The ACP Advocate Blog

by Bob Doherty

Wednesday, January 28, 2015

Are we about to see the death of fee-for-service?

For years, policy experts have been predicting the end of fee-for-service.  Yet it can be said of fee-for-service that, like Mark Twain’s alleged demise, reports of its death have been greatly exaggerated. (Actually, this is an often-used misrepresentation of what Twain actually said. After the New York Herald incorrectly reported that he was “grievously ill and possibly dying,” an “amused” Mark Twain wrote that “the report of my death has been exaggeration” — an error that was promptly corrected by the newspaper).

On Monday, though, the Department of Health and Human Services announced ambitious goals to mostly replace pure Medicare fee-for-service — that is, paying physicians and hospitals a set amount per unit of service — with value-based payments. Not over many years, but in three years.

 According to the announcement by HHS Secretary Burwell, the agency “has set a goal of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models, such as Accountable Care Organizations (ACOs) or bundled payment arrangements by the end of 2016, and tying 50 percent of payments to these models by the end of 2018.  HHS also set a goal of tying 85 percent of all traditional Medicare payments to quality or value by 2016 and 90 percent by 2018 through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs.  This is the first time in the history of the Medicare program that HHS has set explicit goals for alternative payment models and value-based payments.”

If tying 90 percent of Medicare payments to quality or value by 2019 doesn’t count as the end of traditional fee-for-service, it comes pretty darn close to it.  (To be clear, even if Secretary Burwell’s goal is met, FFS won’t be completely eliminated.  Rather, 90% of FFS payments would be linked to measures of quality and value, so that the usual per-unit fixed payment would be increased or decreased depending on how well the “provider” does on the applicable performance measures.  Also, half of Medicare payments would go to innovative payment models, like Patient-Centered Medical Homes, Accountable Care Organizations, or bundled payments.  Even in these ‘alternative’ models, a good part of the payment will likely continue to be fee-for-service, but with opportunities to share in savings that the models are able to achieve, and with other performance-based payment incentives.  The more advanced models will require that the APMs accept financial risk, so if the performance metrics aren’t met, they lose money, but if they meet or exceed the metrics, they will come out ahead).

Yet there is no question that HHS’s goals are audacious ones that will fundamentally change, within a few short years, how most doctors and hospitals are paid.  And given the evidence that many physicians aren’t participating in, or not have been able to successfully participate in, the existing Medicare quality reporting programs, there is reason to worry that many of them will be left behind and not able to catch up, potentially exposing them to large performance-based payment cuts.

I have been advising physicians for years that they need to be ready for the end of fee-for-service—while explaining why physicians own professional societies, including ACP, are among those who have been advocating for such a shift to value-based payments.  When I wrote in this blog in May 2011 that “doctors call for an end to fee-for-service,” citing testimony from the  American Medical Association, American College of Physicians, American Academy of Family Physicians, American College of Surgeons, and American Osteopathic Association that called for a staged process that would result in the current Medicare FFS system being replaced with new, value-based payment models, I received among the largest number of comments ever on an ACP Advocate blog post.

In response to this week’s HHS announcement, ACP President David A. Fleming, MD, FACP issued an official statement on Tuesday that expressed support and agreement with the “ambitious but achievable” goals set by Secretary Burwell, while noting that “several critical steps will be required to achieve these goals” including:

1.   Congress needs to pass legislation to repeal the Medicare SGR formula and create a clear pathway to a new merit-based incentive payment program and alternative payment models including PCMHs and ACOs, as specified in the bipartisan, bicameral SGR Repeal and Medicare Provider Payment Modernization Act.
2.   HHS should work to harmonize and prioritize the measures used in the current Medicare reporting programs—PQRS, Medicare value-modifier, meaningful use, and e-prescribing—with each other and with the measures used by private payers, to reduce the burden of reporting based on inconsistent and sometimes conflicting and inappropriate measures.
3.   HHS should partner with professional medical membership societies to support and prioritize efforts to develop guidelines and measures relating to high value care, to simplify reporting, and to support physician practices as they transition to new payment and delivery models associated with value.
4.   HHS should ramp up and expand the programs funded by the Center of Medicare and Medicaid Innovation, including the Comprehensive Primary Care Initiative.
5.   HHS should continue to make improvements in traditional fee-for-service that will facilitate the transition to value-based models, including improving on the new Medicare payment policy for managing care of patients with chronic illnesses.
6.   HHS should continue to work on improving the functionality of electronic health records, including making changes in the meaningful use program.
7.   HHS and Congress should ensure that all performance measures are validated through the National Quality Forum, a "not-for-profit, nonpartisan, membership-based organization that works to catalyze improvements in healthcare.” The NQF "endorses consensus standards for performance measurement; ensures that consistent, high-quality performance information is publicly available; and seeks real time feedback to ensure measures are meaningful and accurate.” [Quotes excerpted from NQF website].
8.   HHS and Congress should ensure that all of the programs and agency initiatives involved in achieving Secretary Burwell’s goals recognize and support the critical role that primary care physicians will play in ensuring that payments are aligned with value.

HHS’s announcement appropriately establishes measurable goals of transitioning away from FFS to value-based payments by defined dates, but the agency can’t bring about the necessary changes on its own.

It will need to partner with physicians and their professional societies, because it is physicians, not the government, who bring value to health care.  It is physicians, not the government, who can learn from each other about what works best to improve outcomes.  It is physicians, not the government, who know best what should be measured, and how, and what should not.  The government can do much to facilitate physician-led improvements in care, not just by setting goals and providing funding, but also by simplifying reporting requirements, harmonizing and prioritizing measures, eliminating poor or redundant measures, easing counterproductive regulations like meaningful use, and by helping physicians do what they are intrinsically motivated to do, which is to provide the best possible care to their patients.

So the real test of HHS’s new goal of replacing FFS with value-based payments is not just whether 50, or 60, or 90 percent of payments are based on value and quality in the next few years, but whether the changes required really help sustain the most important component of the value equation, which is the value that caring physicians provide to their patients each and every day.  This transcendent value—the hallowed patient-doctor relationship—may be hard to measure, but it is the foundation of good medical care.   As organizations like ACP work with the administration and Congress to advance the goals of value-based payments, we need to do everything possible to ensure that this, the most important value, is not forgotten along the way, as we try to measure everything else that can be measured, whether it improves care or not.

Today’s question: What do you think of HHS’s goals to transition away from FFS to value-based payments over the next three years, and ACP’s response?

Tuesday, January 20, 2015

Martin Luther King and the Moral Case for Medicaid Expansion

Yesterday, on the anniversary commemoration of Dr. Martin Luther King’s birth, I went to see Selma—the movie, not the place.  The biopic is everything I expected—a moving, enthralling, inspiring yet immeasurably sad account of Dr. King’s leadership in organizing a march from Selma to Montgomery, Alabama in support of voting rights.

The movie does not cover the next great cause planned by Dr. King, a “Poor People’s March” to call for an Economic Bill of Rights.  As journalist Gary May recounts, “King had hoped to recreate Birmingham and Selma: organize the masses, demonstrate, touch the conscience of the nation, and thus force the government to act. It had happened in 1963 and 1965, so surely it could happen again.  But it didn’t.”   Dr. King was assassinated on April 4, 1968.  Just a little over a month later, his widow Coretta Scott King led a march of 5000 people calling for an Economic Bill of Rights (my late father Jack Doherty was one of the marchers), yet “No Economic Bill of Rights was ever created and the campaign produced only minimal results — more food stamps became available and funding for Head Start programs in Mississippi and Alabama was increased” observes May.

“Had King lived, it is doubtful that he could have achieved more” May concludes.  “The American political system [today] is incapable of producing the massive changes King prescribed in 1968 . . . That such changes are needed is indisputable but how to achieve them in a time of institutional and political paralysis is the million dollar question that lacks a practical answer. . . The unfortunate history of the Poor People’s Campaign and the failure to deal with contemporary outrages is not a prescription for inaction, however. Quite the contrary.  King put it best: "I can’t lose hope," he once said, "because when you lose hope, you die."

What if, though, the country decided to act on a contemporary issue (although it has its roots in the Civil Rights movement of the 1960s) and agreed to expand the Medicaid program to the poor in every single state?  While it's risky to speculate on how a person from the past would view any current issue, is there any reasonable doubt that Dr. King would continue to believe, if he were alive today, that the United States has a moral obligation to provide affordable coverage to everyone, and especially to the poor?   He reportedly once said that “Of all the forms of inequality, injustice in health care is the most shocking and inhumane.”  The Affordable Care Act, and particularly the expansion of Medicaid, was created to provide access to coverage for the tens of millions of poor and near-poor, and it is starting to achieve this—more than 10 million previously uninsured persons gained coverage in 2014, and millions more will get coverage this year.  But in the majority of states that have refused to accept federal dollars to expand Medicaid, the truly poor (people with incomes at or below the poverty level) have no access to subsidized coverage under the ACA—because the 112th Congress and the Obama administration had never envisioned that the Supreme Court would make Medicaid expansion voluntary, and that a majority of states would then turn expansion down.  More than 7 million poor people fall into this coverage gap.

The good news is that there are a growing number of states, with Republican governors, that are seeking to expand Medicaid—but with changes that need to be approved by the Obama administration.

We still have a long way to go before every poor person in the United States has access to coverage.  I can think of no better way to honor Dr. King’s legacy than for physicians in every non-expansion state to urge their governors and state legislatures to close the coverage gap for their poorest residents by urging them to expand Medicaid—not next year, not five years from now, but this year, now, because “Of all the forms of inequality, injustice in health care is the most shocking and inhumane.”

Today’s questions: What do you think Dr. King would say to the states that refuse to expand Medicaid? What will you say to them?

Thursday, January 8, 2015

How’s that? New GOP-controlled Congress wants to raise the deficit and put more people in government health care?

Why would any conservative lawmaker vote for a law to increase the federal budget deficit, force more Americans into government-funded health care, reduce private sector employee working hours, and increase the number of uninsured, because fewer will get private coverage from their employers? You would think that conservative members of Congress associated with the Tea Party would be up in arms about such a law—the movement, after all, was founded over opposition to increased federal spending and “government-run” health care.

Yet passing such a law is up as one of the first items of business of the new GOP-controlled 114th Congress—with the strong support of Tea Party lawmakers!  The House of Representatives is expected to vote as early as today on a law, the Save American Workers Act of 2015, to increase the work-week hours counted toward being defined as a “full-time” employee from 30 to 40, for the purposes of determining whether larger employers are required to offer them a private health insurance plan that meets the requirements of the Affordable Care Act (ACA).  Under the ACA, employers with 50 or more employees must provide “qualified” coverage to all employees who work 30 or more hours, or pay a penalty.  The bill will almost certainly pass the House, and then be taken up by the Senate in short order (although it is unclear if Senate leadership can muster enough Democratic votes to reach the 60 votes needed to overcome a filibuster).

At first glance, raising the work hours from 30 to 40 that count as full-time employment, thereby subject to Obamacare’s employer mandate, seems reasonable, the argument being that the ACA currently creates an incentive to cut back employees’ working hours to fewer than 30 hours to get around the law’s employer-mandate.  But raising the work hours from 30 to 40 will actually increase the number of Americans who will be forced to work fewer hours and lose their employer’s health insurance plan.  Many of them will either then end up in the taxpayer-subsidized Obamacare plans offered through the exchanges, or in Medicaid.  As a result, the number of people getting “government-run” taxpayer-subsidized coverage will go up, while employer-based private sector coverage will go down—adding tens of billions to federal spending and the budget deficit in the process.

Here are more details on what will happen if Congress raises the work hours from 30 to 40:

The deficit will go up, private sector coverage will go down, there will be more uninsured, and more people will become dependent on government programs. According to the Congressional Budget Office, the budget deficit will increase by $53.2 billion over the next ten years, because the government will end up paying for people who lose their employer health insurance coverage as employers reduce their hours to fall below 40); if they make less than 400% of the federal poverty level, they will be eligible for government subsidies to buy coverage from the exchange plans, or they might end up in Medicaid, depending on their state’s income eligibility standard.  The states will also pay more because they will have to pay part of the costs for more people enrolling in Medicaid. “The agency [CBO]  thinks that 1 million fewer people would get health insurance at work: an employer might decide not to offer coverage to someone who works 35 hours per week, for example, because they no longer face a penalty,“ explains Vox Media’s Sarah Kliff. “Some of these people would just be out of luck — a bit fewer than 500,000 people, CBO says, would end up uninsured. More would end up on government programs: between 500,000 and 1 million people would join Medicaid or enroll through the exchanges (maybe with a federal subsidy, if they earn less than 400 percent of the poverty line) after losing their employer coverage.”

That the GOP’s proposed change will increase the budget deficit nevertheless was “dismissed”  by Senate Majority Leader Mitch McConnell, who argued that "It is wreaking havoc out in society regardless of what the CBO view may be of the impact on the U.S. budget.”

More people will be at risk of having their work hours cut. Kliff cites another independent study that concluded that “while working slightly more than 40 hours is common, working slightly more than 30 hours is rare. In other words, few workers are at risk of having hours slashed from 31 per week to 29, but many could be cut back from 41 to 39.”  The study, by the Commonwealth Fund, found that “Compared with the current 30-hour definition, at a full-time definition of 40 hours per week, there are more than twice as many workers at high risk of hours reductions because they are within five hours of the full-time definition at firms that do not offer health insurance coverage.”

These hardly sound to me like outcomes that most Republicans would want.  But in their zeal to undue any part of Obamacare, the very un-conservative result of more deficit spending, and more people in government run plans, doesn’t seem to matter as much as showing their base that they are doing something, anything to reverse the law.  (Some conservatives get this: the National Review’s Yuval Levin argues that “For reasons of both policy and politics, it seems to me that a repeal of the employer mandate makes much more sense than an adjustment of its definition of full-time work. And that adjustment, quite apart from the appeal of other measures, seems likely to be worse than doing nothing).”

As it turns out, the White House has promised that Obamacare will veto a change in the work hours, so this bill isn’t likely to become law anyway.

This initial Obamacare fight, though, illustrates a much bigger challenge facing the GOP-controlled Congress, which is that about any change that they might make in Obamacare will increase the deficit, and cause many people to lose coverage, just like the change in work hours.  If they take away Obamacare’s taxes on insurance companies and medical devices, the deficit will go up.  The same thing if they reduce payment cuts to hospitals and Medicare Advantage plans, or if they eliminate the cost-saving Medicare Independent Payment Advisory Board.  People will lose health insurance coverage if they trim funding for Obamacare’s premium subsidies or Medicaid expansion, or if they repeal the individual insurance mandate.  (The 114th Congress will likely try to pass these and other changes, but few will become law anyway because Obama would veto them).

As the work hour debate shows, it  is one thing for conservatives to run against Obamacare, but making changes in it that don’t make things worse, and that don’t violate some of their own conservative principles (like not increasing the deficit), is going to be close to impossible.

Today’s question: What do you think of Congress’s effort to change the Obamacare work week?

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About the Author

Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog

Email Bob Doherty: TheACPAdvocateblog@acponline.org.

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