Tag: Doctors Pay

CMS to cut Medicare rates after April 15 if SGR bill not approved

Starting April 15, the Centers for Medicare and Medicaid Services said it will begin reducing physician payment for Medicare claims by 21 percent, the rate mandated under the sustainable growth rate, if legislation is not passed.

The reduced payment will be retroactive to claims received on or after April 1, according to the notice.

CMS issued the notice to healthcare providers after the U.S. Senate adjourned for a two-week break at the end of March without voting on a bill that would end SGR’s cost-cutting mandate for physician payment.

In addition to the rate delay, CMS said it is pushing back enforcement of the “two midnight rule” for 30 days. The rule sets parameters for how long hospital visits can be before becoming inpatient stays. Critics have said the “two midnights” benchmark is too rigid. The SGR bill  would delay the rule for six months

Senate Majority Leader Mitch McConnell, R-KY, promised quick action on the bill when the Senate returned the week of April 13.

However, the deadline for the last “doc fix” on SGR expired April 1, which meant the 21 percent pay cut to physicians would take effect at that time.

CMS will delay processing claims, but said any delay after April 15 would negatively affect providers’ cash flow.

“Because we have an obligation to make sure that physicians are paid for services furnished, starting on April 15, we will begin to process claims at the 21-percent lower payment rate if the law is not changed,” CMS said in its notice. Should Congress act after April 15, CMS would reprocess those claims paid at the lower payment rate to reflect the new payment rates, it said.

The bill , H.R. 2, repeals the automatic Medicare payment cuts to doctors and was overwhelmingly passed the House on March 28.

New Program Accelerates Move to Value-Based Pay for Care

The White House and healthcare industry stakeholders on March 25 officially launched a new nationwide program to rapidly move away from fee-for-service payments and adopt value-based pay methods.

President Obama in January announced formation of the Healthcare Payment Learning and Action Network, and registration started in February. Since then, about 2,800 payers, providers, states, consumer groups and other organizations have joined.

The Department of Health and Human Services announced in January the goal of tying 30 percent of FFS Medicare payments to quality or value through alternative payment models (ACOs, bundled payments, etc.) by 2016 and hitting 50 percent by the end of 2018. HHS also wants to tie 85 percent of traditional Medicare payments to value by 2016 and 90 percent by 2018 through the Hospital Value Based Purchasing and Hospital Readmission Reduction Programs.

Consequently, the goal of the Healthcare Payment Learning and Action Network is to work with private stakeholders to create their own alternative payment models. Such models today account for about 20 percent of Medicare payments.

CMS is funding the Network through monies allocated in the Affordable Care Act. “CMS will fund an independent contractor who will be responsible for convening the Network,” according to an agency statement. “A guiding committee will be created to identify priorities and provide recommendations to the Network convener. The guiding committee will be composed of participants from the Network. Workgroups will be created by the convener in consultation with the guiding committee to address specific topics. Participants in workgroups will be drawn from Network participants. Information will be shared with the entire Network through written communications, regulatory scheduled webinars and in-person meetings.

Among early stakeholder commitments, Cigna has agreed to match the HHS goals with a focus on incenting and assisting physicians, the American College of Physicians will provide education on the initiative to its members and Caesars Entertainment has started a bundled payment demonstration project that includes reduced cost sharing for employees.

Health information technology vendors were well represented at the kick-off of the initiative at the White House today, says Jennifer Covich Bordenick, CEO at eHealth Initiative, an industry stakeholder consortium. That’s important, she adds, because the Healthcare Payment Learning and Action Network brings new emphasis on the value that technology and data play in keeping costs down and improving quality.

Technology to support exchanging and analyzing data, coordinating care and engaging consumers will be critical components for success, Bordenick believes. “Everyone will be focused on figuring out how to move the data so you can use it for alternative payment models.” The new initiative also is a major opportunity for the HIT industry to demonstrate its value, “and that’s a good thing,” she adds.

Contact DAS to learn more about how we can help your practice with the transition to value-based payment.

House, Senate leaders unveil permanent ‘doc fix’ bills

Congressional leaders Thursday announced a bipartisan, bicameral deal to permanently repeal Medicare’s loathed sustainable growth-rate formula for paying doctors. Bills containing terms of the deal were introduced in both chambers of Congress.

Unclear for now, though, is the fate of the Children’s Health Insurance Program and the exact details of how it will be financed.

The legislation, if enacted, would end one of Washington’s longest-running fiscal battles and bring welcome stability to payments for doctors who treat Medicare patients. Congress has passed 17 consecutive short-term fixes dating back more than a decade. A vote is anticipated next week. Doctors would face a 21.2% cut in payments on April 1 if no legislative fix is enacted.

“As a doctor, I know firsthand just how destructive the SGR formula has been to America’s seniors and their providers,” said. Rep. Michael Burgess (R-Texas), the chief sponsor of the House legislation, in a statement. “Finally, after unparalleled progress in recent years, both sides of the aisle have begun to understand that the long-term solvency of our Medicare system depends on taking this fight head-on together.”

The “doc fix” deal was negotiated by House Speaker John Boehner and Minority Leader Nancy Pelosi in recent weeks behind closed doors. But key committee members have signed on. Sponsors of the legislation included Rep. Paul Ryan (R-Wis.), chair of the House Ways and Means Committee and Sen. Orrin Hatch (R-Utah), chair of the Senate Finance Committee.

Boehner and Pelosi negotiated a $213 billion deal that also would extend CHIP funding by two years. The additional spending would be partially offset by $70 billion in spending reductions. Those reductions would be split between reductions to Medicare benefits and cuts to provider payments.

“It’s a chance to get rid of Washington’s most infamous budget gimmick,” Boehner said at a Capitol press conference shortly before the deal was announced.

But the legislation introduced Thursday is essentially the same policy bill that was introduced last year to much fanfare. That deal collapsed when negotiators couldn’t agree on how to pay for the package.

This time around there appears to be tentative agreement on a financing package, although final details are still subject to change, according to staffers monitoring the discussions.

“It’s something that has to happen,” Pelosi said at a press conference Thursday, when asked about SGR repeal. “It’s not a doc fix. It’s a fix for America’s seniors so that they can continue to see their doctors under Medicare.”

A particular sticking point could still be the CHIP issue. The Boehner-Pelosi deal calls for a two-year extension of the program. But Senate Democrats have threatened to withhold their support if it doesn’t include a four-year extension.

Sen. Ron Wyden (D-Ore.), the ranking member of the Finance Committee, pointedly did not add his name to the SGR repeal bill. “At this point, it is not clear what our House colleagues will ask America’s seniors and providers to pay, and the impact that new financial demands will have on them both,” Wyden said in a statement explaining his rationale for withholding support. “Every Democrat in the Senate has cosponsored a clean, four-year extension of CHIP. … Yet negotiators in the House seem willing to settle for less, even though extending funding for this widely popular program would amount to pennies on the dollar in terms of the total cost of the House package.”

Bruce Lesley, president of First Focus, a children’s healthcare advocacy group, said there’s a concern that if CHIP is only extended for two years, it could replace SGR as a perennial legislative vehicle that attracts all kinds of additional proposals. “There’s a perception that no one does harm to kids,” Lesley said. “So people like to hostage-take with our issues.”

There are also potential political perils remaining on both sides of the aisle.

Liberal advocacy groups have generally been muted in their criticism of the deal, despite changes to Medicare benefits that will increase costs for beneficiaries with incomes above $133,000 and eventually eliminate first-dollar-coverage Medigap plans.

Conservatives have splintered over the issue. Americans for Tax Reform, the influential anti-tax organization, has backed the deal. But other advocacy groups have blasted it for failing to fully pay for the increase in Medicare expenditures. The nonpartisan Committee for a Responsible Federal Budget released an analysis Thursday showing that the deal would add $400 billion to the federal deficit by 2035—a statistic that’s sure to stir unrest among budget hawks.

Robert Moffit, a healthcare policy expert at the conservative Heritage Foundation, decried the secretive talks between Pelosi and Boehner. “It’s a very bad way to do something of this magnitude,” Moffit said. “This rotten process is going to present members of Congress with a fait accompli.”

Stan Collender, a former top staffer on both the House and Senate budget committees, thinks the SGR deal probably has the votes to pass in the House. But he suggests that it could still get hung up in the Senate if ardent fiscal conservatives (and presidential hopefuls) like Sens. Ted Cruz (R-Texas) and Rand Paul (R-Ky.) decide to filibuster it.

“The votes may be there to overcome a filibuster, but it’s not going to be easy,” said Collender, who is now executive vice president and national director of the Washington-based consulting firm Qorvis MSLGROUP. “There’s at least a 33% chance, if not higher, that this just doesn’t happen.”

The calendar also could present problems. Congress is supposed to adjourn next Thursday for the Easter/Passover break. That leaves little time for any missteps. If Congress doesn’t take action by the end of the month, doctors would face a 21.2% cut in Medicare payments on April 1.

A senior House staffer who has worked closely on the issue expressed optimism that the deal will get passed, but noted that “it’s not done until it’s done.”

Another patch looks inevitable as ‘doc fix’ deadline nears

The perennial battle over Medicare payments to doctors is about to surface on Capitol Hill once again and the outcome is likely to be the same as in previous years—a temporary patch.

The current “doc fix” expires at the end of March. If Congress fails to take action, physicians will face a 21.2% decrease in payments for treating Medicare beneficiaries—a prospect that’s viewed as untenable by partisans of all stripes.

Prospects for a permanent fix to Medicare’s sustainable growth rate formula before the end of the month are slim to non-existent, according to lobbyists and congressional staffers who track the issue.

Last year, negotiators reached a bicameral, bipartisan accord on scrapping the hated payment scheme. But that pact collapsed because there was no agreement on how to pay for the roughly $130 billion fix. The financial task has now become more difficult, with the Congressional Budget Office adding roughly $40 billion to the price tag over a decade.

“It’s pretty clear that we’re going to get some kind of a patch,” said Dean Rosen, a partner with the lobbying firm Mehlman Castagnetti Rosen Bingel & Thomas. “The only question is, how long is it going to be?”

That patch would be the 18th straight short-term doc fix. Speculation on the length of the patch runs anywhere from two months to the end of 2016, which would kick the SGR can past the next presidential election.

But most informed observers are focused on a shorter-term fix in the three- to six-month range. That would provide a window for Republican congressional leaders to work on a permanent repeal package.

“There clearly is a lot of sincere intention to have a longer-term fix at some point this year,” said Rosen, who previously served as the top healthcare staffer for former GOP Senate Majority Leader Bill Frist.

Congressional staffers echo that view. “It is clear that the ranking members and the chairmen are on board for what we have been calling the base agreement,” said a senior House staffer close to the issue. “We all still think this is the right answer.”

A six-month extension also would push the deadline beyond June, when the Supreme Court is expected to rule on the King v. Burwell case challenging premium subsidies in up to 37 states that haven’t established their own health insurance exchanges. If subsidies are struck down, the SGR could potentially become part of a broader discussion about fixes to the Affordable Care Act.

But the immediate agenda on Capitol Hill will almost certainly include passing another patch. A six-month fix would cost in the neighborhood of $10 to $12 billion. The bulk of that money is likely to come from extending Medicare cuts that were part of the sequestration deal, as well as extending cuts to Medicaid’s Disproportionate Share Hospital payments, according to lobbyists and staffers working on the issue.

One wild card is whether reauthorization of the Children’s Health Insurance Program becomes part of the deal. That program is set to run out of money at the end of September and there is bipartisan support for extending it. States would like to see that happen soon because many of them are in the process of drafting budgets for the fiscal year that begins July 1.

“They’re saying you can’t leave us hanging until September,” said Anne Phelps, U.S. healthcare regulatory leader at consulting firm Deloitte. “That’s way too late.”

But the issue has become entangled in partisan politics. Last month, Sen. Orrin Hatch (R-Utah), chair of the Senate Finance Committee, and Rep. Fred Upton (R-Mich.), chair of the House Energy and Commerce Committee, released a proposal to extend CHIP funding. That plan has drawn fire from left-leaning groups such as the Center on Budget and Policy Priorities for reducing benefits and shifting costs to the states.

“It has added more partisan tension to the discussion than I think probably either side would have hoped,” said Billy Wynne, a partner with lobbying firm Thorn Run Partners, who works on healthcare issues. “It hasn’t helped bring the parties together to get a final deal done.”

A GOP Senate staffer involved in the issue said Republicans are running a risk by letting the SGR deadline get so close without notifying their Democratic counterparts about what they plan to propose. As a result, they could see Democrats demand a clean CHIP reauthorization in return for their votes as the clock winds down. “How much of a game is going to be played there is unclear,” the Senate staffer said.

In recent years, SGR-patch legislation also has become an attractive vehicle for other policy proposals because it’s one of the few healthcare bills guaranteed to gain traction. Last year’s package, for example, included an implementation delay in the ICD-10 coding system for Medicare payments.

But most healthcare watchers are expecting a relatively clean bill to emerge, given the small window for action. Any extraneous policy proposals could clog the prospects for timely passage.

“New policy is not something that they’re interested in at this point,” said Joel White, president of the Council for Affordable Health Coverage, a business-backed advocacy group.

Despite the potential legislative potholes, most healthcare policy watchers expect a deal will come together on an SGR patch before the March 31 deadline. “It gets done,” White said. “It’s just, what does it look like?”

The prospects for a longer-term deal remain much more uncertain. That’s in large part because of questions about how to pay for it. The thumbnail dynamic is that most Republicans believe a permanent doc fix needs to be offset by spending cuts, while many Democrats don’t think that’s necessary.

“I believe the majority of the majority [Republicans] believe that the majority of it has to be paid for,” Rosen said.

Which means, Wynne noted, that the odds of a permanent fix remain remote. “It’s always safe to bet against permanent SGR repeal,” he said.

When Hospitals Buy Doctors’ Offices, and Patient Fees Soar

Imagine you’re a Medicare patient, and you go to your doctor for an ultrasound of your heart one month. Medicare pays your doctor’s office $189, and you pay about 20 percent of that bill as a co-payment.

Then, the next month, your doctor’s practice has been bought by the local hospital. You go to the same building and get the same test from the same doctor, but suddenly the price has shot up to $453, as has your share of the bill.

Patients around the country are getting that unpleasant surprise, as more and more doctors’ offices are being bought by hospitals. Medicare, the government health insurance program for those 65 and over or the disabled, pays one price to independent doctors and another to doctors who work for large health systems — even if they are performing the exact same service in the exact same place.

This week, the Obama administration recommended a change to eliminate much of that gap. Despite expected protests from hospitals and doctors, the idea has a chance of being adopted because it would yield huge savings for Medicare and patients.

In the dry language of the annual budget, the White House asks Congress to “encourage efficient care by improving incentives to provide care in the most appropriate ambulatory setting.” In normal English, that means reducing financial incentives that are causing many doctors to sell their practices to hospitals just to take advantage of extra revenue.

The heart doctors are a great example. In 2009, the federal government cut back on what it paid to cardiologists in private practice who offered certain tests to their patients. Medicare determined that the tests, which made up about 30 percent of a typical cardiologist’s revenue, cost more than was justified, and there was evidence that some doctors were overusing them. Suddenly, Medicare paid about a third less than it had before.

But the government didn’t cut what it paid cardiologists who worked for a hospital and provided the same test. It actually paid those doctors more, because the payment systems were completely separate. In general, Medicare assumes that hospital care is by definition more expensive to provide than office-based care.

You can imagine the result: Over the past five years, the number of cardiologists in private practice has plummeted as more and more doctors sold their practices to nearby hospitals that weren’t subject to the new cuts. Between 2007 and 2012, the number of cardiologists working for hospitals more than tripled, according to a survey from the American College of Cardiology, while the percentage working in private practice fell to 36 percent from 59 percent. At the time of the survey, an additional 31 percent of practices were either in the midst of merger talks or considering it. The group’s former chief operating officer once described the shift to me as “like a migration of wildebeests.”

Cardiologists are not the only doctors who have been migrating toward hospital practice. In the last few years, there have been increases in the number of doctors working for hospitals across the specialties. And spreads between fees for office services exist in an array of medical services, down to the basic office visit. The president’s proposal would apply to all doctors working in off-campus, hospital-owned practices.

Shifting practice ownership patterns have ripple effects for patients with private insurance, too. Like Medicare, most private insurers pay higher prices to hospitals than to independent doctors.

Private insurers tend to copy many of Medicare’s payment policies. And, in general, large hospital groups tend to have more negotiating clout with insurers, meaning they can bargain for higher prices than smaller practices.

The administration’s proposal would essentially end that system of different prices for similar services. Medicare would pay the same for any visit, test or procedure offered by doctors who work in private practice and by those who work in off-campus practices that are owned by hospitals. Doctors who work in the hospital building could still be paid the higher hospital rate. But the free-standing practice that suddenly changes hands would not continue to be paid more.

The result, in dollar terms, is estimated to be very large. According to the White House’s calculation, Medicare would save nearly $30 billion over 10 years if Congress required the payment switch. That’s more than Medicare could save if it raised the eligibility age to 67. And that doesn’t even count the money that could be saved by Medicare patients whose co-payments will also go down.

Hospitals don’t like the idea. Nearly all the money would come out of their pockets, and they argue that running a medical practice really does cost more for hospitals than it does for independent physician practices. Hospitals have to stay open at all hours, run emergency rooms and comply with an array of regulatory requirements that physician-owned practices don’t need to worry about.

“You can’t just convert it and be exactly the same,” said Rich Pollack, an executive vice president at the American Hospital Association. “You have to meet the requirements.”

The Medicare Payment Advisory Committee, a group of experts that advises Congress, thinks that the pay differences should be narrowed, but only for a select set of medical services in which it’s really clear that there’s no difference between the care offered by a hospital and a physician office.

The pay differences, of course, are not the only reason that more doctors are going to work for hospitals. There are generational trends: Younger doctors are less interested in entrepreneurship and more interested in predictable hours and salary. And another Medicare program is trying to create financial incentives for health systems to manage patients’ entire health care experience, which many hospitals find easier to do if they employ the doctors.

Still, Robert Berenson, a physician and a senior fellow at the Urban Institute, said it’s clear that a lot of recent doctor-hospital mergers have been driven by Medicare’s disparate pay policies. He thinks the budget proposal lacks needed subtlety, but he supports equalizing many payments in concept. “If hospitals are going to employ physicians, it should be done for the right reasons, not the wrong reasons,” he said.

The change would have big consequences, especially for hospitals, which have already endured several rounds of recent Medicare cuts. But in contrast to a lot of things in the president’s budget, it’s hard to dismiss this proposal as mere wishful thinking. Congress is often looking for places to save money in the Medicare budget, in part because it must find money every year to keep all doctors’ pay from declining precipitously — the result of a misguided payment formula passed in the 1990s.

“The list of available offsets is dwindling,” said Eric Zimmerman, a partner at the lobbying firm McDermott Will & Emery, who represents many health care providers. In an email, he described the doctor’s pay proposal as one that “may be moving to the top of the list.”

Feds speed plans for value-based Medicare payments

The U.S. Department of Health and Human Services (HHS) on Monday said it would fundamentally reform how it pays providers for treating Medicare patients in the coming years.

The intent, according to HHS officials, is to cut down on the volume of unnecessary procedures while improving patient outcomes.

“Those models will depend on how well providers care for their patients, instead of how much care they provide,” HHS Secretary Sylvia Mathews Burwell said at a Monday press conference, the Washington Post reported.

For the first time, she said in a statement, her agency was “setting clear goals–and establishing a clear timeline–for moving from volume to value in Medicare payments. We will use benchmarks and metrics to measure our progress; and hold ourselves accountable for reaching our goals.”

During a later press conference, Patrick Conway, M.D., deputy administrator for innovation and quality and the chief medical officer for the Centers for Medicare & Medicaid Services, said the agency will tie 30 percent of all fee-for-service payments to providers to quality initiatives through alternative payment models–particularly accountable care organizations (ACOs) and bundled payments–by 2016. It will rise to 50 percent by 2018.

About 20 percent of Medcare FFS payments are through new payment models, according to the HHS statement.

“This is focused on moving our system toward better care,” Conway said at the press conference Monday afternoon. He added that the announcement was intended to provide clarity on payment policy to providers, “so they can partner with health plans and move toward a health system that is patient-centered.”

Conway noted that the agency intends to accelerate the program through expansion of current payment models, including the Pioneer and other ACO programs, as well as emerging models, such as bundled payments for oncology care.

Medicare is the second-largest spender of U.S. government revenues behind the military, with a budget of around $600 billion a year. And while it spend less on services than private payers, the U.S. still spends twice as much as any other industrialized nation on healthcare delivery, often with quality that suffers in comparison.