The biggest driver of health care spending
Earlier this month, the National Commission on Physician Payment Reform released a report that listed the four factors it singled out as the biggest drivers of high health care system spending.
Topping the list was fee-for-service reimbursement. The commission recommended that payers should largely eliminate stand-alone fee-for-service payments to medical practices over the next five years, blaming the scheme's inherent inefficiencies and negative incentives toward more care. Instead, the commission advocated "an approach based on quality and value" and "fixed-payment models."
Does this mean that the commission expects fee-for-service to disappear in five years? Not necessarily. In fact, the commission said it expects that "fee-for-service will remain an important mode of payment into the future," which is why it also has recommendations on how to "recalibrate" it in the interim.
The commission's report adds to the chorus of those advocating for a reduced role for fee-for-service in the future of physician payment. Medicare is moving toward value-based payment and experimenting with blended payment approaches in approaches in its Comprehensive Primary Care Initiative. Other payers are doing the same. While there is no suggestion that we will ever completely cure ourselves of fee-for-service, there is every indication that it is a treatable condition whose adverse effects, especially on primary care physicians’ quality of life, can be reduced.
(In case you were wondering, the next three practices the commission said are contributing to high spending were a reliance on technology and expensive care, reliance on a high proportion of specialists, and insurers paying hospitals more for certain services or procedures than they would in an outpatient setting.)
– Kent Moore, Senior Strategist for Physician Payment for the American Academy of Family Physicians
Comprehensive Primary Care Initiative: Coming soon to a market near you?
The Center for Medicare & Medicaid Innovation (CMMI) has identified the markets where it will test its Comprehensive Primary Care Initiative (CPCI), according to information posted yesterday on the CMMI website. CPCI, which was announced last fall, will test a payment model that offers physicians a monthly care management fee for each Medicare fee-for-service patient in their care as well as a share of any savings that the initiative generates. The following markets were chosen based on applications from payers:
- New Jersey,
- New York (Capital District/Hudson Valley Region),
- Ohio (Cincinnati/Dayton region),
- Oklahoma (Greater Tulsa region),
Approximately 75 practices in each market will be chosen to participate. CMMI will solicit applications from practices as soon as final agreements are signed with the participating payers, which include private health plans, state Medicaid agencies, and employers, as well as Medicare.
CPCI is a four-year initiative with a planned launch date this summer. If it is shown to improve quality of care and lower costs, CMMI has the authority to roll out the initiative nationwide. Read more about the initiative in Family Practice Management.
2010 Medicare physician fee schedule: Here we go again!
I feel like a broken record.
On April 1 (see "2010 Medicare physician fee schedule: Stop me if you've heard this one before"), I shared with you how the Senate had again failed to pass legislation avoiding a 21 percent cut in the Medicare payment rate to physicians. As a result, the cut was technically effective with dates of service on or after April 1, 2010, but the Centers for Medicare & Medicaid Services (CMS) again instructed its contractors to hold claims for services paid under the fee schedule for the first 10 business days of April to give Congress time to rescind the cut.
It actually took 15 days. On April 15, Congress passed and the President signed legislation that extended the 2009 Medicare physicians payment rate until May 31, 2010.
Now May 31 has come and gone, and I know that you will be shocked to learn that Congress again failed to act. Actually, to be fair to the House of Representatives, it was the Senate that again failed to act. The House passed a bill on May 28 that would have increased the payment rate by 2.2 percent for the rest of 2010 plus an additional 1 percent in 2011. The Senate, however, determined that there was insufficient time to consider the bill before their Memorial Day recess and left Washington without action on the bill.
Consequently, the 21 percent cut is technically in effect again for dates of service on or after June 1. And once again, CMS has instructed its Medicare contractors to hold claims for services paid under the fee schedule for the first 10 business days of the month to give Congress time to rescind the cut.
Congress returns from its recess on June 7. What will happen then is anyone's guess. In the meantime, it's the same tune and a different verse, and it's beginning to sound like the blues to most physicians.
Potentially good news on the Medicare horizon
I don't normally recommend reading the Federal Register unless you're a masochist or have trouble sleeping. However, last month, the Centers for Medicare and Medicaid Services (CMS) published its proposed rule on the 2010 Medicare physician fee schedule in the Federal Register, and there is actually some good news for family physicians in what CMS is proposing.
Among the proposals that CMS estimates will have a positive impact on family physicians, two are most significant. One is that CMS proposes to use more current physician practice cost data in its calculation of practice expense relative value units. The other is that CMS proposes to increase the relative values of office visits and initial hospital visits in conjunction with a proposal to no longer recognize and pay consultation codes. CMS estimates that the impact of these changes would result in approximately an 8 percent increase in Medicare allowed charges for family physicians in 2010. Not surprisingly, the AAFP has commented in support of both proposals.
Of course, every silver lining is attached to a cloud. In this case, the cloud is a 21.5 percent decrease in the Medicare conversion factor for 2010 if Congress does not intervene between now and Jan. 1. Here's hoping the folks on Capitol Hill get around to that, whether or not they get around to health care reform in general.
CMS is accepting comments on the proposed rule until Aug. 31. You can submit comments online or by other means specified in the proposed rule.
Effective April 1, 2009, UnitedHealthcare (UHC) is implementing a new fee schedule that will impact approximately 70,000 physicians nationwide. The effective date of this new fee schedule is not the only thing funny about it. You’ll laugh until you cry.
Recipients of the new fee schedule were previously on what UHC termed a “progressive” fee schedule. (Admittedly, the idea of any health plan, let alone UHC, having a “progressive” fee schedule is funny in and of itself. But, I digress.) That fee schedule featured a fixed conversion factor and relative value units (RVUs) that changed annually based on changes in RVUs in the Medicare physician fee schedule.
The new fee schedule is what UHC calls a “stated year fee schedule.” Under this fee schedule, the physicians’ fees will be based on their existing conversion factors and 2008 Medicare RVUs and non-RVU based fees, and these values will not change on an annual basis.
In essence, affected physicians will have their fees from UHC frozen at their current rates. (No, this is not an April Fools Day joke.)
When asked about this fact, UHC staff responded that network physicians always have the right to initiate negotiations with UHC regarding their fees. So, in effect, the fees are only frozen until the physicians negotiate an increase with UHC or the Cubs win the World Series, whichever comes first.
UHC's rationale for the change is that “recent congressional activity affecting Medicare payment to physicians has introduced new complexity to some of our existing contractual arrangements.” The activity in question is Congress’ mandate that Medicare quit implementing budget neutrality adjustments by simply adjusting work RVUs. UHC had heretofore taken advantage of the adjusted Medicare RVUs, which were lower than the unadjusted RVUs mandated by Congress for 2009. Because of the congressional mandate, continuing to use Medicare RVUs and a fixed conversion factor as the basis for its “progressive” fee schedule would have meant a significant increase in expenditures for UHC. Unable to handle this “new complexity” (“What? We have to pay more?!?”) and in an effort to “stabilize” the methodology for its physicians, UHC decided to change its fee schedules.
“Stability through change.” It’s the new oxymoron of our times.
In any case, UHC has assured affected physicians that they will “see no difference with this new fee schedule and your current reimbursement.” Of course they won’t, because UHC is freezing their reimbursements at the 2008 level. Now, if only they could freeze physicians’ cost of practice at the same time.
Of course, one thing more foolish than UHC’s new fee schedule and its rationale would be actually accepting it.
The future of physician payment?
The start of a new year is often a time to look ahead and try to foresee the future. As I do that this January with respect to physician payment, I see “value-based purchasing” on the horizon.
What is “value-based purchasing?” Good question. I do not have a definitive answer, but I can tell you that the folks in the Centers for Medicare & Medicaid Services (CMS) view it as something that “aligns payment more directly to the quality and efficiency of care provided by rewarding providers for their measured performance across the dimensions of quality.”
And this is not just idle musing, either. By law, the Secretary of Health and Human Services is to develop a plan to transition to a value-based purchasing program for Medicare payment for covered professional services (including physician services) and submit a report to the Congress no later than May 1, 2010. To that end, CMS held a public listening session on this topic on Dec. 9, 2008, and has released an issues paper for review and comment.
What this all means for physician payment is not yet clear. However, I can imagine a day in the not-too-distant future when Medicare and other payers rely less on “fee-for-service” and more on what we have heretofore called “pay-for-performance.” In the meantime, it may be wise to keep an eye on CMS’s plans for transitioning to “value-based purchasing” as an indicator of things to come.