A Bird’s Eye View from the Penalty Box

The Centers for Medicare & Medicaid Services (CMS) EHR Incentive Program—also known as Meaningful Use (MU)—initially provided incentives to accelerate the adoption of electronic health records (EHRs) to meet certified program  requirements.  Many physicians were mandated to change over to electronic records at the cost of tens of thousands of dollars.  Electronic records have never been shown to improve patient care or outcomes with statistical significance, the criteria physicians routinely use when making care decisions.

Physicians who failed to participate in MU would receive penalties in the form of reduced Medicare reimbursements automatically. To avoid a penalty, physicians had to implement certified electronic health records (CEHRT) and demonstrate MU of that technology through an attestation process at the end of each reporting period.  There were 10 data specifications. Approximately 209,000 physicians were facing penalties at the start of 2016, almost one-fourth of the U.S. physician workforce.

By the end of 2015, CMS had stated it would broadly accept applications for hardship exemptions because of the delayed publication of the program regulations.  Applications for physicians were due by July 1, 2016.

A friend of mine opened a private practice in October 2015 and thought she was on the right path toward submitting data and meeting MU requirements.  One of the most challenging things about running a business is hiring excellent ancillary staff for support.  Employees should be smart, capable, and well, able to reliably submit data.  It is worthwhile to note physicians receive no business training in medical school, so the learning curve is steep for all physicians including my friend, who is a family practice doctor.

There are mistakes and triumph along the way and my friends’ misstep was hiring an office manager who ultimately was not a good fit – unbeknownst to the physician, she did not submit ANY data.  The notification arrived in the mail that this practice did not meet all 10 MU program requirements. “We had recently acquired a new EHR (cost 6K) and were uncertain how to verify data had been submitted.  We were working on it.” She contacted CMS and they denied any opportunity for appeal.

Welcome to the penalty box, with no term limit. Every single visit, procedure, counseling session, or medical intervention will have 2% shaved off the top.  The average family physician receives about $100,000 a year in Medicare reimbursements, so a 2% penalty for 2017 will become  3% in 2018, and increase to 4% in 2019—a combined three-year total of $9,000.

This total overlooks the increased costs and overhead of running a business. Staff members get raises; medical supplies cost more, and even medical license fees continue increasing — all while the physicians’ income is decreasing with no end in sight.

This young physician is working in her hometown somewhere in Middle America, a small community, with a population of 13,000.  She is there because her family and friends are nearby.  She loves her patients; 50% of them are insured by Medicare and Medicaid.  She provides high quality care; for which she will be paid less and less each year.

This physician is neither lazy nor stupid.  She is just not a businesswoman, yet.  She opened her practice straight out of residency and was under the impression she did not need to submit data immediately while getting things settled.  Once she began “submitting” data, she trusted the office manager to do it, because she was otherwise engrossed in seeing patients, (a part of our profession likely to disappear in the near future.)   The art of practicing medicine will become an outdated and ridiculous notion at the rate we are going.

My advice for every primary care physician in this country is to opt-out of Medicare and Medicaid so our businesses can survive.  This particular physician cannot do that as the hospital has guaranteed her salary for one year while she gets her practice started.  What a great deal for the hospital! The primary care physician is left to their own devices, to build a practice, and serve as a source of revenue feeding the specialists, who are employed by the hospital in this particular scenario.  The hospital did offer to employ her; however the wage was far below the industry standard.

This family physician might reluctantly have to close her Medicaid and Medicare panels anyway. If her business begins failing due to the penalties being leveraged, she will opt out of both Medicare and Medicaid.  So will us all if this punitive payment structure continues unabated.

This scenario is repeating itself over and over across the country every day.  Private practice physicians are stuck between a rock and hard place.  Indentured servitude is on one side and the freedom to independently practice medicine is on the other.

Financial analyst John Graham at Forbes wrote in April of 2015 that MACRA was a “fiscally irresponsible approach to increasing the amount the federal government spends on Medicare’s physicians’ services.”  What should we do when working with a fiscally irresponsible person?  Do we jump on board and begin a business partnership?  No.  Then why are physicians acquiescing to this abuse?  MACRA penalties will begin in 2019 at 4% and increase to 9% by 2022.  Who can afford to stay in practice at the rate of decline in reimbursement?

In general, physicians tend to be compassionate and empathetic, they are rule followers, and do the ‘right’ thing; traveling on the straight and narrow should not bring us to the point where we cannot make more than we would working  in a fast food restaurant.  The answer is we must opt-out until changes are made.  Private practice physicians need to realize we are on our own.  The AMA, ACP, and CMS are working in direct opposition to independent physicians fighting hard to break the chains that bind us.  It is simply time to let go and walk away.

Suneel Dhand recently wrote, “it’s not just the ace of spades that the doctor and patient are holding — but the entire deck.”  He is right.  It is time for us to become dealers.  And I want to play dealers’ choice.

Categories: Uncategorized

6 replies »

  1. I think there is a good chance that Price will do major corrective surgery on MACRA.

    He’s made public statements that are pretty disdainful.

    I think there are probably two camps: the value-based care guys and the old school “I know big gubermnt and this is big gubermnt” guys

    We’ll see how things play out.

  2. Meltoots – Interesting perspective. I think you are correct the work involved is not worth it and accepting the penalties are where this is headed for many. The question for me is where do the penalties end? Once we are all at 9%, will the government just keep going? At 50% penalty for non compliance will all the doctors go back to mom and pop practices accepting only cash? What a terrible way for the country to try and cut costs. The population will be left with no access to care…. I am holding out hope too. 🙂

  3. Dr. Nelson – I do not disagree with you about social capital and the common good. I think those are variable for every community and region and that is what makes specific targeted intervention so difficult.

  4. Actually, the Medicare reimbursement levels have not kept up with either the economy or the basic costs of offering responsive Primary Healthcare. The MACRA provisions further worsen the image of our nation’s Federal government as controlling, coercive and highly centralized. All of these attributes characterize the feudal governments that originally led to the emigration forming our nation. In addition, the deficiencies of our nation’s health may not be totally caused by inadequate healthcare. Now, more than ever, our healthcare industry has ignored a ‘population health’ view of comprehensive Primary Healthcare for all citizens. It begins with “social capital.”

    So, what else could underlie the leveling off of our nation’s longevity, recently reported. The answer is reported as being related to all sorts of unhealthy life-style problems. Putting aside the covert economy related to illicit drug trade (“Huge”), what might also be causing all of this. Some of you may remember an April 2016 JAMA ‘Special Communication’ describing an analysis (very detailed), Census Tract by Census tract, of the connection between income and longevity. For most but not all communities, poverty shortens a person’s longevity. The correlation was uniform except for the community’s whose residents generally comprised citizens with a more prevalent level of college education. The report itself used the words ‘social capital’ only once and only one of the three Editorial comments used the words ‘social capital’ twice. With our transient, highly distracted, polarizing lives, could it be that the CAUSE of poor health for so many citizen is the declining presence of resilient networks of caring relationships, formed by the extended families with stable traditions, in so many of our communities.

    I realize that this is all fairly “far afield.” But, our current preoccupation with EMRs and retrogressive funding of Primary Healthcare actually makes the resilience of our nation’s health worse. For nearly 20 years, we have pegged healthcare reform prominently on the payment process. This emphasis, of course, is wrong as verified by the longevity study. In communities with a higher level of ‘social capital,’ poverty by itself does not reduce a person’s longevity. We still need to fix our healthcare industry. But, it won’t actually make health much better for everyone without a strategy to refurbish the ‘common good,’ community by community. It will take a vigorous investment in the ‘social capital’ asset of every community. I am not referring to loans or a new federally authorized financial institution. We need to mobilize the potential True Believers in every community to restore the prevalence and strength of ‘caring relationships’ within each community. We need a new locally initiated and nationally sanctioned strategy to invigorate, again, the traditions of our nation, community by community. The goal of a vibrant ‘common good’ for every citizen’s community needs to be started now. And

    Without it, healthcare reform will soon be faced by a reinvigorated Federal government given the excess cost of our nation’s healthcare. It is now nearly 60% of our annual national deficit.

  5. I love the penalty box. It took some time for my “must jump every hurdle” personality to get used to it, but now, its great. I never THINK about attesting, audits, useless data entry, etc. I must say, its great. If you can afford it, just take the lumps and use what you want out of your EHR or paper. If you look at:
    You will see that only 195K eligible providers attested for 2015. Only 170K so far for 2016. The highest year was 233K in 2013. Yep about 20% of those that are supposed to attest, well actually attest. Great job CMS!! 80% penalty rate! 2017 will still have 170K providers being penalized, even though EVERYONE had the chance to claim hardship due to the late entry of “rules” for 2015.

    As for MACRA, I nearly threw up trying to read the nuts and bolts about computation of scores, etc. It reads like a policy satire. I cannot, for the life of me, think that a single person outside of DC and the halls of non-MD land CMS, that this is a good idea.
    Does CMS REALLY think that if I self report that all my surgeries get preop antibiotics that this somehow is value based care? 100% already do? Yet I have to use an EHR, extract the data, compile it for a registry, and pay a registry to give it to CMS. And this is value based care? What a joke.

    Then add Clinical practice improvement? WTF. CMS really did not listen at all about burden, reporting, meaningless activities. That is a real dagger.

    ACI is just MU with a new name, so they can stick that wherever they want.

    The best is that CMS cannot figure out how to attribute (link) resource use to a particular provider. Is it the surgeon’s fault when the patient fails to take CHF meds and gets readmitted for CHF within 90 days of surgery? Or is that the cardio doc? Or primary? Wait who does this penalty belong to?

    Its a HUGE mess, and honestly, the best thing that MDs can do is ignore it, make it fail like MU. Passive aggression is all we have left. Let policy makers stare all day at bad numbers and try to spin them to “see how great we are”.

    I am still holding out hope that the new admin and change in Congress will kill all this value based reporting , MACRA reporting mess and just pay us for taking care of Medicare patients. They are getting quite a good deal. Barely 1000 bux to fix a fractured hip plus 90 days of post care. Try to get a plumber to fix a pipe and 90 days post fix for less. Take the deal CMS. Leave us alone with all your silly burdensome reporting non value based games.