually get a vote). Since it is about to become the law of the land, let’s take a look at what’s inside. There’s a little slice of fun in here for everyone.

First and, theoretically, foremost, the bill blocks the pending cuts to doctors under the long-broken Sustainable Growth Rate (SGR) formula. It would maintain existing physician pay rates for another twelve months, through March 31, 2015.

Not coincidentally, a vote to raise the debt limit will likely come due again at about that time.

Second, the bill continues, for a comparable period, the package of so-called Medicare extenders: a hodge podge of policies that boost payments in rural areas, suspend caps on certain benefits and other otherwise sunsetting policies that each have their niche constituencies. Many of these items have been reauthorized by Congress for over 15 years.

Third, the bill includes some new policies that put out fires of their own, or effectuate high priority programs for well-placed Members of Congress. These include:

An additional six month extension of the Two Midnights Rule, which drew a bright line distinction between presumptive inpatient and outpatient hospital stays but has created significant confusion and objections among many hospitals;
A one-year delay of ICD-10 implementation, to October 1, 2015 (this is the second time Congress has acted to delay ICD-10);
Elimination of the ACA cap on deductibles for employer-sponsored health plans; and
Two provisions aiming to improve mental health services, including the Excellence in Mental Health Act that, among other things, improves funding for community mental health centers.

Woah, some of you are saying. Dial back to that 2^nd bullet. While the transition to ICD-10 has been controversial since it was first proposed in 2005, just last month CMS Administrator Tavenner said there would be no more delays (last year, the Administration voluntarily delayed the program from 2013 to 2014).

Healthcare providers have been battening down the hatches and preparing for this colossal transition from ICD-9 and its 14,000 codes to ICD-10 and its 69,000. Word on the street is that the provision was included primarily to earn cred with specialty physician groups, whose support for the bill was in question for concern about other provisions (see the bullet re: misvalued – aka overvalued – codes below).

Turns out, the specialty doc associations by and large opposed the bill anyway, and the healthcare sector is now left grappling with this unexpected turn.

The Death of SGR Reform

Mar 9, 2014• 18

By Billy Wynne

Late last week, House Republican leaders declared their intention to bring H.R. 4015, the bipartisan, bicameral SGR repeal measure, to the floor for a vote.

Good news, you’d think, for doctors and the broader healthcare system, that we might finally be rid of the SGR’s broken machinations and perverse cycle of congressional intervention.

But House leaders added a footnote: the measure would be paid for by delaying the individual mandate, which CBO opined last week would save money through reduced enrollment in Exchanges and Medicaid. To cover the approximate $150 billion cost of the SGR measure, the mandate would probably need to be delayed by at least 10 years.

While sparing us a rehash of the individual mandate debate here, suffice it to say that the Obama Administration, the authors of the Affordable Care Act, and most healthcare insurers and providers consider it to be a linchpin of the health reform regime.

Without it, most agree, the consumer protections established by the ACA would precipitate spiraling premiums that would quickly destroy the market.

In other words, the House measure is DOA in the Democrat-controlled Senate and White House, which House leaders know all too well. In a move whose political deftness is hard to quibble with, they are coupling two very popular measures into a single package that they know the vast majority of Democrats can’t support.

Good politics? Probably. Good for enactment of SGR repeal? More like the opposite.

But don’t blame House leaders for the demise of SGR repeal. This move is a symptom, not a cause, of its end. As previously reported, the well-intentioned negotiators were having difficulty finding common ground on the so-called extenders package that would be included, and were miles apart on the offsets that would be used to fund it.

This train had already come off the tracks.

Don’t Be Fooled, Prospects for Long-Term SGR Fix Still Dim

Feb 9, 2014• 5

By Billy Wynne

In light of Thursday’s bicameral, bipartisan release of a Medicare physician payment policy to permanently replace the Sustainable Growth Rate (SGR) formula – an achievement to be celebrated in its own right – some are seeing momentum toward passage of such a deal before the current doc fix expires on March 31.

But the scope of what the committees issued Thursday represents as much of a step back as a step forward, at least relative to their aspirations and timeline for accomplishing them.

Once the appointment of Senator Baucus to be Ambassador to China was announced, the committees agreed to make it “as far as they could” toward a comprehensive SGR replacement policy prior to his confirmation, including identifying offsets to pay for the $125-150 billion (over 10 years) bill. For those who missed it, Senator Baucus was confirmed on Thursday.

Only in the past week did the key committees acknowledge that achieving agreement on offsets by this deadline was unattainable, but finalization of the so-called “extenders,” a hodge podge of Medicare payment plus-ups and other polices perennially included with the doc fix, was still the goal.

(Recall that the Senate Finance Committee passed an SGR replacement bill with extenders in December, but their House counterparts have yet to do so.)

In negotiations on that extenders element, House Republican leads reportedly would not agree to include beneficiary-oriented policies, such as funding for outreach to Medicare enrollees regarding low-income subsidy programs and for Family-to-Family Health Information Centers.

While some Democrats involved in the talks may have been inclined to make this concession, others sharply objected, scuttling a deal on this front and demonstrating the difficulty of compromise on this relatively non-controversial topic.

Furthermore, and has always been the assumption, identifying offsets for the package continues to be an exponentially heavier lift than any other aspect of the process. On that front, the key camps have outlined their broad parameters for what they might accept.

House Republican leads desire and likely require meaningful cuts to ACA-related spending as well as a substantial balance of Medicare beneficiary-impacting cuts, such as those relating to premiums and coinsurance.

The Fine Print: In Which We Go over the SGR Fix Line by Line with a Yellow Highlighter

Feb 7, 2014• 5

By DAVID HARLOW

The Sustainable Growth Rate mechanism creating a zero-sum game for Medicare Part B reimbursement rates (dropping rates as volume picks up) has long been unsustainable, and so Congress has been messing around with short-term SGR fix legislation for years now. Every six to twelve months we’ve been hearing about the impending 20% or 30% Medicare pay cut about to hit physicians’ pocketbooks, and the likely exit of physicians from the rolls of participating providers.

However, the stars are now aligned in such a way that real progress seems likely: multiple powerful Congressional committees have signed off on a deal to replace the SGR rule with something more workable: A unified approach to financial incentives to physicians and other medical professionals who are Medicare participating providers intended to promote quality and enrollment in alternative payment arrrangements.

The full text of the bill will be available here: It’s H.R. 4015. Check out the SGR fix section-by-section-summary and the websites of the House Energy & Commerce Committee and the Senate Finance Committee too. The substance of the proposal is discussed below.

How has this happened?

One of the sticking points involved in fixing this problem is that the price tag for a permanent SGR fix has long been seen as too high. How do we know the price? and How high is too high? you may ask. Well, Congress looks at CBO projections of the cost of implementing legislation over a ten-year planning horizon. When physician cost trends are on a steep increasing slope, that ten-year budget number looks bigger. When the trends flatten out a bit, the big number gets smaller. At present, that ten-year cost projection is “only” $125 billion, and Congress has spent over $150 billion on short-term fixes. So the time is right.

Why the SGR Fix Won’t Work and Could Actually Make Things Worse

Feb 7, 2014• 57

By Jeff Goldsmith

Partisan gridlock in Washington regarding health policy has been so pervasive and bitter that any bipartisan co-operation on any important health issue should be applauded by a frustrated public.

That is why the emerging bipartisan compromise regarding the fifteen-year long policy embarrassment known as the Sustainable Growth Rate (SGR) problem needs to be taken seriously.

Remarkably similar solutions — a new hybrid physician “value-based” payment methodology — have emerged from three of the four key committees in Congress, and seemingly the only stumbling block is finding the $115-120 billion to pay for it.

Moreover, key physician interest groups, including the American Medical Association, appear to have signed off on this approach.

This makes it all the more troubling that the approach taken is unsound health policy that will damage practicing physicians in diverse settings: private practice, medical school practice plans, and hospital employment.

This is because 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, that the disease we have now.

The SGR fix would basically freeze or severely limit future physician fee updates for Medicare Part B (a serious problem for primary care), while permitting physicians to earn modest “value-based” bonuses if they can document quality measure attainment, cost reductions, participation in alternative payment schemes, practice enhancement activities, or meaningful use of EHRs.

Physicians who meet all these standards could expect to supplement their existing Part B fee by about 4 percent in 2016, going to 10 percent in 2020, with the aggregate bonuses subtracted from the pool of total Part B physician payments to preserve budget neutrality. Non-compliant physicians would see corresponding reductions in their updates.

There are sensible opt-outs for physicians who can report in groups, virtual or real, as well as for physicians who participate in as yet unspecified “advanced payment models” (APMs).
Continue reading…

The Month of Anti-Deadlines

Nov 30, 2013• 2

By Billy Wynne

As we shake off the carb-coma and make our pre-resolutions, Congress and the Administration head into a sprint to the holiday recess fraught with health policy implications. Unlike every December in recent memory, there isn’t very much Congress actually has to do. Here are the top five things you need to know to follow the fun and prepare your organization for the changes afoot. A key theme to take home is that December 2013 is a month of anti-deadlines.

The Nov. 30/Dec. 1 “fix” to Healthcare.gov was set arbitrarily and has simply teed up another pivot point for opponents to pounce. We already know the wand hasn’t tapped the electro-synapses of the site yet to make the dang thing work like it should. Expect more incremental improvements through the month and enrollment numbers to come in above current rock-bottom expectations, with a healthy chunk coming from the proud, the few … the state-based exchanges.
The Dec. 13 deadline for budget conferees to produce a joint resolution is similarly fictional and self-imposed. While there are some burgeoning reports that co-chairs Murray and Ryan might be able to agree to FY14 funding levels and potentially alleviate some of the sequester, the buzz-o-sphere in Washington still has deep doubts. Even if the two negotiators come to agreement, House and Senate leadership have the bigger challenge of getting a bipartisan deal through their chambers.
Jan. 15 is the real deadline for a budget agreement and the real goal is writing a check to fund the government through Sept. 30. A budget resolution is helpful to give appropriators time to write actual spending policy, but it can be bypassed if the end-game is a continuing resolution that keeps current funding allocations in place. (Congress hasn’t passed an actual budget resolution since Democrats controlled both chambers.) At the end of the day, we’ll be back to the all-too-familiar roundtable of congressional leaders and Obama reps hatching a last-minute deal to avert a shutdown.

How The Affordable Care Act Will Affect Doctors

Jun 15, 2012• 25

By Tevi Troy

Just over two years ago, President Barack Obama signed the Affordable Care Act (ACA), a law purported to increase access to health care and to “bend down” the health care cost curve. A great debate over the implications of that law, especially in the areas of coverage, affordability, and quality of care, has arisen. Furthermore, a series of political and legal challenges have generated uncertainty about the law’s prospects within the health industry and at the state level. Despite this, the Department of Health and Human Services (HHS) has already issued over 12,000 pages of regulations elaborating on the original 2,700-page law, leading to more uncertainty regarding how appointed and career federal officials will determine the exact shape of the law’s final requirements. All of this uncertainty raises real concerns about how the new law will impact the most crucial actors in any health care reform effort: doctors.

Doctors are demonstrably nervous about the new law and how it will affect their incomes, their access to technologies, and their professional autonomy. According to a survey by the Doctors Company, 60 percent of physicians are concerned that the new law will negatively impact patient care. Only 22 percent are optimistic about the law’s impact on patient care. Fifty-one percent feel that the law will negatively impact their relationships with patients. These statistics raise questions about how and whether doctors will participate in the new system.

The Doc Fix

Nov 28, 2011• 15

By Merrill Goozner

Holiday cheer and bipartisan bonhomie are still possible on Capitol Hill.

For evidence, one need only look at the so-called “doc fix,” where Congress every year overrides a previous effort at health care cost control to ensure physicians get paid at least as much as they did the year before. Expect another present to arrive at physicians’ offices sometime between Thanksgiving and Christmas, now that the Super Committee has failed to permanently resolve the issue as part of Medicare’s contribution to long-term deficit control.

The heretical thought that the salaries of physicians who treat Medicare patients could be held in check dates from the mid-1990s. The optimistically entitled 1997 Balanced Budget Act created a “sustainable growth rate” (SGR) for physician reimbursement that said any increase in total pay for physicians could not exceed the growth rate of the rest of the economy.

That was wishful thinking, as it turned out. Health care costs and physician pay far exceeded economic growth, largely because of Medicare’s fee-for-service system. While the Center for Medicare and Medicaid Services could fix the reimbursement rate for the 7,000 price-controlled services offered by physicians, it could not put a brake on the quantity that physicians ordered.

“This system, which ties annual updates to cumulative expenditures, has failed to restrain volume growth and, in fact, may have exacerbated it,” the Medicare Payment Advisory Commission (MedPAC) noted in its non-binding recommendations to Congress in mid-October.

MedPAC’s SGR Solution: Bad Medicine For A Chronic Problem

Nov 17, 2011• 16

By JEFF GOLDSMITH

The Medicare Payment Advisory Commission (MedPAC) is the closest thing Congress has to adult supervision on important health policy questions. The Commission commands bipartisan respect both for its record of sound policy advice and for its leadership.

With its October recommendations, MedPac attempted to solve the sustainable growth rate (SGR) physician payment formula budget crisis by spreading its more than $300 billion cost beyond the physician community. More than two-thirds of the burden would fall on hospitals, pharmaceutical and device manufacturers and, significantly, on Medicare beneficiaries themselves. Clearly MedPac’s intent was to widen the circle of pain.

However, a significant portion of the burden, over $100 billion, would still be borne by the physician community through 17 percent reductions in specialists’ fees and a ten-year freeze on primary care fees. If implemented, MedPac’s policies will give rise to a festival of unintended consequences: weakening multi-specialty group practices (which rely upon specialist comp to cross-subsidize their primary care services); winding down private practice-based primary care medicine; accelerating the hospital roll-up of medical practices while widening hospitals’ losses on the practices they already own; and triggering a further wave of ill-timed cost shifting to private insurers.

CMS’ Opportunity: A Lawsuit Offers A Chance To Reform Physician Payment

Oct 25, 2011• 1

By BRIAN KLEPPER & DAVID KIBBE, MD

By mid-November, the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) must respond to the legal complaint filed in a Maryland federal court by six Augusta, Georgia family physicians.

These doctors are not asking for money, but for relief from the negative effects brought about by CMS’ twenty year reliance on the American Medical Association’s Relative Value Scale Update Committee (RUC) for valuing doctors’ work. They are asking CMS to enforce the Federal Advisory Committee Act(FACA), which requires that regulatory agencies shield themselves from undue special interest influence. In the process, they are asking CMS to rethink Medicare’s approach to physician payment, with a mind toward recognizing and valuing primary care’s ability to treat the whole patient within a larger system of care. They are asking CMS to develop payment policy that supports the needs of patients over those of professional groups.

In a sense, the suit reflects the larger concerns of America’s increasing unrest: a general frustration with a system rigged to benefit the few at the expense of the many, privatizing profits while socializing losses. It calls into question an incentive structure that has resulted in half or more of all health spending providing no utility and translating to exorbitant cost but debatable value. In other words, the case is accompanied by a sense that the system, as it is currently constituted, is failing the American people.

Any simple examination of medical services payment reveals the systematic under-valuing of primary care services relative to procedural services, the direct result of the RUC’s valuation process. For example, in an earlier Health Affairs Blog post we compared a 99214 moderately complex established office visit with a routine cataract extraction and intraocular lens implant. The first has all of medicine as it’s palette. The second is a highly refined, low risk, repetitive procedure that is valued, on an hourly basis, at 12.5 times the first.