The ACP Advocate Blog

by Bob Doherty

Wednesday, May 11, 2011

Doctors call for an end to Medicare fee-for-service

For many, many years, organized medicine has fought tooth and nail to preserve the Medicare fee-for-service (FFS) payment system. The battlegrounds have been over the procedure codes that define each service and the AMA’s ownership of the codes (CPT), the relative values assigned to each procedure code (and who and how those values are determined—including the role of the RUC), geographic adjustments in practice costs and wages, of course, the annual fight over payment cuts resulting from Medicare’s sustainable growth rate (SGR) formula.

So it is truly remarkable that last week, organized medicine essentially called for the end to Medicare FFS. Not right away, mind you, but over the next decade. In their respective statements for the record of a May 5 hearing by the House Energy and Commerce Committee, the American Medical Association (AMA), American College of Physicians (ACP), American Academy of Family Physicians (AAFP), American College of Surgeons (ACS), and American Osteopathic Association (AOA) called for a staged process that would result in the current Medicare FFS system being replaced with new, value-based payment models.

Frances Correa with International Medical News Group reports that, “Although the groups’ approaches to an SGR fix vary, their plans share some similarities: a full repeal of the SGR and creation of a new payment model that break away from a “once size fits all” model. They also suggest a 4-5 year transition period in which physicians can participate in the new payment plan on a voluntary basis. Additionally, they call for a transition to value-based payment systems and increased emphasis on patient-centered medical homes. The ACS, the AAFP, and the ACP all specifically include the need for higher reimbursements for primary care in their plans.”

ACP, in its statement to the committee, proposed a comprehensive, step-by-step plan to transition from the SGR formula and fee-for-service payments to broad adoption of new models to align incentives with better value for patients:

“Stage 1: 2012-2016, Medicare would stabilize and improve payments under the current Medicare fee schedule by eliminating the sustainable growth rate (SGR) as a factor in establishing annual updates and by ensuring higher payments and protection from budget neutrality cuts for undervalued evaluation and management services. Also, during this stage, physicians who voluntarily participate in specific, designated Physician Payment Innovation Initiatives—including Patient-Centered Medical Homes, Accountable Care Organizations, and other models that meet ACP’s suggested criteria for value to patients—could qualify for appropriately higher payments.

Then, during stage 2, beginning in 2016, physicians would be given a set timetable to transition their practices to the models that Congress and the Department of Health & Human Services (HHS) has determined to be most effective based on experience with the payment initiatives evaluated during stage 1, leading to permanent replacements to the existing Medicare payment system.”

The fact that organized medicine is united on wanting to get rid of the SGR is nothing new. But it is big news that the leading physician professional membership societies now understand that it is not a winning strategy to ask Congress to pump hundreds of billions of taxpayer money into reversing the SGR cuts unless it leads to a “permanent, sustainable solution to the Medicare physician payment problem” that “reduces spending, pays providers fairly, and pays for services according to their value to the beneficiary” as the House Energy and Commerce committee wrote in its March 28 request to the physician groups for their ideas.

Getting from the current flawed FFS system to models that pay for services according to the value will be daunting. For all of the problems with FFS, it is the system that most physicians and patients are used to, and as I blogged about a few weeks ago, given the history of other failed policy interventions, skepticism trending toward cynicism is a perfectly justifiable reaction from internists to the new alphabet soup of unproven payment models.

But the alternative is fighting to hold onto a FFS payment system that is broken, and like Humpty Dumpty, can’t be put back together again.

Today’s question: Do you support the call by organized medicine and Congress for a transition to new payment models that pay for services according to their value to the patient?

10 Comments :

Blogger w said...

Well.

You still have centrally-set prices and an
”economic” system without any price mechanism.

You will change incentives which will result – by logical necessity – in new unintended consequences. Are they better or worse than those of the status quo? How do we know?

The only criterion of “value” that has any meaning in the end – services that informed patients want at prices they are willing to pay – is essentially unaccounted for. Instead we will have check boxes on an EMR that show the PVAX was discussed (whether it was, or not), etc., while the diagnosis is missed. But “quality” is documented and recompensed. (Oh, but you respond, patients cannot possibly judge better and worse, like they do so poorly with food, water, shelter, clothing. We the experts must tell them what they want and what “quality” means, even if they don’t like it and don’t want it despite an intelligent discussion).

Absent, as well, is the recognition of what we lose everyday in discouraging innovation in the delivery of health care by the suppression of free markets. This cannot be measured, but certainly exists.

My usual question: Why do we think we are smarter than everyone in the past that has tried to centrally-plan large swaths of economies and failed? What have we figured out this time that will make this change in the top-down system work when all prior attempts have failed?

-wbond

May 11, 2011 at 2:22 PM  
Blogger John said...

Well, since it will cost several million dollars to start up an ACO, and tens of thousands to run a PCMH, I guess I'd better plan for another career.

My thanks again to the visionaries at ACP!

May 11, 2011 at 5:57 PM  
Blogger Steve Lucas said...

The fee for service payment model has been for number of years, both inside and outside medicine, viewed as a cost driver. Simply put, if a doctor is paid for x he will do x. The results have been predictable with some doctors seeing 70 patients a day. Others have patients on a 30 day cycle, and with specialist, I know people who see a doctor every month of the year.

I have, on a number of occasions, had to ask both doctors and nurses to step aside so that I could leave an exam room. Ultimately the statement is made ”but, you have insurance.”

Today cardiologists are debating the lack of change in their practices even with new evidence that invasive procedures do not change mortality. The answer is simple, money.

A major factor in the decline in the position of doctors in society is this process and the attitude that we, as patients, have nothing better to do. For many the logistics of getting someone to the doctor are mindboggling, as this becomes a family process.

The other reality is companies do not give sick leave to take family to the doctor; this comes at best out of vacation time. Time that could be better spent with family in a fun activity.

We have to change this system. People are being medicated to generate office visits and unnecessary procedures are being done to maximize patient income. This system has to change.

Steve Lucas

May 12, 2011 at 1:24 PM  
Blogger Harrison said...

Do we support a change from fee for service medicine?
Sure, what do you have in mind?

As far as I know the people who earn the money that is paid into the system stopped paying for fee for service medicine 50 years ago or more.

Insurance is not fee for service.
It is a bet.
The insurers then have to figure out how to win that bet.
They have to pay service providers (including doctors).
They originally did okay with paying fee for serve, or usual and customary or whatever else it was called.
But churning got to be too easy.
So limits were introduced.
That was even before Medicare entered.
Medicare originally paid fee for service too -- and still does kind of.
But Medicare A went to a DRG system. That is a risk sharing fee for service hybrid that was imposed on the hospitals.
It made it so that doctors and hospitals had different goals relative to hospitalized patients.
Doctors did fine with them in. Hospitals wanted them in and out just as fast as possible and with as few services used as possible.
Quality?
An after thought at best -- for anyone.

Fast forward to now.
ACO's
Pay for performance
Capitation
Or maybe just make us all government employees and put us on salary.

Really, there aren't that many ways to pay providers.

The focus has to become quality, and its cousin -- value.

We can all agree that costs are too high, and that they will rise to a point where it is a national crisis if left unchecked.
We can all also agree that people should have a right to a basic level of health care services, although we will disagree on what that level should be.

This is going to be a long and painful process, involving politics.
I hope that physicians stay active in the debate as individuals and as organized voices.

The market will not fix this.
The government will not fix this.
We have to fix it within our culture, and it will take time.
And a lot of debate.

Harrison

May 12, 2011 at 4:12 PM  
Blogger PCP said...

Like much that comes out of congress, it all depends on the details.
If done well, it has the potential of reinventing the profession and cutting waste in meaningful ways.
Much will depend on whether doctor and patients are empowered in this new construct or changes imposed on them as is usually the case.
I see ACOs advanced medical homes etc as corporate dominated entities with plans to exploit the profession and treat doctors and patients alike as commodities. The truth is they will likely be dominated by corporates like insurance companies, hospitals etc. Unless that is specifically excluded.
The result of that is that doctors get relegated to mere replaceable employees. For all it's pitfalls FFS prevented that from happening, always providing a viable alternative.
It will take a while but autonomy will be eroded, professional satisfaction will decline, financial rewards will shrink, the strength of the doctor patient relations will be further eroded and diluted and medicine as a career will continue to become less attractive. Odds are profiteering will rise and costs will go no lower either.
I am not at all confident that change can be done that in any way over ti e is to the benefits of physicians in clinical practice. The history of change in the past few decades goes against this.

May 14, 2011 at 9:02 AM  
Blogger Robert J. Sobel, M.D. said...

The danger begins when the mantra that fee-for-service is broken goes unchallenged. The next word is always, "the solution will be complex." The bureaucratic layers between me and basic medical practice (especially when it comes to prescribing medications) are already oppressive, redundant, and unduly complex. Any move that does not address this is bound to fail.

The fee for service disaster is all of 13% of Medicare expenditures to outpatient physicians (please check this; it was in one of the Congressman's intros). The examples of success are Blue Cross and UHC outreaches and vertical entities with near monopolies. ACO's and homes are a slap in the face to small, independent physicians. The consolidation marches on.

SGR can be replaced with the simple house bill passed. If global corrections need to be made, how about regulating the commodities (new drugs and scans and technologies). The Medicare Patient Empowerment would jibe with reduced payments that will be necessary to reduce the actual parts of Medicare that are ballooned (check the growth curves of the last 20 years to figure that out). Somewhere between the Republican extreme destruction and handover to private insurance (though better than the single payor craziness) and the Democrat's further exaggeration of the basic insurance role that Medicare should play, lies such a simple solution. Organized medicine's promulgation of 5 more years of experimentation at least acknowledges that no alternative solution exists. Unfortunately, the consolidation tsunami has gained a lot of momentum via the stimulus, and private practice has very few defenses.

May 14, 2011 at 8:06 PM  
Blogger Jerry M said...

It is difficult to believe that even the AMA favors pie in the sky concepts like the medical home and accountable care organizations in favor to FFS. These concepts are favored by people who think their care is better then most therefore it will be given higher value. The government , however, is actually more interested in paying less for medical care. As you must realize there is nothing new about these concepts. The HMO was invented to take advantage of this idea. Measuring value is something that has been tried many times with little success such as correcting outcomes for severity of illness. I fail to see how FFS is broken. It is the standard method of payment for all other industries. What has been broken since its inception is Medicare. It is a classic Ponzi scheme which was never fully funded or invested and was frequently robbed by congressional spending. Now we are asked to save it by magically inventing a way to supply a better product cheaper. It might be possible if the product or outcome expected were held to the same level but it is not. Constant improvement is required. We are , therefor , bound to fail. If ,on the other hand, my contributions to medicare for 40 years had been saved until I became eligible to use it, I would have a” Cadillac” insurance plan rather then the poor payer that exists now.

No, it is not the payment system that is flawed. It is the poor management of FICA set up by an overreaching congress. Quite frankly I’m sick of ACP always promising that physicians can do more for less–if only we all had EMRs–if only we were paid for quality– if only we were paid for coordinating . In my opinion, we need to be paid adequately for service rendered !

May 17, 2011 at 10:32 PM  
Blogger Harrison said...

FFS has never made much sense.
We are a profession that waits for people to be sick, and then we ask them to pay us, and with FFS we do better if they don't get well right away.
We in primary care also do okay if we invite in lots of specialists.

Hospitals are paid to get people in and then get them out.
Payment schemes pit doctors against hospitals, because they need us to get patients well quickly and okay their discharges, and we get paid more and more for every day they are there and for every service we can offer while they are in the hospital.

How could anyone have ever expected these combinations of incentives would thrive?
FFS by itself is unsustainable.

If patients were paying for services themselves then they would choose to get sick and live with it and avoid the doctor, whose services are too costly.

If they pay for insurance then the insurance company would be foolish to pay whatever the doctor chooses to charge for whatever reason the doctor wants to charge it.
The insurance company's goal will be to keep the patient well with as few services as it takes to accomplish that, and use doctors as little as possible.
And to use hospitals even less.

FFS cannot continue.
It was never a good fit for a health care market place.

Harrison

May 18, 2011 at 6:01 PM  
Blogger The Unseen Patient said...

I have been practicing internal medicine/primary care for over 30 years, and have witnessed internal medicine evaporate from the specialty that attracted the most medical school graduated to one that now is one of the last chosen. Although I have had my own theories why this has occurred, last week my experience at the orthopedist and dermatologist made convinced me that my hypothesis is correct.
After registering at the orthopedist's office, before seeing a physician or nurse, I was sent to have an Xray of my injured knee. Shortly later, the doctor came into the examining room, greeted me, took a history and performed an exam just as I do. However, his history was three direct questions and his exam was three brief palpations of my knee. He then said I should have an MRI and select a date for arthroscopic surgery. The total time spent with me was less than 5 minuted.
The encounter with the dermatologist was longer perhaps ten minutes during which I had 8 kerotoses frozen.
I do not know what the reimbursements were for either of the physicians. However, I do know that for a a five minute visit to my office I get paid about $20 and slightly more for the ten minute visit. Furthermore, I do not get compensated for each of the diagnoses I make for each patient.
Why would a medical student select primary care that involves problems of the entire patient, difficult interpretations of complex stories none of which can be obtained in 3 three minutes and then look forward to being paid a million dollars less over his/her career than the orthopedist and dermatologist.
Medical students understand this. Why is it that those who regulate those who set reimbursement do not?
An extra couple of tens of thousand dollars is more like 'blood money'

R Freidin, MD
http:theunseenpatient.blogspot.com

May 20, 2011 at 1:19 PM  
Blogger ryanjo said...

There is absolutely nothing wrong with the fee-for -service (FFS) system in any economic sector. And that includes healthcare. Just get the third parties OUT.

The problem is that the insurance companies and government have inserted themselves between the payor and the provider of services. This distorted the valuation of services, resulting in a highly successful try (by insurers) to siphon off payments for profits, and a mostly failed attempt (by government) to reduce costs.

Statements by planners and some physicians that FFS doesn't fit in medical care are wrongheaded. Patients should be able to vote on service and value with their checkbooks. They should be able to pay for treatment, or prevention, or both, as they wish. Does it work differently in other areas of life? Some of us replace worn tires, and some wait for a flat. Do we accuse the tire store of encouraging overuse? No, because the consumer has advantages of choice and competition. And guess what, they don't have to be tire experts -- it is the interest of each tire seller to explain the benefits to the consumer.

The only way the FFS doesn't make sense is as a tweak to the present broken system. And some of the parties to the national debate can't see past that point.

May 20, 2011 at 10:09 PM  

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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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