Reimbursement Incentives Offered to Ease the Strain
Editor’s Note: This story is the first in a three-part Medical News series examining some impacts of sweeping federal health reform legislation signed into law in March by President Obama. The series looks at three groups of stakeholders – providers, patients and third-party payers. This month: providers.
Well, it’s done, and depending on your perspective, the historic Patient Protection and Affordable Care Act that sets about reforming America’s health system could be a boon or it could be a bust. For most stakeholders, reality is somewhere in the middle.
“There is something in here for virtually everyone to love and everyone to hate,” said William F. Jessee, MD, president and CEO of the Medical Group Management Association. Jessee spoke during an April webinar attended by Medical News that was designed to give MGMA members a big-picture look at effects of the legislation, as well as an overview of some provider responsibilities.
Kevin Pho, MD, a Nashua, N.H., primary-care physician and a popular Internet blogger on healthcare issues at www.kevinmd.com, said in an interview, “I believe that the status quo wasn’t sustainable, and I think that healthcare reform, although it’s imperfect, does give us a few steps forward to expand coverage to an additional 32 million Americans and also make some attempts at controlling costs.”
Pho said physicians’ reactions to reform are all over the board, depending on their specialty and their political persuasion. “Physicians, as you know, are also divided into political camps. So, if you have certain partisan views, you’re going to view healthcare reform in a certain way, no matter what the other side says,” he said.
From Pho’s primary-care perspective, he said the legislation does include a reimbursement boost for primary-care doctors, who traditionally make less – and sometimes much less – than specialists. Starting in 2011, the law authorizes a 10 percent Medicare bonus payment for primary-care services for five years (general surgery and psychotherapy, too). It also guarantees that in 2013 and 2014, Medicaid will pay primary-care physicians at least as much as Medicare does for primary-care services, including immunizations.
There’s also an emphasis throughout the legislation on the importance of primary care in healthcare delivery, and the law includes incentives for primary-care practitioners to work in underserved areas. While Pho applauded these initiatives, he said they’re “not nearly enough to increase primary-care supply.” America’s healthcare system is “already stressed” by the shortage of primary-care doctors, he added, and an addition of 32 million more insured Americans will only exacerbate the problem. “If you’re looking for job security, certainly going into primary care wouldn’t be a bad thing,” he quipped.
From the provider point of view, two measures are missing from the reform law: meaningful liability reform and a fix for the Medicare physician payment system. While Pho said the legislation “pays some lip service” to tort reform with money for pilot programs, that’s “not nearly enough to make a difference.” He added, “I think when a lot of doctors talk about tort reform, they think about how it affects them. I think it also affects patients, who aren’t served by the current malpractice system.”
The law also fails to address the flawed Sustainable Growth Rate (SGR) formula for Medicare reimbursement. “All the word on Capitol Hill is that they intend to do something to repeal the SGR and to fix the problem, but quite frankly, we’ve heard that story before,” Jessee said, adding, “The more postponements there are, the more difficult it’s going to be for them to come up with an affordable fix.” (At press time, Congress had halted a proposed 21 percent cut through May 31, while a proposed freeze through Sept. 30 was in conference committee.)
A permanent fix will cost several hundred million dollars, a move probably not likely in today’s fiscal environment. Without that stability, Pho said, “We’re just going to play these games where every few months there’s a threat of a 20 percent plus Medicare cut, and it’s probably going to be delayed. I don’t think that cut will ever go through. It’s just kicking the can down the road.”
Ah, yes, Medicare’s Physician Quality Reporting Initiative. Maligned by doctors who’ve run into problems with the system, the new law boosts PQRI’s importance. “The ground rules on PQRI are changing,” Jessee said. Satisfactory participation means a 1 percent incentive payment for 2011, .5 percent for 2012 through 2014, a 1.5 percent penalty in 2015 and a 2 percent penalty for 2016 and beyond. “CMS is also required to establish an appeals process and will begin to include PQRI info on the Medicare Physician COMPARE website,” he said. “The administration is very committed to transparency.”
Imaging services take a hit in the reform legislation. Beginning July 1, payment for the technical component of some imaging services will be reduced from 25 percent to 50 percent for subsequent procedures on consecutive body parts. Other facilities are taking a hit, too. “Frankly, what’s happening is that physicians through the SGR have always been subject to a ratcheting down as productivity has increased. That same concept has now been applied to ambulatory surgery centers, to hospitals, to home care, to virtually every other category of provider,” Jessee said.
Value-based purchasing is in the future for hospitals and ambulatory surgery centers, and payment adjustments may be made up or down, depending on purchasing changes. Also when it comes to hospitals, the Part A market basket update for inpatient and outpatient hospitals will be reduced each year up to .75 percent from 2010 through 2019. Medicaid disproportionate share hospital payments are also going down over time, yet the reduction is expected to be offset by eventual increases in the number of patients on Medicaid. According to the MGMA presentation, a national pilot program on payment bundling is “on the horizon.” Both the American Hospital Association and the Federation of American Hospitals have lauded the legislation’s passage.
“There are a great deal of new compliance requirements in this legislation, and you need to pay particular attention to those because they make the complex compliance landscape even more complex,” Jessee said.
Pertaining to self-referral, patients must be notified in writing of two things when they are referred in-office for an MRI, CT, PET scan and maybe other services:
- the patient’s right to receive care elsewhere and
- a list of alternative facilities that could provide the service near the patient’s home.
What Jessee said was “perplexing” about this requirement is that the law says the effective date is Jan. 1, 2010. “A word to the wise would be to go ahead and put a process in place as quickly as possible in your practice to give patients this notice going forward,” he said.
When it comes to physician-owned hospitals, just forget it. “The hospital industry has been trying to put the kibosh on physician ownership of hospitals for some time, and they have succeeded,” Jessee said. Those grandfathered in face more restrictions.
“There is widespread agreement amongst all the parties in Washington – House, Senate, Democrats, Republicans and agencies – that there are significant amounts of fraud and abuse in the Medicare and Medicaid programs, and if there were just better controls over fraud and abuse, that would free up more money in those programs to provide services,” Jessee said. “What you see in this bill is a reflection of that philosophy.”