The House hears SGR alternatives, vows action

A plan to finally replace Medicare’s much-maligned sustainable growth rate (SGR) payment formula could be unveiled by this summer, federal lawmakers said at a committee hearing. “Here’s the bottom line: If we get to December and we’re doing an extension, that’s a failure on our part,” Rep. Michael Burgess (R–Tex) said at the hearing. “We need a permanent solution that’s predictable, updatable, and reasonable for this year—and nothing else will do.”

“Whatever virtues the SGR had when it was created 14 years ago..., it’s clear that they have vanished,” added Rep. Henry A. Waxman (D–Calif). He noted that in the past 2 years, Congress has had to pass legislation six times, blocking fee cuts of up to 21% or more.

About 30 medical associations, including the American Society of Clinical Oncology (ASCO), responded to the House subcommittee’s request for suggestions and proposals in developing a new system. On May 5, 2011, House subcommittee members met with a five-person panel of experts from medical associations and health policy organizations to consider alternatives to the current SGR formula, which some participants labeled as anything but sustainable.

One size won’t fit all

Although the details of ASCO’s plan and others vary, they also show a consensus on several fronts: repealing the SGR, moving away from the traditional fee-for-services payment model, and providing a 4- to 5-year transition period during which providers can experiment with a variety of payment systems.

In a letter accompanying the ASCO recommendations, the president, Dr. George Sledge, and CEO, Dr. Allen Lichter, stressed that SGR reforms in general should be linked to existing “robust” systems that promote evidence-based medicine. For oncology in particular, that effort should leverage the Quality Oncology Practice Initiative (QOPI), a comprehensive, field-tested program that more than one-quarter of outpatient oncology practices in the United States already participate in. More than 80% of oncology care is provided in that setting.

“The current SGR system has created an uncertain and unstable environment—a situation that threatens the viability of practices and access to care for thousands of cancer patients,” they concluded.

In its recommendations, ASCO asserted that evidence-based medicine is “both warranted and necessary” because:

• Medicare beneficiaries account for more than half of all new cancer diagnoses in the United States, and treatment and prevention of the disease comprise almost 10% of costs under fee-for-service Medicare;
• The care is complex, treatment can span many specialties, and treatment strategies change rapidly to keep pace with scientific advances; and
• These complexities would not be adequately addressed if a multispecialty system (such as the Physician Quality Reporting System) were to be applied in the oncology setting.
The recommendations also detailed why the QOPI should be incorporated as the primary quality measurement program: 25%-30% of a range of practices—urban, rural, community, and academic—participate in it; it is free; some private insurers have adopted incentives for participation in the program; the performance measures are field-tested and up-to-date; and participation promotes high-quality, high-value care and can help identify and address discrepancies in oncology care.

Moreover, QOPI “protects the best interests of patients, reduces exposure to unnecessary treatments and tests, minimizes the use of suboptimal treatment options, promotes the coordination of care, and protects the Medicare program from costs associated with poor-quality care,” ASCO asserted in the recommendation.

Members of the expert panel also stressed the importance of avoiding a “one-size-fits-all” solution. “We should [be mindful] that what will work in one part of the country will not work in another part of the country, and that’s why we have continued to talk about a variety of options,” said Dr. Cecil Wilson, president of the American Medical Association (AMA). “There is a temptation to feel that we ought to figure out one rule ...that solves it all.”

Dr. Wilson pointed to the provisions in the Affordable Care Act that allow for a variety of models of accountable care organizations, embodying the concept of options in the medical system. In that spirit, he said that the AMA has formed a physician leadership group to evaluate the effectiveness of alternative payment methods.

Dr. Roland A. Goertz, president of the American Academy of Family Physicians (AAFP), noted in written testimony to the committee that “the evidence shows that to achieve the savings Congress is looking for, and to improve the quality of health care delivered to millions of patients in the country, reform must include investment in primary care.”

To strengthen primary care’s role in Medicare, the AAFP backs payment reforms that would boost primary care reimbursement and support the concept of the patient-centered medical home (PCMH). The AAFP’s proposal would create a blended reimbursement system for primary care delivered within a PCMH: fee-for-service payments and pay for performance, plus care management fees for PCMH-related activities that do not involve direct patient care.

To prepare for that new payment system, the AAFP has proposed a 5-year transition period with mandated pay increases for primary care physicians, an increase in the Primary Care Incentive Care payment from 10% to 20%, and a rule that Medicaid payments to primary care physicians will always be at least equal to Medicare payments.

Dr. David Hoyt, executive director of the American College of Surgeons, said the College is analyzing the use of bundled payments for surgery. Dr. M. Todd Williamson, of the Coalition of State Medical and National Specialty Societies, introduced the option of private contracting, in which patients would be free to apply their benefits to a doctor of their choice, who would be free to opt out on a per-patient basis.

“Private contracting is a key principle of American freedom and liberty,” Dr. Williamson said. “[It] will help the federal government achieve fiscal stability while fulfilling its promise to Medicare beneficiaries.”

Harold Miller, executive director of the Center for Healthcare Quality and Payment Reform, suggested an episode-of-care payment plan through which hospitals and physicians jointly charge one price for all services included in a hospitalization. The model would also include a warranty stating that any infections or complications would be treated at no additional cost. Also, a physician practice would receive one payment for all patient needs associated with chronic diseases or other conditions.

Rep. Burgess, who is also a physician, said organizations should focus on ways to address patients with chronic conditions, adding that 80% of Medicare funding is spent by 20% of beneficiaries with chronic illnesses.

Is the IPAB the new SGR?

Rep. Fred Upton (R–Mich) raised concerns about the Independent Payment Advisory Board (IPAB), created by the Affordable Care Act. The Board sets expenditure targets on which it bases spending cuts. In 2018, targets will be based on the gross domestic product. “Sounds a lot like the SGR, which we’re trying to get rid of,” Mr. Upton said. “Since hospitals are exempt from IPAB cuts through the rest of the decade, it seems that the IPAB has the potential to undermine any serious efforts at physician payment reform.”

Some panelists agreed. “It’s not impossible that [the IPAB] could serve a function,” Dr. Wilson said, “but as presently constituted, we see it [as] basically another target for physicians to meet, potential double jeopardy, with an SGR as well as the pronouncements from this body.”

The panelists also asserted their belief that whatever plan chosen should be physician led, with financial support of the government. “It would be very helpful if physicians could get better financial support in their own payment system to enable them to lead all of those efforts,” said Dr. Mark B. McClellan, director of the Engelberg Center for Health Care Reform and former administrator of the Centers for Medicare and Medicaid Services. “Right now, with fee-for-service staying the way it is, they’re staying behind.” Dr. McClellan added that physicians can be the best sources for innovative and cost-saving mechanisms.

A plan to finally replace Medicare’s much-maligned sustainable growth rate (SGR) payment formula could be unveiled by this summer, federal lawmakers said at a committee hearing. “Here’s the bottom line: If we get to December and we’re doing an extension, that’s a failure on our part,” Rep. Michael Burgess (R–Tex) said at the hearing. “We need a permanent solution that’s predictable, updatable, and reasonable for this year—and nothing else will do.”

“Whatever virtues the SGR had when it was created 14 years ago..., it’s clear that they have vanished,” added Rep. Henry A. Waxman (D–Calif). He noted that in the past 2 years, Congress has had to pass legislation six times, blocking fee cuts of up to 21% or more.

About 30 medical associations, including the American Society of Clinical Oncology (ASCO), responded to the House subcommittee’s request for suggestions and proposals in developing a new system. On May 5, 2011, House subcommittee members met with a five-person panel of experts from medical associations and health policy organizations to consider alternatives to the current SGR formula, which some participants labeled as anything but sustainable.

One size won’t fit all

Although the details of ASCO’s plan and others vary, they also show a consensus on several fronts: repealing the SGR, moving away from the traditional fee-for-services payment model, and providing a 4- to 5-year transition period during which providers can experiment with a variety of payment systems.

In a letter accompanying the ASCO recommendations, the president, Dr. George Sledge, and CEO, Dr. Allen Lichter, stressed that SGR reforms in general should be linked to existing “robust” systems that promote evidence-based medicine. For oncology in particular, that effort should leverage the Quality Oncology Practice Initiative (QOPI), a comprehensive, field-tested program that more than one-quarter of outpatient oncology practices in the United States already participate in. More than 80% of oncology care is provided in that setting.

“The current SGR system has created an uncertain and unstable environment—a situation that threatens the viability of practices and access to care for thousands of cancer patients,” they concluded.

In its recommendations, ASCO asserted that evidence-based medicine is “both warranted and necessary” because:

• Medicare beneficiaries account for more than half of all new cancer diagnoses in the United States, and treatment and prevention of the disease comprise almost 10% of costs under fee-for-service Medicare;
• The care is complex, treatment can span many specialties, and treatment strategies change rapidly to keep pace with scientific advances; and
• These complexities would not be adequately addressed if a multispecialty system (such as the Physician Quality Reporting System) were to be applied in the oncology setting.
The recommendations also detailed why the QOPI should be incorporated as the primary quality measurement program: 25%-30% of a range of practices—urban, rural, community, and academic—participate in it; it is free; some private insurers have adopted incentives for participation in the program; the performance measures are field-tested and up-to-date; and participation promotes high-quality, high-value care and can help identify and address discrepancies in oncology care.

Moreover, QOPI “protects the best interests of patients, reduces exposure to unnecessary treatments and tests, minimizes the use of suboptimal treatment options, promotes the coordination of care, and protects the Medicare program from costs associated with poor-quality care,” ASCO asserted in the recommendation.

Members of the expert panel also stressed the importance of avoiding a “one-size-fits-all” solution. “We should [be mindful] that what will work in one part of the country will not work in another part of the country, and that’s why we have continued to talk about a variety of options,” said Dr. Cecil Wilson, president of the American Medical Association (AMA). “There is a temptation to feel that we ought to figure out one rule ...that solves it all.”

Dr. Wilson pointed to the provisions in the Affordable Care Act that allow for a variety of models of accountable care organizations, embodying the concept of options in the medical system. In that spirit, he said that the AMA has formed a physician leadership group to evaluate the effectiveness of alternative payment methods.

Dr. Roland A. Goertz, president of the American Academy of Family Physicians (AAFP), noted in written testimony to the committee that “the evidence shows that to achieve the savings Congress is looking for, and to improve the quality of health care delivered to millions of patients in the country, reform must include investment in primary care.”

To strengthen primary care’s role in Medicare, the AAFP backs payment reforms that would boost primary care reimbursement and support the concept of the patient-centered medical home (PCMH). The AAFP’s proposal would create a blended reimbursement system for primary care delivered within a PCMH: fee-for-service payments and pay for performance, plus care management fees for PCMH-related activities that do not involve direct patient care.

To prepare for that new payment system, the AAFP has proposed a 5-year transition period with mandated pay increases for primary care physicians, an increase in the Primary Care Incentive Care payment from 10% to 20%, and a rule that Medicaid payments to primary care physicians will always be at least equal to Medicare payments.

Dr. David Hoyt, executive director of the American College of Surgeons, said the College is analyzing the use of bundled payments for surgery. Dr. M. Todd Williamson, of the Coalition of State Medical and National Specialty Societies, introduced the option of private contracting, in which patients would be free to apply their benefits to a doctor of their choice, who would be free to opt out on a per-patient basis.

“Private contracting is a key principle of American freedom and liberty,” Dr. Williamson said. “[It] will help the federal government achieve fiscal stability while fulfilling its promise to Medicare beneficiaries.”

Harold Miller, executive director of the Center for Healthcare Quality and Payment Reform, suggested an episode-of-care payment plan through which hospitals and physicians jointly charge one price for all services included in a hospitalization. The model would also include a warranty stating that any infections or complications would be treated at no additional cost. Also, a physician practice would receive one payment for all patient needs associated with chronic diseases or other conditions.

Rep. Burgess, who is also a physician, said organizations should focus on ways to address patients with chronic conditions, adding that 80% of Medicare funding is spent by 20% of beneficiaries with chronic illnesses.

Is the IPAB the new SGR?

Rep. Fred Upton (R–Mich) raised concerns about the Independent Payment Advisory Board (IPAB), created by the Affordable Care Act. The Board sets expenditure targets on which it bases spending cuts. In 2018, targets will be based on the gross domestic product. “Sounds a lot like the SGR, which we’re trying to get rid of,” Mr. Upton said. “Since hospitals are exempt from IPAB cuts through the rest of the decade, it seems that the IPAB has the potential to undermine any serious efforts at physician payment reform.”

Some panelists agreed. “It’s not impossible that [the IPAB] could serve a function,” Dr. Wilson said, “but as presently constituted, we see it [as] basically another target for physicians to meet, potential double jeopardy, with an SGR as well as the pronouncements from this body.”

The panelists also asserted their belief that whatever plan chosen should be physician led, with financial support of the government. “It would be very helpful if physicians could get better financial support in their own payment system to enable them to lead all of those efforts,” said Dr. Mark B. McClellan, director of the Engelberg Center for Health Care Reform and former administrator of the Centers for Medicare and Medicaid Services. “Right now, with fee-for-service staying the way it is, they’re staying behind.” Dr. McClellan added that physicians can be the best sources for innovative and cost-saving mechanisms.

A plan to finally replace Medicare’s much-maligned sustainable growth rate (SGR) payment formula could be unveiled by this summer, federal lawmakers said at a committee hearing. “Here’s the bottom line: If we get to December and we’re doing an extension, that’s a failure on our part,” Rep. Michael Burgess (R–Tex) said at the hearing. “We need a permanent solution that’s predictable, updatable, and reasonable for this year—and nothing else will do.”

“Whatever virtues the SGR had when it was created 14 years ago..., it’s clear that they have vanished,” added Rep. Henry A. Waxman (D–Calif). He noted that in the past 2 years, Congress has had to pass legislation six times, blocking fee cuts of up to 21% or more.

About 30 medical associations, including the American Society of Clinical Oncology (ASCO), responded to the House subcommittee’s request for suggestions and proposals in developing a new system. On May 5, 2011, House subcommittee members met with a five-person panel of experts from medical associations and health policy organizations to consider alternatives to the current SGR formula, which some participants labeled as anything but sustainable.

One size won’t fit all

Although the details of ASCO’s plan and others vary, they also show a consensus on several fronts: repealing the SGR, moving away from the traditional fee-for-services payment model, and providing a 4- to 5-year transition period during which providers can experiment with a variety of payment systems.

In a letter accompanying the ASCO recommendations, the president, Dr. George Sledge, and CEO, Dr. Allen Lichter, stressed that SGR reforms in general should be linked to existing “robust” systems that promote evidence-based medicine. For oncology in particular, that effort should leverage the Quality Oncology Practice Initiative (QOPI), a comprehensive, field-tested program that more than one-quarter of outpatient oncology practices in the United States already participate in. More than 80% of oncology care is provided in that setting.

“The current SGR system has created an uncertain and unstable environment—a situation that threatens the viability of practices and access to care for thousands of cancer patients,” they concluded.

In its recommendations, ASCO asserted that evidence-based medicine is “both warranted and necessary” because:

• Medicare beneficiaries account for more than half of all new cancer diagnoses in the United States, and treatment and prevention of the disease comprise almost 10% of costs under fee-for-service Medicare;
• The care is complex, treatment can span many specialties, and treatment strategies change rapidly to keep pace with scientific advances; and
• These complexities would not be adequately addressed if a multispecialty system (such as the Physician Quality Reporting System) were to be applied in the oncology setting.
The recommendations also detailed why the QOPI should be incorporated as the primary quality measurement program: 25%-30% of a range of practices—urban, rural, community, and academic—participate in it; it is free; some private insurers have adopted incentives for participation in the program; the performance measures are field-tested and up-to-date; and participation promotes high-quality, high-value care and can help identify and address discrepancies in oncology care.

Moreover, QOPI “protects the best interests of patients, reduces exposure to unnecessary treatments and tests, minimizes the use of suboptimal treatment options, promotes the coordination of care, and protects the Medicare program from costs associated with poor-quality care,” ASCO asserted in the recommendation.

Members of the expert panel also stressed the importance of avoiding a “one-size-fits-all” solution. “We should [be mindful] that what will work in one part of the country will not work in another part of the country, and that’s why we have continued to talk about a variety of options,” said Dr. Cecil Wilson, president of the American Medical Association (AMA). “There is a temptation to feel that we ought to figure out one rule ...that solves it all.”

Dr. Wilson pointed to the provisions in the Affordable Care Act that allow for a variety of models of accountable care organizations, embodying the concept of options in the medical system. In that spirit, he said that the AMA has formed a physician leadership group to evaluate the effectiveness of alternative payment methods.

Dr. Roland A. Goertz, president of the American Academy of Family Physicians (AAFP), noted in written testimony to the committee that “the evidence shows that to achieve the savings Congress is looking for, and to improve the quality of health care delivered to millions of patients in the country, reform must include investment in primary care.”

To strengthen primary care’s role in Medicare, the AAFP backs payment reforms that would boost primary care reimbursement and support the concept of the patient-centered medical home (PCMH). The AAFP’s proposal would create a blended reimbursement system for primary care delivered within a PCMH: fee-for-service payments and pay for performance, plus care management fees for PCMH-related activities that do not involve direct patient care.

To prepare for that new payment system, the AAFP has proposed a 5-year transition period with mandated pay increases for primary care physicians, an increase in the Primary Care Incentive Care payment from 10% to 20%, and a rule that Medicaid payments to primary care physicians will always be at least equal to Medicare payments.

Dr. David Hoyt, executive director of the American College of Surgeons, said the College is analyzing the use of bundled payments for surgery. Dr. M. Todd Williamson, of the Coalition of State Medical and National Specialty Societies, introduced the option of private contracting, in which patients would be free to apply their benefits to a doctor of their choice, who would be free to opt out on a per-patient basis.

“Private contracting is a key principle of American freedom and liberty,” Dr. Williamson said. “[It] will help the federal government achieve fiscal stability while fulfilling its promise to Medicare beneficiaries.”

Harold Miller, executive director of the Center for Healthcare Quality and Payment Reform, suggested an episode-of-care payment plan through which hospitals and physicians jointly charge one price for all services included in a hospitalization. The model would also include a warranty stating that any infections or complications would be treated at no additional cost. Also, a physician practice would receive one payment for all patient needs associated with chronic diseases or other conditions.

Rep. Burgess, who is also a physician, said organizations should focus on ways to address patients with chronic conditions, adding that 80% of Medicare funding is spent by 20% of beneficiaries with chronic illnesses.

Is the IPAB the new SGR?

Rep. Fred Upton (R–Mich) raised concerns about the Independent Payment Advisory Board (IPAB), created by the Affordable Care Act. The Board sets expenditure targets on which it bases spending cuts. In 2018, targets will be based on the gross domestic product. “Sounds a lot like the SGR, which we’re trying to get rid of,” Mr. Upton said. “Since hospitals are exempt from IPAB cuts through the rest of the decade, it seems that the IPAB has the potential to undermine any serious efforts at physician payment reform.”

Some panelists agreed. “It’s not impossible that [the IPAB] could serve a function,” Dr. Wilson said, “but as presently constituted, we see it [as] basically another target for physicians to meet, potential double jeopardy, with an SGR as well as the pronouncements from this body.”

The panelists also asserted their belief that whatever plan chosen should be physician led, with financial support of the government. “It would be very helpful if physicians could get better financial support in their own payment system to enable them to lead all of those efforts,” said Dr. Mark B. McClellan, director of the Engelberg Center for Health Care Reform and former administrator of the Centers for Medicare and Medicaid Services. “Right now, with fee-for-service staying the way it is, they’re staying behind.” Dr. McClellan added that physicians can be the best sources for innovative and cost-saving mechanisms.