The Sustainable Growth Rate mechanism creating a zero-sum game for Medicare Part B reimbursement rates (dropping rates as volume picks up) has long been unsustainable, and so Congress has been messing around with short-term SGR fix legislation for years now. Every six to twelve months we’ve been hearing about the impending 20% or 30% Medicare pay cut about to hit physicians’ pocketbooks, and the likely exit of physicians from the rolls of participating providers.
However, the stars are now aligned in such a way that real progress seems likely: multiple powerful Congressional committees have signed off on a deal to replace the SGR rule with something more workable: A unified approach to financial incentives to physicians and other medical professionals who are Medicare participating providers intended to promote quality and enrollment in alternative payment arrrangements.
The full text of the bill will be available here: It’s H.R. 4015. Check out the SGR fix section-by-section-summary and the websites of the House Energy & Commerce Committee and the Senate Finance Committee too. The substance of the proposal is discussed below.
How has this happened?
One of the sticking points involved in fixing this problem is that the price tag for a permanent SGR fix has long been seen as too high. How do we know the price? and How high is too high? you may ask. Well, Congress looks at CBO projections of the cost of implementing legislation over a ten-year planning horizon. When physician cost trends are on a steep increasing slope, that ten-year budget number looks bigger. When the trends flatten out a bit, the big number gets smaller. At present, that ten-year cost projection is “only” $125 billion, and Congress has spent over $150 billion on short-term fixes. So the time is right.
Continue reading “The Fine Print: In Which We Go over the SGR Fix Line by Line with a Yellow Highlighter”
Filed Under: The Business of Health Care
Tagged: David Harlow, Doc Fix, House Energy and Commerce Committee, HR 4105, Merit-Based Incentive Payment System, payment reform, Senate Finance Committee, SGR
Feb 7, 2014
My wife Mary and I recently got a series of early morning calls alerting us to the declining health of Mary’s mom, who was in her 90s. She died later that week. We were stricken and so sad, but took comfort that she died with dignity and good care on her own terms, and at her home in San Francisco.
Ten years ago, we received a very different early morning call, about my father. An otherwise healthy and vigorous 72-year-old, Dad had fallen at home. Presuming he’d had a stroke, paramedics took him to a hospital with a neurosurgery speciality rather than to the university trauma center. That decision proved fatal.
A physician in Seattle at the time, I arrived the next day to find Dad in the intensive care unit on a ventilator. Dad’s head CT revealed a massive intracranial hemorrhage. Dad also had a large, obvious contusion on his forehead.
The following day, the physicians asked to remove Dad from the ventilator. He died that night. We were profoundly devastated by his death and upset with the care he’d received.
Our family wasn’t interested in blame or lawsuits. We did, however, want answers: Why hadn’t Dad been treated for a traumatic injury from a fall? Shouldn’t he have had timely surgery to relieve pressure from bleeding? What went wrong?
I’ve spent the last decade searching for answers, for myself and countless others, to questions about how to improve health care. I’ve had the honor of working with many people pushing health care toward high value, at the Robert Wood Johnson Foundation(RWJF) and elsewhere.
We’ve worked hard to find solutions. We all get it: The health care problem is a big, complex one without silver bullet answers. Still, we’ve made incredible progress with efforts like RWJF’s Aligning Forces for Quality Initiative in which community alliances work to improve the value of their health care.
We’re searching for ways to help us all make smarter health care decisions. We’re helping health care professionals improve and patients and families be more proactive. We’re exploring the price and cost of care, and ways to automate health care information with technology.
And importantly, we’re working to align the incentives that health care professionals need to support and deliver great care. We strongly believe that unless we reward great results, we won’t get them. That means payment reform, with a focus on financial incentives for those who hunt for waste, resolve safety problems, sustain improvement, and, most of all, innovate to save more lives.
But do financial incentives to promote and reward behavior work?
Continue reading “Aligning Physician Incentives Doesn’t Do It”
Filed Under: OP-ED, Physicians, THCB
Tagged: AF4Q, behavioral economics, financial incentives, HCI3, Michael Painter, Patient Safety, payment reform, Physicians, Quality, RWJF
Aug 6, 2013
There’s been a great deal of discussion about health care payment reform. Prominent in this discussion is “Pay for Performance” (P4P). The idea is simple — rather than pay providers based on volume of care (fee-for-service) or number of patients (capitation), tie their payment to a measure(s) of performance. There has been substantial concern about the quality of care delivered to patients, so pay for performance appears to make a lot of sense. Don’t we want to reward providers for good performance? Shouldn’t this encourage them to provide high quality care?
Unfortunately, this is not as straightforward as it might appear. While the idea of pay for performance is very appealing and intuitive, there are some major pitfalls in implementation.
Continue reading “The Promises and Pitfalls of Pay for Performance”
Filed Under: The Business of Health Care
Tagged: Economics, health economics, Hospitals, Incentives, Martin S. Gaynor, Medicare, Pay for Performance, payment reform, Quality
Mar 3, 2013
Last week veteran analyst Vince Kuraitis reviewed a report from the consulting firm Oliver Wyman (OW), arguing that the trend toward reconfiguring health systems to deliver more accountable care is more widespread than any of us suspect.
“The healthcare world has only gotten serious about accountable care organizations in the past two years, but it is already clear that they are well positioned to provide a serious competitive threat to traditional fee-for-service medicine. In “The ACO Surprise,” our analysis finds that 25 to 31 million Americans already receive their care through ACOs-and roughly 45 percent of the population live in regions served by at least one ACO.”
OW provides a well-reasoned analysis and conclusions, but I’m skeptical. In discussions with health system executives around the country, I hear some movement toward change, but relatively few organizations are materially turning their operations in a different direction. The specter of policy change is looming, but it is still abstract. As I’ve described before, market forces are intensifying, but they’re mostly still scattered and immature.
Fee-for-service remains the prevailing paradigm, and there is no palpable threat to the health care excess that is business-as-usual. Several health system CFOs have told me: “Why should we take less money until we have to?”
There’s no question that Medicare’s ACO programs have the bulls-eye on reimbursement for health systems, which are a convergence point for a large percentage of appropriate and inappropriate health care costs. But there is a silver lining. American health care is so replete with waste – on the order of half or more of all health care expenditures – that any system that tries could deliver dramatically lower costs and improved outcomes.
Continue reading “ACOs: We’re NOT There Yet”
Filed Under: THCB, The Business of Health Care
Tagged: accountable care, ACOs, AtlantiCare, Brian Klepper, Fee-for-service, Incentives, Oliver Wyman, payment reform
Dec 10, 2012
In the battle over health care that lies ahead, how strongly will the public rally around the need for innovation in confronting health care costs? Does the public view innovation as relevant to the challenge in the first place?
These aren’t idle questions. The news that growth in overall national health care spending has been moderating has raised speculation that innovations in payment and health care delivery are already paying off, notwithstanding the unquestioned impact of the Great Recession.
Looking ahead, uncertainty over the fate of the Affordable Care Act and the likelihood of federal budget cuts yet to come has many fearing that innovations will be vulnerable. And it is not just federal spending that will be at risk. Hospitals and health plans will all be watching their margins carefully to assess how far and how fast they can keep making investments that support innovation (such as investments in healthcare IT, analytics and care coordination) but that may take months or years to generate a return.
All of which places the role of innovation in controlling costs center stage. After all, this is what undergirds the Triple Aim that so many health care leaders have embraced as the only realistic alternative to arbitrary cutbacks in health care services and spending. Health care leaders can defend innovation if they have public support. But do they?
Continue reading “Innovation is Key to Controlling Health Care Costs”
Filed Under: THCB, The Business of Health Care
Tagged: bipartisanship, Costs, efficiency, Health care spending, Innovation, NEHI, payment reform, polls, public support, R&D, The ACA, Triple Aim
Jun 26, 2012
Are the House and Senate giving us a false choice for how to control health care costs in Massachusetts? Aren’t there other options?
A few major themes have emerged from the two payment reform proposals and highlight the fact that they fail to align incentives for patients to be more involved in the purchase of their health insurance and their health care.
For example, even with full transparency of cost and quality (which is a huge lift on its own) for many patients, high-cost still correlates with higher quality in medicine. A recent report from Attorney General Coakley proved this theory wrong, but simply providing patients with cost data without placing the right incentives in their health plan to choose the low-cost high-quality provider will result in many selecting the most expensive care. As a result, these proposals will fall short of sustainably bending the cost curve.
Continue reading “Red or Blue Pill for Payment Reform? Both Won’t Work”
Filed Under: Uncategorized
Tagged: Commonwealth, cost curve, health care spending cuts, Joshua Archambault, Massachusetts, payment reform, The States
May 14, 2012