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Medicare Sets Measures for Hospital P4P
Medicare officials are expanding the list of quality measures that hospitals will be judged on as part of a new pay-for-performance program created under the Affordable Care Act.
In a final rule released Nov. 1, detailing Medicare payment rates for hospital outpatient departments, officials at the Centers for Medicare and Medicaid Services announced that they are adding a new clinical process of care measure related to urinary catheters to the Hospital Inpatient Value-Based Purchasing (VBP) Program. The new measure, which will go into effect in October 2013 for fiscal year 2014, will assess whether a urinary catheter inserted during surgery is removed on the first or second postsurgical day. Hospitals will begin reporting data to the CMS on the new measure in 2012.
The new measure will be added to 12 clinical process measures and 1 patient experience measure that were adopted for the first year of the program. The CMS also finalized plans to include three outcome measures related to 30-day mortality for acute myocardial infarction, heart failure, and pneumonia in the program for fiscal year 2014.
At the same time, the CMS is delaying plans to include other measures. The agency had planned to include eight measures on hospital-acquired conditions, two composite measures from the Agency for Healthcare Research and Quality, and a Medicare Spending per Beneficiary measure in the Hospital VBP program in fiscal year 2014. But after receiving public comments noting that performance data had not been publicly available long enough for hospitals to prepare to incorporate the measures, Medicare officials relented.
According to the final rule, the CMS will post hospital performance data on the measures to Medicare’s Hospital Compare website for at least 1 year before requiring hospitals to report data on them.
Under the Hospital VBP program, the CMS will begin making incentive payments to hospitals based on quality on Oct. 1, 2012. The payments are funded by reducing Medicare payments to hospitals by 1% during fiscal year 2013 and 1.25% in fiscal year 2014.
Hospital payments under the program will be based on performance on clinical process-of-care measures, patient satisfaction, and clinical outcomes. In fiscal year 2014, process-of-care measures will be weighted at 45% of the score, patient satisfaction at 30%, and outcomes at 25%. During the first year of the program, process-of-care measures will weighted at 70% and patient satisfaction measures at 30%.
Medicare officials are also moving ahead with plans to require ambulatory surgical centers (ASCs) to report on quality measures next year.
In the final rule, the CMS adopted four clinical outcome measures and one surgical infection control measure that ASCs must report on beginning in October 2012. The final list includes measures related to patient burns; patient falls; wrong site, wrong side, wrong patient, wrong procedure, and wrong implant surgery; rate of ASC admissions requiring a hospital transfer/admission upon discharge; and prophylactic intravenous antibiotic timing. The data reported will be used to determine payments for 2014, according to the final rule.
In 2013, ASCs will also have to report on their use of the safe surgery checklist and report data on their facility volume on selected procedures. That information will be used in setting payments for 2015. Additionally, hospitals will be required to report on influenza vaccination coverage among health care workers starting in 2014, which will affect their 2016 payments.
The more than 1,500-page final rule also outlines the 2012 payments to hospitals and ASCs for outpatient services. The CMS estimates that in 2012, it will spend about $41.1 billion to pay the more than 4,000 general acute care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, long-term acute care hospitals, children’s hospitals, and cancer hospitals under Medicare’s Outpatient Prospective Payment System. And the agency will pay another $3.5 billion to about 5,000 ASCs next year.
The final rule increased payments to hospital outpatient departments by 1.9% in 2012. Under the rule, payments to cancer hospitals will go up by 11.3% due to adjustments required under the Affordable Care Act. ACSs will also see their payments increase by 1.6% in 2012. ☐
Medicare officials are expanding the list of quality measures that hospitals will be judged on as part of a new pay-for-performance program created under the Affordable Care Act.
In a final rule released Nov. 1, detailing Medicare payment rates for hospital outpatient departments, officials at the Centers for Medicare and Medicaid Services announced that they are adding a new clinical process of care measure related to urinary catheters to the Hospital Inpatient Value-Based Purchasing (VBP) Program. The new measure, which will go into effect in October 2013 for fiscal year 2014, will assess whether a urinary catheter inserted during surgery is removed on the first or second postsurgical day. Hospitals will begin reporting data to the CMS on the new measure in 2012.
The new measure will be added to 12 clinical process measures and 1 patient experience measure that were adopted for the first year of the program. The CMS also finalized plans to include three outcome measures related to 30-day mortality for acute myocardial infarction, heart failure, and pneumonia in the program for fiscal year 2014.
At the same time, the CMS is delaying plans to include other measures. The agency had planned to include eight measures on hospital-acquired conditions, two composite measures from the Agency for Healthcare Research and Quality, and a Medicare Spending per Beneficiary measure in the Hospital VBP program in fiscal year 2014. But after receiving public comments noting that performance data had not been publicly available long enough for hospitals to prepare to incorporate the measures, Medicare officials relented.
According to the final rule, the CMS will post hospital performance data on the measures to Medicare’s Hospital Compare website for at least 1 year before requiring hospitals to report data on them.
Under the Hospital VBP program, the CMS will begin making incentive payments to hospitals based on quality on Oct. 1, 2012. The payments are funded by reducing Medicare payments to hospitals by 1% during fiscal year 2013 and 1.25% in fiscal year 2014.
Hospital payments under the program will be based on performance on clinical process-of-care measures, patient satisfaction, and clinical outcomes. In fiscal year 2014, process-of-care measures will be weighted at 45% of the score, patient satisfaction at 30%, and outcomes at 25%. During the first year of the program, process-of-care measures will weighted at 70% and patient satisfaction measures at 30%.
Medicare officials are also moving ahead with plans to require ambulatory surgical centers (ASCs) to report on quality measures next year.
In the final rule, the CMS adopted four clinical outcome measures and one surgical infection control measure that ASCs must report on beginning in October 2012. The final list includes measures related to patient burns; patient falls; wrong site, wrong side, wrong patient, wrong procedure, and wrong implant surgery; rate of ASC admissions requiring a hospital transfer/admission upon discharge; and prophylactic intravenous antibiotic timing. The data reported will be used to determine payments for 2014, according to the final rule.
In 2013, ASCs will also have to report on their use of the safe surgery checklist and report data on their facility volume on selected procedures. That information will be used in setting payments for 2015. Additionally, hospitals will be required to report on influenza vaccination coverage among health care workers starting in 2014, which will affect their 2016 payments.
The more than 1,500-page final rule also outlines the 2012 payments to hospitals and ASCs for outpatient services. The CMS estimates that in 2012, it will spend about $41.1 billion to pay the more than 4,000 general acute care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, long-term acute care hospitals, children’s hospitals, and cancer hospitals under Medicare’s Outpatient Prospective Payment System. And the agency will pay another $3.5 billion to about 5,000 ASCs next year.
The final rule increased payments to hospital outpatient departments by 1.9% in 2012. Under the rule, payments to cancer hospitals will go up by 11.3% due to adjustments required under the Affordable Care Act. ACSs will also see their payments increase by 1.6% in 2012. ☐
Medicare officials are expanding the list of quality measures that hospitals will be judged on as part of a new pay-for-performance program created under the Affordable Care Act.
In a final rule released Nov. 1, detailing Medicare payment rates for hospital outpatient departments, officials at the Centers for Medicare and Medicaid Services announced that they are adding a new clinical process of care measure related to urinary catheters to the Hospital Inpatient Value-Based Purchasing (VBP) Program. The new measure, which will go into effect in October 2013 for fiscal year 2014, will assess whether a urinary catheter inserted during surgery is removed on the first or second postsurgical day. Hospitals will begin reporting data to the CMS on the new measure in 2012.
The new measure will be added to 12 clinical process measures and 1 patient experience measure that were adopted for the first year of the program. The CMS also finalized plans to include three outcome measures related to 30-day mortality for acute myocardial infarction, heart failure, and pneumonia in the program for fiscal year 2014.
At the same time, the CMS is delaying plans to include other measures. The agency had planned to include eight measures on hospital-acquired conditions, two composite measures from the Agency for Healthcare Research and Quality, and a Medicare Spending per Beneficiary measure in the Hospital VBP program in fiscal year 2014. But after receiving public comments noting that performance data had not been publicly available long enough for hospitals to prepare to incorporate the measures, Medicare officials relented.
According to the final rule, the CMS will post hospital performance data on the measures to Medicare’s Hospital Compare website for at least 1 year before requiring hospitals to report data on them.
Under the Hospital VBP program, the CMS will begin making incentive payments to hospitals based on quality on Oct. 1, 2012. The payments are funded by reducing Medicare payments to hospitals by 1% during fiscal year 2013 and 1.25% in fiscal year 2014.
Hospital payments under the program will be based on performance on clinical process-of-care measures, patient satisfaction, and clinical outcomes. In fiscal year 2014, process-of-care measures will be weighted at 45% of the score, patient satisfaction at 30%, and outcomes at 25%. During the first year of the program, process-of-care measures will weighted at 70% and patient satisfaction measures at 30%.
Medicare officials are also moving ahead with plans to require ambulatory surgical centers (ASCs) to report on quality measures next year.
In the final rule, the CMS adopted four clinical outcome measures and one surgical infection control measure that ASCs must report on beginning in October 2012. The final list includes measures related to patient burns; patient falls; wrong site, wrong side, wrong patient, wrong procedure, and wrong implant surgery; rate of ASC admissions requiring a hospital transfer/admission upon discharge; and prophylactic intravenous antibiotic timing. The data reported will be used to determine payments for 2014, according to the final rule.
In 2013, ASCs will also have to report on their use of the safe surgery checklist and report data on their facility volume on selected procedures. That information will be used in setting payments for 2015. Additionally, hospitals will be required to report on influenza vaccination coverage among health care workers starting in 2014, which will affect their 2016 payments.
The more than 1,500-page final rule also outlines the 2012 payments to hospitals and ASCs for outpatient services. The CMS estimates that in 2012, it will spend about $41.1 billion to pay the more than 4,000 general acute care hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities, long-term acute care hospitals, children’s hospitals, and cancer hospitals under Medicare’s Outpatient Prospective Payment System. And the agency will pay another $3.5 billion to about 5,000 ASCs next year.
The final rule increased payments to hospital outpatient departments by 1.9% in 2012. Under the rule, payments to cancer hospitals will go up by 11.3% due to adjustments required under the Affordable Care Act. ACSs will also see their payments increase by 1.6% in 2012. ☐
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Policy Corner: An Inside Look at the Most Pressing Policy Issues
In early November, the Institute of Medicine (IOM) released a report on the current status of health information technology (HIT). Although the report was developed at the request of the Office of the National Coordinator (ONC), the arm within the Department of Health and Human Services (HHS) responsible for promoting the use of HIT, not everything in the report was positive—and could leave the impression that HIT is not quite as successful as some think.
The report recommends that the ONC should work with the private and public sectors to make comparative user experiences across vendors publicly available.
Many hospitalists have developed significant expertise with HIT, played significant roles in its effective implementation and use, and are acutely aware of implementation pitfalls. This practical experience could be very helpful in working with the ONC to develop solutions. It is for this reason that hospitalists should reach out to the ONC and offer their expertise instead of waiting for the ONC to act.
The report, “Patient Safety and Health IT: Building Safer Systems for Better Care,” did praise HIT’s potential for eventual cost savings and increased patient safety but stopped short of being a ringing endorsement of the pace HM is taking toward implementation initiatives, such as meaningful use. An overall theme of the report is that greater oversight of HIT is needed to protect patients from potential medical errors associated with its use.
A few of the recommendations given by the IOM to achieve a greater level of safety range from the establishment of a mechanism for vendors and users to report health IT-related deaths, injuries, or unsafe conditions to possible FDA regulation of the systems themselves.
Information-sharing and reporting in a nonpunitive environment, as recommended by the IOM, would go a long way when it comes to remedying or avoiding IT-related problems, and hospitalists probably have some ideas about how this could be done.
Unfortunately, IT vendor contracts often prevent the open sharing of information, so working toward doing away with such contract terms might be a worthy step before making a push toward overall FDA regulation and the unintended consequences that may come with it.
At first glance, FDA regulation seems like the easiest solution because the FDA can theoretically control every aspect of what might go wrong with HIT, but at what cost would such regulation come? FDA approval can be long, complicated and expensive. The whole process could result in cutting-edge technology becoming outdated by the time approval is granted or innovations being overlooked entirely because of a negative cost-benefit analysis. Furthermore, the expense associated with FDA approval could in turn increase the cost of already costly electronic health records (EHR).
Despite the myriad problems that can arise if implementation moves too fast, HIT holds promise and has shown success when done well.
SHM is currently working to position hospitalists as a resource for the ONC, so hospitalists with expertise in this area should not hesitate to come forward with ideas on how to make HIT work better and more safely. HIT is not going to go away, so the best option is to help make it better.
In early November, the Institute of Medicine (IOM) released a report on the current status of health information technology (HIT). Although the report was developed at the request of the Office of the National Coordinator (ONC), the arm within the Department of Health and Human Services (HHS) responsible for promoting the use of HIT, not everything in the report was positive—and could leave the impression that HIT is not quite as successful as some think.
The report recommends that the ONC should work with the private and public sectors to make comparative user experiences across vendors publicly available.
Many hospitalists have developed significant expertise with HIT, played significant roles in its effective implementation and use, and are acutely aware of implementation pitfalls. This practical experience could be very helpful in working with the ONC to develop solutions. It is for this reason that hospitalists should reach out to the ONC and offer their expertise instead of waiting for the ONC to act.
The report, “Patient Safety and Health IT: Building Safer Systems for Better Care,” did praise HIT’s potential for eventual cost savings and increased patient safety but stopped short of being a ringing endorsement of the pace HM is taking toward implementation initiatives, such as meaningful use. An overall theme of the report is that greater oversight of HIT is needed to protect patients from potential medical errors associated with its use.
A few of the recommendations given by the IOM to achieve a greater level of safety range from the establishment of a mechanism for vendors and users to report health IT-related deaths, injuries, or unsafe conditions to possible FDA regulation of the systems themselves.
Information-sharing and reporting in a nonpunitive environment, as recommended by the IOM, would go a long way when it comes to remedying or avoiding IT-related problems, and hospitalists probably have some ideas about how this could be done.
Unfortunately, IT vendor contracts often prevent the open sharing of information, so working toward doing away with such contract terms might be a worthy step before making a push toward overall FDA regulation and the unintended consequences that may come with it.
At first glance, FDA regulation seems like the easiest solution because the FDA can theoretically control every aspect of what might go wrong with HIT, but at what cost would such regulation come? FDA approval can be long, complicated and expensive. The whole process could result in cutting-edge technology becoming outdated by the time approval is granted or innovations being overlooked entirely because of a negative cost-benefit analysis. Furthermore, the expense associated with FDA approval could in turn increase the cost of already costly electronic health records (EHR).
Despite the myriad problems that can arise if implementation moves too fast, HIT holds promise and has shown success when done well.
SHM is currently working to position hospitalists as a resource for the ONC, so hospitalists with expertise in this area should not hesitate to come forward with ideas on how to make HIT work better and more safely. HIT is not going to go away, so the best option is to help make it better.
In early November, the Institute of Medicine (IOM) released a report on the current status of health information technology (HIT). Although the report was developed at the request of the Office of the National Coordinator (ONC), the arm within the Department of Health and Human Services (HHS) responsible for promoting the use of HIT, not everything in the report was positive—and could leave the impression that HIT is not quite as successful as some think.
The report recommends that the ONC should work with the private and public sectors to make comparative user experiences across vendors publicly available.
Many hospitalists have developed significant expertise with HIT, played significant roles in its effective implementation and use, and are acutely aware of implementation pitfalls. This practical experience could be very helpful in working with the ONC to develop solutions. It is for this reason that hospitalists should reach out to the ONC and offer their expertise instead of waiting for the ONC to act.
The report, “Patient Safety and Health IT: Building Safer Systems for Better Care,” did praise HIT’s potential for eventual cost savings and increased patient safety but stopped short of being a ringing endorsement of the pace HM is taking toward implementation initiatives, such as meaningful use. An overall theme of the report is that greater oversight of HIT is needed to protect patients from potential medical errors associated with its use.
A few of the recommendations given by the IOM to achieve a greater level of safety range from the establishment of a mechanism for vendors and users to report health IT-related deaths, injuries, or unsafe conditions to possible FDA regulation of the systems themselves.
Information-sharing and reporting in a nonpunitive environment, as recommended by the IOM, would go a long way when it comes to remedying or avoiding IT-related problems, and hospitalists probably have some ideas about how this could be done.
Unfortunately, IT vendor contracts often prevent the open sharing of information, so working toward doing away with such contract terms might be a worthy step before making a push toward overall FDA regulation and the unintended consequences that may come with it.
At first glance, FDA regulation seems like the easiest solution because the FDA can theoretically control every aspect of what might go wrong with HIT, but at what cost would such regulation come? FDA approval can be long, complicated and expensive. The whole process could result in cutting-edge technology becoming outdated by the time approval is granted or innovations being overlooked entirely because of a negative cost-benefit analysis. Furthermore, the expense associated with FDA approval could in turn increase the cost of already costly electronic health records (EHR).
Despite the myriad problems that can arise if implementation moves too fast, HIT holds promise and has shown success when done well.
SHM is currently working to position hospitalists as a resource for the ONC, so hospitalists with expertise in this area should not hesitate to come forward with ideas on how to make HIT work better and more safely. HIT is not going to go away, so the best option is to help make it better.
Reimbursement Readiness
Doctors shouldn’t have to worry about financial issues. The welfare of our patients should be our only concern.
We should be able to devote our full attention to studying how best to serve the needs of the people we care for. We shouldn’t need to spend time learning about healthcare reform or things like ICD-9 (or ICD-10!)—things that don’t help us provide better care to patients.
But these are pie-in-the-sky dreams. As far as I can tell, all healthcare systems require caregivers to attend to economics and data management that aren’t directly tied to clinical care. Our system depends on all caregivers devoting some time to learn how the system is organized, and keeping up with how it evolves. And the crisis in runaway costs in U.S. healthcare only increases the need for all who work in healthcare to devote significant time (too much) to the operational (nonclinical side) of healthcare.
Hospitalist practice is a much simpler business to manage and operate than most forms of clinical practice. There usually is no building to rent, few nonclinical employees to manage, and a comparatively simple financial model. And if employed by a hospital or other large entity, nonclinicians handle most of the “business management.” So when it comes to the number of brain cells diverted to business rather than clinical concerns, hospitalists start with an advantage over most other specialties.
Still, we have a lot of nonclinical stuff to keep up with. Consider the concept of “managing to Medicare reimbursement.” This means managing a practice or hospital in a way that minimizes the failure to capture all appropriate Medicare reimbursement dollars. Even if you’ve never heard of this concept before, there are probably a lot of people at your hospital who have this as their main responsibility, and clinicians should know something about it.
So in an effort to distract the fewest brain cells away from clinical matters, here is a very simple overview of some components of managing to Medicare reimbursement relevant to hospitalists. This isn’t a comprehensive list, only some hospitalist-relevant highlights.
Medicare Reimbursement Today
Accurate determination of inpatient vs. observation status. Wow, this can get complicated. Most hospitals have people who devote significant time to doing this for patients every day, and even those experts sometimes disagree on the appropriate status. But all hospitalists should have a basic understanding of how this works and a willingness to answer questions from the hospital’s experts, and, when appropriate, write additional information in the chart to clarify the appropriate status.
Optimal resource utilization, including length of stay. Because Medicare pays an essentially fixed amount based on the diagnoses for each inpatient admission, managing costs is critical to a hospital’s financial well-being. Hospitalists have a huge role in this. And regardless of how Medicare reimburses for services, there is clinical rationale for being careful about resources used and how long someone stays in a hospital. In many cases, more is not better—and it even could be worse—for the patient.
Optimal clinical documentation and accurate DRG assignment. Good documentation is important for clinical care, but beyond that, the precise way things are documented can have significant influence on Medicare reimbursement. Low potassium might in some cases lead to higher reimbursement, but a doctor must write “hypokalemia”; simply writing K+ means the hospital can’t include hypokalemia as a diagnosis. (A doctor, nurse practitioner, or physician assistant must write out “hypokalemia” only once for Medicare purposes; it would then be fine to use K+ in the chart every other time.)
Say you have a patient with a UTI and sepsis. Write only “urosepsis,” and the hospital must bill for cystitis—low reimbursement. Write “urinary tract infection with sepsis,” and the hospital can bill for higher reimbursement.
There should be people at your hospital who are experts at this, and all hospitalists should work with them to learn appropriate documentation language to describe illnesses correctly for billing purposes. Many hospitals use a system of “DRG queries,” which hospitalists should always respond to (though they should agree with the issue raised, such as “was the pneumonia likely due to aspiration?” only when clinically appropriate).
Change Is Coming
Don’t make the mistake of thinking Medicare reimbursement is a static phenomenon. It is undergoing rapid and significant evolution. For example, the Affordable Care Act, aka healthcare reform legislation, provides for a number of changes hospitalists need to understand.
I suggest that you make sure to understand your hospital’s or medical group’s position on accountable-care organizations (ACOs). It is a pretty complicated program that, in the first few years, has modest impact on reimbursement. If the ACO performs well, the additional reimbursement to an organization might pay for little more than the staff salaries of the staff that managed the considerable complexity of enrolling in and reporting for the program. And there is a risk the organization could lose money if it doesn’t perform well. So many organizations have decided not to pursue participation as an ACO, but they may decide to put in place most of the elements of an ACO without enrolling in the program. Some refer to this as an “aco” rather than an “ACO.”
Value-based purchasing (VBP) is set to influence hospital reimbursement rates starting in 2013 based on a hospital’s performance in 2012. SHM has a terrific VBP toolkit available online.
Bundled payments and financial penalties for readmissions also take effect in 2013. Now is the time ensure that you understand the implications of these programs; they are designed so that the financial impact to most organizations will be modest.
Reimbursement penalties for a specified list of hospital-acquired conditions (HACs) will begin in 2015. Conditions most relevant for hospitalists include vascular catheter-related bloodstream infections, catheter-related urinary infection, or manifestations of poor glycemic control (HONK, DKA, hypo-/hyperglycemia).
I plan to address some of these programs in greater detail in future practice management columns.
Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.
Doctors shouldn’t have to worry about financial issues. The welfare of our patients should be our only concern.
We should be able to devote our full attention to studying how best to serve the needs of the people we care for. We shouldn’t need to spend time learning about healthcare reform or things like ICD-9 (or ICD-10!)—things that don’t help us provide better care to patients.
But these are pie-in-the-sky dreams. As far as I can tell, all healthcare systems require caregivers to attend to economics and data management that aren’t directly tied to clinical care. Our system depends on all caregivers devoting some time to learn how the system is organized, and keeping up with how it evolves. And the crisis in runaway costs in U.S. healthcare only increases the need for all who work in healthcare to devote significant time (too much) to the operational (nonclinical side) of healthcare.
Hospitalist practice is a much simpler business to manage and operate than most forms of clinical practice. There usually is no building to rent, few nonclinical employees to manage, and a comparatively simple financial model. And if employed by a hospital or other large entity, nonclinicians handle most of the “business management.” So when it comes to the number of brain cells diverted to business rather than clinical concerns, hospitalists start with an advantage over most other specialties.
Still, we have a lot of nonclinical stuff to keep up with. Consider the concept of “managing to Medicare reimbursement.” This means managing a practice or hospital in a way that minimizes the failure to capture all appropriate Medicare reimbursement dollars. Even if you’ve never heard of this concept before, there are probably a lot of people at your hospital who have this as their main responsibility, and clinicians should know something about it.
So in an effort to distract the fewest brain cells away from clinical matters, here is a very simple overview of some components of managing to Medicare reimbursement relevant to hospitalists. This isn’t a comprehensive list, only some hospitalist-relevant highlights.
Medicare Reimbursement Today
Accurate determination of inpatient vs. observation status. Wow, this can get complicated. Most hospitals have people who devote significant time to doing this for patients every day, and even those experts sometimes disagree on the appropriate status. But all hospitalists should have a basic understanding of how this works and a willingness to answer questions from the hospital’s experts, and, when appropriate, write additional information in the chart to clarify the appropriate status.
Optimal resource utilization, including length of stay. Because Medicare pays an essentially fixed amount based on the diagnoses for each inpatient admission, managing costs is critical to a hospital’s financial well-being. Hospitalists have a huge role in this. And regardless of how Medicare reimburses for services, there is clinical rationale for being careful about resources used and how long someone stays in a hospital. In many cases, more is not better—and it even could be worse—for the patient.
Optimal clinical documentation and accurate DRG assignment. Good documentation is important for clinical care, but beyond that, the precise way things are documented can have significant influence on Medicare reimbursement. Low potassium might in some cases lead to higher reimbursement, but a doctor must write “hypokalemia”; simply writing K+ means the hospital can’t include hypokalemia as a diagnosis. (A doctor, nurse practitioner, or physician assistant must write out “hypokalemia” only once for Medicare purposes; it would then be fine to use K+ in the chart every other time.)
Say you have a patient with a UTI and sepsis. Write only “urosepsis,” and the hospital must bill for cystitis—low reimbursement. Write “urinary tract infection with sepsis,” and the hospital can bill for higher reimbursement.
There should be people at your hospital who are experts at this, and all hospitalists should work with them to learn appropriate documentation language to describe illnesses correctly for billing purposes. Many hospitals use a system of “DRG queries,” which hospitalists should always respond to (though they should agree with the issue raised, such as “was the pneumonia likely due to aspiration?” only when clinically appropriate).
Change Is Coming
Don’t make the mistake of thinking Medicare reimbursement is a static phenomenon. It is undergoing rapid and significant evolution. For example, the Affordable Care Act, aka healthcare reform legislation, provides for a number of changes hospitalists need to understand.
I suggest that you make sure to understand your hospital’s or medical group’s position on accountable-care organizations (ACOs). It is a pretty complicated program that, in the first few years, has modest impact on reimbursement. If the ACO performs well, the additional reimbursement to an organization might pay for little more than the staff salaries of the staff that managed the considerable complexity of enrolling in and reporting for the program. And there is a risk the organization could lose money if it doesn’t perform well. So many organizations have decided not to pursue participation as an ACO, but they may decide to put in place most of the elements of an ACO without enrolling in the program. Some refer to this as an “aco” rather than an “ACO.”
Value-based purchasing (VBP) is set to influence hospital reimbursement rates starting in 2013 based on a hospital’s performance in 2012. SHM has a terrific VBP toolkit available online.
Bundled payments and financial penalties for readmissions also take effect in 2013. Now is the time ensure that you understand the implications of these programs; they are designed so that the financial impact to most organizations will be modest.
Reimbursement penalties for a specified list of hospital-acquired conditions (HACs) will begin in 2015. Conditions most relevant for hospitalists include vascular catheter-related bloodstream infections, catheter-related urinary infection, or manifestations of poor glycemic control (HONK, DKA, hypo-/hyperglycemia).
I plan to address some of these programs in greater detail in future practice management columns.
Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.
Doctors shouldn’t have to worry about financial issues. The welfare of our patients should be our only concern.
We should be able to devote our full attention to studying how best to serve the needs of the people we care for. We shouldn’t need to spend time learning about healthcare reform or things like ICD-9 (or ICD-10!)—things that don’t help us provide better care to patients.
But these are pie-in-the-sky dreams. As far as I can tell, all healthcare systems require caregivers to attend to economics and data management that aren’t directly tied to clinical care. Our system depends on all caregivers devoting some time to learn how the system is organized, and keeping up with how it evolves. And the crisis in runaway costs in U.S. healthcare only increases the need for all who work in healthcare to devote significant time (too much) to the operational (nonclinical side) of healthcare.
Hospitalist practice is a much simpler business to manage and operate than most forms of clinical practice. There usually is no building to rent, few nonclinical employees to manage, and a comparatively simple financial model. And if employed by a hospital or other large entity, nonclinicians handle most of the “business management.” So when it comes to the number of brain cells diverted to business rather than clinical concerns, hospitalists start with an advantage over most other specialties.
Still, we have a lot of nonclinical stuff to keep up with. Consider the concept of “managing to Medicare reimbursement.” This means managing a practice or hospital in a way that minimizes the failure to capture all appropriate Medicare reimbursement dollars. Even if you’ve never heard of this concept before, there are probably a lot of people at your hospital who have this as their main responsibility, and clinicians should know something about it.
So in an effort to distract the fewest brain cells away from clinical matters, here is a very simple overview of some components of managing to Medicare reimbursement relevant to hospitalists. This isn’t a comprehensive list, only some hospitalist-relevant highlights.
Medicare Reimbursement Today
Accurate determination of inpatient vs. observation status. Wow, this can get complicated. Most hospitals have people who devote significant time to doing this for patients every day, and even those experts sometimes disagree on the appropriate status. But all hospitalists should have a basic understanding of how this works and a willingness to answer questions from the hospital’s experts, and, when appropriate, write additional information in the chart to clarify the appropriate status.
Optimal resource utilization, including length of stay. Because Medicare pays an essentially fixed amount based on the diagnoses for each inpatient admission, managing costs is critical to a hospital’s financial well-being. Hospitalists have a huge role in this. And regardless of how Medicare reimburses for services, there is clinical rationale for being careful about resources used and how long someone stays in a hospital. In many cases, more is not better—and it even could be worse—for the patient.
Optimal clinical documentation and accurate DRG assignment. Good documentation is important for clinical care, but beyond that, the precise way things are documented can have significant influence on Medicare reimbursement. Low potassium might in some cases lead to higher reimbursement, but a doctor must write “hypokalemia”; simply writing K+ means the hospital can’t include hypokalemia as a diagnosis. (A doctor, nurse practitioner, or physician assistant must write out “hypokalemia” only once for Medicare purposes; it would then be fine to use K+ in the chart every other time.)
Say you have a patient with a UTI and sepsis. Write only “urosepsis,” and the hospital must bill for cystitis—low reimbursement. Write “urinary tract infection with sepsis,” and the hospital can bill for higher reimbursement.
There should be people at your hospital who are experts at this, and all hospitalists should work with them to learn appropriate documentation language to describe illnesses correctly for billing purposes. Many hospitals use a system of “DRG queries,” which hospitalists should always respond to (though they should agree with the issue raised, such as “was the pneumonia likely due to aspiration?” only when clinically appropriate).
Change Is Coming
Don’t make the mistake of thinking Medicare reimbursement is a static phenomenon. It is undergoing rapid and significant evolution. For example, the Affordable Care Act, aka healthcare reform legislation, provides for a number of changes hospitalists need to understand.
I suggest that you make sure to understand your hospital’s or medical group’s position on accountable-care organizations (ACOs). It is a pretty complicated program that, in the first few years, has modest impact on reimbursement. If the ACO performs well, the additional reimbursement to an organization might pay for little more than the staff salaries of the staff that managed the considerable complexity of enrolling in and reporting for the program. And there is a risk the organization could lose money if it doesn’t perform well. So many organizations have decided not to pursue participation as an ACO, but they may decide to put in place most of the elements of an ACO without enrolling in the program. Some refer to this as an “aco” rather than an “ACO.”
Value-based purchasing (VBP) is set to influence hospital reimbursement rates starting in 2013 based on a hospital’s performance in 2012. SHM has a terrific VBP toolkit available online.
Bundled payments and financial penalties for readmissions also take effect in 2013. Now is the time ensure that you understand the implications of these programs; they are designed so that the financial impact to most organizations will be modest.
Reimbursement penalties for a specified list of hospital-acquired conditions (HACs) will begin in 2015. Conditions most relevant for hospitalists include vascular catheter-related bloodstream infections, catheter-related urinary infection, or manifestations of poor glycemic control (HONK, DKA, hypo-/hyperglycemia).
I plan to address some of these programs in greater detail in future practice management columns.
Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm (www.nelsonflores.com). He is also course co-director and faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.
SGR Cuts Loom After Supercommittee Fails
The Joint Select Committee on Deficit Reduction failed to produce a plan to cut federal spending, triggering a process slated to cut physician pay and a host of public h
On Nov. 21, just hours before the midnight deadline for the so-called supercommittee to publicly announce a deficit-reduction plan, the cochairs of the committee issued a statement saying that they could not reach a bipartisan agreement.
"Despite our inability to bridge the committee's significant differences, we end this process united in our belief that the nation's fiscal crisis must be addressed and that we cannot leave it to the next generation to solve. We remain hopeful that Congress can build on this committee's work and can find a way to tackle this issue in a way that works for the American people and our economy," according to the statement from Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Tex.).
The bipartisan, bicameral committee of 12 lawmakers was convened last summer as part of the Budget Control Act and tasked with finding about $1.2 trillion in cuts to federal spending over a decade. Under the law, should the supercommittee fail to agree on how to meet that goal, automatic, across-the-board cuts called "sequestration" go into effect starting in 2013.
The cuts would be evenly divided among defense and nondefense spending. Most federal programs are subject to the cuts, except Social Security, Medicaid, the Children's Health Insurance Program, and other low-income programs. The Medicare program is spared some of the deepest cuts since the law calls only for provider cuts, which are capped at 2%.
Physicians' groups expressed disappointment that several weeks of hearings and closed-door meetings had not resulted in a plan. The automatic cuts would endanger everything from military health care, medical research, and disease prevention programs to the training of primary care physicians, Dr. Virginia L. Hood, president of the American College of Physicians, said in a statement.
She urged Congress not to let the sequestration process take effect. Instead, she called on lawmakers to craft a plan to reduce the deficit in a more deliberative way, looking at the cost drivers in health care instead of allowing the across-the-board cuts. The ACP has already provided members of Congress with a list of possible cuts that could produce between $500 billion and $800 billion in savings over the next decade.
For instance, the ACP favors giving the federal government authority to negotiate the prices for drugs paid for by Medicare, a policy change that they estimate would save about $300 billion over 10 years. The federal government also could realize about $62 billion in savings by enacting a medical liability reform plan that includes a $250,000 cap on noneconomic damages, according to the ACP.
But the more pressing concern for doctors is the 27% Medicare physician fee cut that will take effect in a few weeks if Congress doesn't take action to stop it.
Physicians' groups intensely lobbied the supercommittee to make replacing the Sustainable Growth Rate (SGR) formula, used in setting Medicare payments, part of any deficit-reduction plan. Now the task of getting a permanent SGR fix will be much more difficult, said Robert Doherty, ACP's senior vice president for government affairs and public policy.
There had been some interest among the supercommittee members in addressing the SGR, and a large deficit-reduction package was a reasonable place to deal with such an expensive problem, Mr. Doherty said in an interview. As part of a $1.2-trillion package, it was possible to find the necessary $300 billion in offsets to pay for a fix. Finding those offsets would be much harder in a stand-alone bill.
But while Mr. Doherty said the supercommittee's failure represents a "huge lost opportunity" on the SGR, the ACP is not giving up. He said the group favors a proposal from Rep. Allyson Schwartz (D-Pa.) to permanently repeal the SGR. The proposal, known as the Medicare Physician Payment Innovation Act, would stabilize Medicare physician payments for several years before moving to new payment systems.
Specifically, Rep. Schwartz proposes that the Center for Medicare and Medicaid Innovation come up with at least four new payment and delivery models. Starting in 2017, physicians could choose one of those new models or stay in the traditional fee-for-service system, but fee-for-service payments would begin to decline in 2018. At press time, the proposal had not been formally introduced in Congress.
The proposal won the support of the American Academy of Family Physicians, the American Osteopathic Association, the American College of Obstetricians and Gynecologists, and the Society of Hospital Medicine but not that of the American Medical Association.
The AMA praised Rep. Schwartz for her efforts to try to repeal the SGR but stopped short of endorsing the plan, saying that it couldn't sign on to the specific schedule of pay increases and penalties given the workflow changes and investments that would likely be required from physicians.
In the wake of the supercommittee's announcement, physicians' groups called on Congress to act immediately to avert the scheduled 27% Medicare pay cut and to come up with some sort of long-term solution to the annual scrambling to avert SGR-related fee cuts.
"The AMA is deeply concerned that continued instability in the Medicare program, including the looming 27% cut scheduled for Jan. 1, will force many physicians to limit the number of Medicare and TRICARE patients they can care for in their practices," Dr. Peter W. Carmel, president of the AMA, said in a statement . "Congress has ignored the reality that short-term patches have grown the problem immensely. The cost of repealing the formula has grown 525% in the past 5 years and will double again in the next 5 years."
Congressional Action Looming
The U.S. Senate voted on Dec. 17 to put off by 2 months a Medicare physician pay cut due to take effect on Jan. 1. The Senate voted 89-19 to approve the package, just before it left Washington for a holiday recess.
But on Dec. 19, as the House came back into session, many congressmen said they would not support the package, mainly because it only provided 2 months of relief, rather than a year or longer. Similar legislation passed the House Dec. 13, but with a longer horizon: If enacted, that bill would replace the 27% cut with a 1% increase for 2 years.
If the House votes against approving the Senate bill, and the two houses cannot compromise before Jan. 1, physicians will see a 27% reduction in fees, as dictated by the Medicare Sustainable Growth Rate (SGR) formula.
The American Medical Association expressed disgust in a statement issued after the Senate vote.
“Waiting until the last week of the legislative session to address a problem that Congress knew was looming all year is not the way to conduct our nation’s business,” AMA President Peter Carmel said in the statement.
The AMA called on Congress to stop instituting stop-gap fixes and to instead replace the SGR formula. “The 12 temporary patches that Congress has applied have raised the cost of solving the problem by more than 500% over the last few years and eroded patients’ access to care,” said Dr. Carmel. “A permanent solution is the long overdue, fiscally responsible approach.”
Alicia Ault contributed to this report.
Medicare beneficiaries are already having trouble finding physicians in many parts of the country, and deep cuts in physician reimbursements may indeed threaten the entire program. Since vascular surgeons are heavily dependent on Medicare support, large cuts in reimbursement or threats to the entire program could be nothing short of catastrophic.
| Dr. Donaldson |
There is no question Medicare cannot continue without cost control, but default "sequestration" or an across the board surgical approach to the budget does not do justice to the complexity of the problem nor take advantage of the crisis to make truly lasting and useful change. Neither does such a relatively oversimplified solution grapple with the obvious deep pockets of waste, defensive overutilization, fraud and overt competitive profiteering.
Furthermore, the Obama healthcare law is on the books and making good progress towards addressing the injustices of our system while at the same time controlling costs without sacrificing quality. At the end of the day, doctors worthy of their profession must join the current CMS effort, strive to keep their eye on the ball of value in patient care and support the fundamental constructive changes now in motion. With energetic expression of this recommitment and constructive cooperation on our part, street wisdom strongly suggests that a 27% cut will not go forward.
Magruder C. Donaldson, MD, is chair of surgery at Metrowest Medical Center in Framingham, Mass.
Medicare beneficiaries are already having trouble finding physicians in many parts of the country, and deep cuts in physician reimbursements may indeed threaten the entire program. Since vascular surgeons are heavily dependent on Medicare support, large cuts in reimbursement or threats to the entire program could be nothing short of catastrophic.
| Dr. Donaldson |
There is no question Medicare cannot continue without cost control, but default "sequestration" or an across the board surgical approach to the budget does not do justice to the complexity of the problem nor take advantage of the crisis to make truly lasting and useful change. Neither does such a relatively oversimplified solution grapple with the obvious deep pockets of waste, defensive overutilization, fraud and overt competitive profiteering.
Furthermore, the Obama healthcare law is on the books and making good progress towards addressing the injustices of our system while at the same time controlling costs without sacrificing quality. At the end of the day, doctors worthy of their profession must join the current CMS effort, strive to keep their eye on the ball of value in patient care and support the fundamental constructive changes now in motion. With energetic expression of this recommitment and constructive cooperation on our part, street wisdom strongly suggests that a 27% cut will not go forward.
Magruder C. Donaldson, MD, is chair of surgery at Metrowest Medical Center in Framingham, Mass.
Medicare beneficiaries are already having trouble finding physicians in many parts of the country, and deep cuts in physician reimbursements may indeed threaten the entire program. Since vascular surgeons are heavily dependent on Medicare support, large cuts in reimbursement or threats to the entire program could be nothing short of catastrophic.
| Dr. Donaldson |
There is no question Medicare cannot continue without cost control, but default "sequestration" or an across the board surgical approach to the budget does not do justice to the complexity of the problem nor take advantage of the crisis to make truly lasting and useful change. Neither does such a relatively oversimplified solution grapple with the obvious deep pockets of waste, defensive overutilization, fraud and overt competitive profiteering.
Furthermore, the Obama healthcare law is on the books and making good progress towards addressing the injustices of our system while at the same time controlling costs without sacrificing quality. At the end of the day, doctors worthy of their profession must join the current CMS effort, strive to keep their eye on the ball of value in patient care and support the fundamental constructive changes now in motion. With energetic expression of this recommitment and constructive cooperation on our part, street wisdom strongly suggests that a 27% cut will not go forward.
Magruder C. Donaldson, MD, is chair of surgery at Metrowest Medical Center in Framingham, Mass.
The Joint Select Committee on Deficit Reduction failed to produce a plan to cut federal spending, triggering a process slated to cut physician pay and a host of public h
On Nov. 21, just hours before the midnight deadline for the so-called supercommittee to publicly announce a deficit-reduction plan, the cochairs of the committee issued a statement saying that they could not reach a bipartisan agreement.
"Despite our inability to bridge the committee's significant differences, we end this process united in our belief that the nation's fiscal crisis must be addressed and that we cannot leave it to the next generation to solve. We remain hopeful that Congress can build on this committee's work and can find a way to tackle this issue in a way that works for the American people and our economy," according to the statement from Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Tex.).
The bipartisan, bicameral committee of 12 lawmakers was convened last summer as part of the Budget Control Act and tasked with finding about $1.2 trillion in cuts to federal spending over a decade. Under the law, should the supercommittee fail to agree on how to meet that goal, automatic, across-the-board cuts called "sequestration" go into effect starting in 2013.
The cuts would be evenly divided among defense and nondefense spending. Most federal programs are subject to the cuts, except Social Security, Medicaid, the Children's Health Insurance Program, and other low-income programs. The Medicare program is spared some of the deepest cuts since the law calls only for provider cuts, which are capped at 2%.
Physicians' groups expressed disappointment that several weeks of hearings and closed-door meetings had not resulted in a plan. The automatic cuts would endanger everything from military health care, medical research, and disease prevention programs to the training of primary care physicians, Dr. Virginia L. Hood, president of the American College of Physicians, said in a statement.
She urged Congress not to let the sequestration process take effect. Instead, she called on lawmakers to craft a plan to reduce the deficit in a more deliberative way, looking at the cost drivers in health care instead of allowing the across-the-board cuts. The ACP has already provided members of Congress with a list of possible cuts that could produce between $500 billion and $800 billion in savings over the next decade.
For instance, the ACP favors giving the federal government authority to negotiate the prices for drugs paid for by Medicare, a policy change that they estimate would save about $300 billion over 10 years. The federal government also could realize about $62 billion in savings by enacting a medical liability reform plan that includes a $250,000 cap on noneconomic damages, according to the ACP.
But the more pressing concern for doctors is the 27% Medicare physician fee cut that will take effect in a few weeks if Congress doesn't take action to stop it.
Physicians' groups intensely lobbied the supercommittee to make replacing the Sustainable Growth Rate (SGR) formula, used in setting Medicare payments, part of any deficit-reduction plan. Now the task of getting a permanent SGR fix will be much more difficult, said Robert Doherty, ACP's senior vice president for government affairs and public policy.
There had been some interest among the supercommittee members in addressing the SGR, and a large deficit-reduction package was a reasonable place to deal with such an expensive problem, Mr. Doherty said in an interview. As part of a $1.2-trillion package, it was possible to find the necessary $300 billion in offsets to pay for a fix. Finding those offsets would be much harder in a stand-alone bill.
But while Mr. Doherty said the supercommittee's failure represents a "huge lost opportunity" on the SGR, the ACP is not giving up. He said the group favors a proposal from Rep. Allyson Schwartz (D-Pa.) to permanently repeal the SGR. The proposal, known as the Medicare Physician Payment Innovation Act, would stabilize Medicare physician payments for several years before moving to new payment systems.
Specifically, Rep. Schwartz proposes that the Center for Medicare and Medicaid Innovation come up with at least four new payment and delivery models. Starting in 2017, physicians could choose one of those new models or stay in the traditional fee-for-service system, but fee-for-service payments would begin to decline in 2018. At press time, the proposal had not been formally introduced in Congress.
The proposal won the support of the American Academy of Family Physicians, the American Osteopathic Association, the American College of Obstetricians and Gynecologists, and the Society of Hospital Medicine but not that of the American Medical Association.
The AMA praised Rep. Schwartz for her efforts to try to repeal the SGR but stopped short of endorsing the plan, saying that it couldn't sign on to the specific schedule of pay increases and penalties given the workflow changes and investments that would likely be required from physicians.
In the wake of the supercommittee's announcement, physicians' groups called on Congress to act immediately to avert the scheduled 27% Medicare pay cut and to come up with some sort of long-term solution to the annual scrambling to avert SGR-related fee cuts.
"The AMA is deeply concerned that continued instability in the Medicare program, including the looming 27% cut scheduled for Jan. 1, will force many physicians to limit the number of Medicare and TRICARE patients they can care for in their practices," Dr. Peter W. Carmel, president of the AMA, said in a statement . "Congress has ignored the reality that short-term patches have grown the problem immensely. The cost of repealing the formula has grown 525% in the past 5 years and will double again in the next 5 years."
Congressional Action Looming
The U.S. Senate voted on Dec. 17 to put off by 2 months a Medicare physician pay cut due to take effect on Jan. 1. The Senate voted 89-19 to approve the package, just before it left Washington for a holiday recess.
But on Dec. 19, as the House came back into session, many congressmen said they would not support the package, mainly because it only provided 2 months of relief, rather than a year or longer. Similar legislation passed the House Dec. 13, but with a longer horizon: If enacted, that bill would replace the 27% cut with a 1% increase for 2 years.
If the House votes against approving the Senate bill, and the two houses cannot compromise before Jan. 1, physicians will see a 27% reduction in fees, as dictated by the Medicare Sustainable Growth Rate (SGR) formula.
The American Medical Association expressed disgust in a statement issued after the Senate vote.
“Waiting until the last week of the legislative session to address a problem that Congress knew was looming all year is not the way to conduct our nation’s business,” AMA President Peter Carmel said in the statement.
The AMA called on Congress to stop instituting stop-gap fixes and to instead replace the SGR formula. “The 12 temporary patches that Congress has applied have raised the cost of solving the problem by more than 500% over the last few years and eroded patients’ access to care,” said Dr. Carmel. “A permanent solution is the long overdue, fiscally responsible approach.”
Alicia Ault contributed to this report.
The Joint Select Committee on Deficit Reduction failed to produce a plan to cut federal spending, triggering a process slated to cut physician pay and a host of public h
On Nov. 21, just hours before the midnight deadline for the so-called supercommittee to publicly announce a deficit-reduction plan, the cochairs of the committee issued a statement saying that they could not reach a bipartisan agreement.
"Despite our inability to bridge the committee's significant differences, we end this process united in our belief that the nation's fiscal crisis must be addressed and that we cannot leave it to the next generation to solve. We remain hopeful that Congress can build on this committee's work and can find a way to tackle this issue in a way that works for the American people and our economy," according to the statement from Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Tex.).
The bipartisan, bicameral committee of 12 lawmakers was convened last summer as part of the Budget Control Act and tasked with finding about $1.2 trillion in cuts to federal spending over a decade. Under the law, should the supercommittee fail to agree on how to meet that goal, automatic, across-the-board cuts called "sequestration" go into effect starting in 2013.
The cuts would be evenly divided among defense and nondefense spending. Most federal programs are subject to the cuts, except Social Security, Medicaid, the Children's Health Insurance Program, and other low-income programs. The Medicare program is spared some of the deepest cuts since the law calls only for provider cuts, which are capped at 2%.
Physicians' groups expressed disappointment that several weeks of hearings and closed-door meetings had not resulted in a plan. The automatic cuts would endanger everything from military health care, medical research, and disease prevention programs to the training of primary care physicians, Dr. Virginia L. Hood, president of the American College of Physicians, said in a statement.
She urged Congress not to let the sequestration process take effect. Instead, she called on lawmakers to craft a plan to reduce the deficit in a more deliberative way, looking at the cost drivers in health care instead of allowing the across-the-board cuts. The ACP has already provided members of Congress with a list of possible cuts that could produce between $500 billion and $800 billion in savings over the next decade.
For instance, the ACP favors giving the federal government authority to negotiate the prices for drugs paid for by Medicare, a policy change that they estimate would save about $300 billion over 10 years. The federal government also could realize about $62 billion in savings by enacting a medical liability reform plan that includes a $250,000 cap on noneconomic damages, according to the ACP.
But the more pressing concern for doctors is the 27% Medicare physician fee cut that will take effect in a few weeks if Congress doesn't take action to stop it.
Physicians' groups intensely lobbied the supercommittee to make replacing the Sustainable Growth Rate (SGR) formula, used in setting Medicare payments, part of any deficit-reduction plan. Now the task of getting a permanent SGR fix will be much more difficult, said Robert Doherty, ACP's senior vice president for government affairs and public policy.
There had been some interest among the supercommittee members in addressing the SGR, and a large deficit-reduction package was a reasonable place to deal with such an expensive problem, Mr. Doherty said in an interview. As part of a $1.2-trillion package, it was possible to find the necessary $300 billion in offsets to pay for a fix. Finding those offsets would be much harder in a stand-alone bill.
But while Mr. Doherty said the supercommittee's failure represents a "huge lost opportunity" on the SGR, the ACP is not giving up. He said the group favors a proposal from Rep. Allyson Schwartz (D-Pa.) to permanently repeal the SGR. The proposal, known as the Medicare Physician Payment Innovation Act, would stabilize Medicare physician payments for several years before moving to new payment systems.
Specifically, Rep. Schwartz proposes that the Center for Medicare and Medicaid Innovation come up with at least four new payment and delivery models. Starting in 2017, physicians could choose one of those new models or stay in the traditional fee-for-service system, but fee-for-service payments would begin to decline in 2018. At press time, the proposal had not been formally introduced in Congress.
The proposal won the support of the American Academy of Family Physicians, the American Osteopathic Association, the American College of Obstetricians and Gynecologists, and the Society of Hospital Medicine but not that of the American Medical Association.
The AMA praised Rep. Schwartz for her efforts to try to repeal the SGR but stopped short of endorsing the plan, saying that it couldn't sign on to the specific schedule of pay increases and penalties given the workflow changes and investments that would likely be required from physicians.
In the wake of the supercommittee's announcement, physicians' groups called on Congress to act immediately to avert the scheduled 27% Medicare pay cut and to come up with some sort of long-term solution to the annual scrambling to avert SGR-related fee cuts.
"The AMA is deeply concerned that continued instability in the Medicare program, including the looming 27% cut scheduled for Jan. 1, will force many physicians to limit the number of Medicare and TRICARE patients they can care for in their practices," Dr. Peter W. Carmel, president of the AMA, said in a statement . "Congress has ignored the reality that short-term patches have grown the problem immensely. The cost of repealing the formula has grown 525% in the past 5 years and will double again in the next 5 years."
Congressional Action Looming
The U.S. Senate voted on Dec. 17 to put off by 2 months a Medicare physician pay cut due to take effect on Jan. 1. The Senate voted 89-19 to approve the package, just before it left Washington for a holiday recess.
But on Dec. 19, as the House came back into session, many congressmen said they would not support the package, mainly because it only provided 2 months of relief, rather than a year or longer. Similar legislation passed the House Dec. 13, but with a longer horizon: If enacted, that bill would replace the 27% cut with a 1% increase for 2 years.
If the House votes against approving the Senate bill, and the two houses cannot compromise before Jan. 1, physicians will see a 27% reduction in fees, as dictated by the Medicare Sustainable Growth Rate (SGR) formula.
The American Medical Association expressed disgust in a statement issued after the Senate vote.
“Waiting until the last week of the legislative session to address a problem that Congress knew was looming all year is not the way to conduct our nation’s business,” AMA President Peter Carmel said in the statement.
The AMA called on Congress to stop instituting stop-gap fixes and to instead replace the SGR formula. “The 12 temporary patches that Congress has applied have raised the cost of solving the problem by more than 500% over the last few years and eroded patients’ access to care,” said Dr. Carmel. “A permanent solution is the long overdue, fiscally responsible approach.”
Alicia Ault contributed to this report.