The recent landmark health care reform legislation seeks to expand health insurance coverage, change incentives, and improve the quality and flow of information. This article reviews the elements of health care reform most relevant to clinical gastroenterology, discusses the ongoing challenges that health care reform legislation faces, and considers the potential implications for clinical practice.
The deficiencies of the American health care system are well known. The recent White House Debt Commission opined that “federal health care spending represents our single largest fiscal challenge over the long-run.” Yet despite such massive spending, access to health care is limited, quality of health care is uneven, and health outcomes are often below par. These problems are not new. By the early 1970s, after experts had declared a health care crisis, President Nixon emphasized that “The time for action is now.” Nonetheless, over the ensuing decades a combination of inaction and incrementalism limited major progress toward fixing health care.
When President Barack Obama entered office it was by no means an auspicious moment to attempt sweeping policy changes. His administration faced soaring federal budget deficits, a unified front of opposition, and staunch resistance from special interest groups interested in preserving the status quo. In addition, opponent-led chants of “rationing,” “death panels,” and “government takeover,” often drowned out efforts to explain how ordinary Americans would benefit from health care reform. Nonetheless, the Obama administration managed to successfully navigate around these obstacles and moved quickly to keep health care reform a top priority from the start. Within several months of entering office, the American Recovery and Reinvestment Act was passed and then signed; it committed $150 billion in health care investments, primarily in health information technology (HIT) and comparative effectiveness research (CER). Over the following year the President assiduously campaigned for health care reform and left key policy decisions to Congress. His administration successfully neutralized special interest groups (eg, medical device makers, the pharmaceutical industry, and health insurance plans) by bringing them to the table to negotiate. They managed to attract public support by emphasizing that insured Americans could keep their existing coverage. Ultimately, in March, 2010, against long odds, the landmark Patient Protection and Affordable Care Act (PPACA) was signed into law. Soon, PPACA was amended by the Health Care and Education Reconciliation Act and the result was a large collection of patchwork-style reforms that build on the existing health care system. Most notably, it expanded coverage to approximately 30 million American citizens who were previously uninsured. Secondarily, it changed financial incentives and altered flow of information in ways designed to improve quality and slow the rate of cost growth. In this article the elements of reform most relevant to clinical gastroenterology are reviewed, the ongoing challenges that this legislation faces are discussed, and the potential implications for clinical practice are considered.
Expanded health insurance coverage
PPACA uses a combination of subsidies, mandates, regulations, and public and private insurance expansions to extend health insurance to most (but not all) of the more than 50 million currently uninsured Americans. Already the bill has established high risk-pools for uninsured individuals with preexisting conditions, extended coverage to children on their parents’ insurance up to age 26 years, and offered credits to small businesses that choose to offer insurance to their employees.
By 2014 a mandate will require that all citizens have and all large businesses (50 or more employees) offer qualifying health insurance or face financial penalties. Qualifying criteria for Medicaid and the Children’s Health Insurance Plan (CHIP) will be expanded. Many of those who do not qualify for these programs (or their employers) will be given subsidies to purchase insurance on health insurance exchanges, which essentially are an “analog to farmers’ markets on which competing insurers offer their products, subject to a set of regulations that make transactions in the marketplace transparent and honorable, and the competition among insurers fair.” Despite these efforts, the Centers for Medicare and Medicaid Services (CMS) actuary estimates that by 2019 23 million citizens will remain uninsured, as will all undocumented immigrants.
PPACA also imposes new regulations on the private insurance industry. It creates minimum standards for coverage, eliminates exclusions because of preexisting illnesses, removes annual and lifetime dollar limits on essential benefits, ends the practice of rescinding coverage because of illness, limits medical loss ratios (defined as the proportion of premium dollars spent on administrative costs and profits), and restricts the upper and lower range of insurance premium costs from varying for any reason other than age, family size, geographic region, and tobacco use. There also are provisions designed to simplify administrative processes for both beneficiaries and providers. For instance, insurers will be required to post on their Web site whether particular tests are covered, how much it will reimburse, and how much patients will have to pay.
Particularly relevant to gastroenterologists is Section 2713, which states that Medicare, Medicaid, and all new commercial insurance plans “shall not impose any cost sharing requirements for evidence-based items or services that have in effect a rating of ‘A’ or ‘B’ in the current recommendations of the United States Preventive Services Task Force.” This will eliminate deductible payments, copayments, and coinsurance for several colon cancer screening modalities, including screening colonoscopy. However, because of the technical language of the bill, the waiver will not cover copayments for diagnostic and therapeutic procedures, including screening colonoscopies during which a polypectomy is performed. It is also unclear whether insurers will apply cost-sharing waivers to surveillance colonoscopy. Rectifying these issues will require a legislative fix, although this is unlikely given the current political climate.
Changing incentives
According to former CMS Administrator Mark McClellan, “The way Medicare pays physicians and health professionals is the linchpin for real reform because of the importance of physician decisions in overall health care quality and cost.” Over the short-term the currently dominant fee-for-service (FFS) model is preserved, although PPACA requires revaluation of certain procedure codes, and extends pay for quality reporting and value-based purchasing initiatives. Over the longer-term, PPACA sets in place a series of efforts designed to shift payment toward broader units of service.
FFS Under PPACA
Over the short-term most physicians will continue to be paid under the FFS model. FFS reimburses physicians for discrete services rendered. Through an intricate process of time and intensity analysis based on surveys of practitioners and cross-walking with like procedures, each service is assigned several relative value units (RVUs) on the Medicare Resource Based Relative Value Scale fee schedule, which guides reimbursement for all Medicare plans as well as most Medicaid and private insurance plans. The number of RVUs is equal to the weighted sum of the estimated amount of physician work (W) (52% of RVU), practice expenses (PE) (44% of RVU), and malpractice costs (MP) (4% of RVU) required to furnish a service, each of which is adjusted based on geographic location (Geographic Practice Cost Index [GPCI]). Next, RVUs are multiplied by a conversion factor (CF) to determine actual dollar payments.
The CF is determined through the controversial sustainable growth rate (SGR) mechanism. The SGR, which was enacted in 1998 to contain Medicare Part B spending, compares spending with a target benchmark that is based primarily on growth in the overall economy, as well as estimates of medical inflation, and growth in the number of Medicare beneficiaries. If spending is less than targeted the CF is adjusted upwards. Conversely, if actual spending exceeds targeted spending the CF is adjusted downwards and payments are cut, unless Congress intervenes.
Despite noble intentions, the SGR is fundamentally flawed because it attempts to restrict spending solely by limiting physician payment rates without accounting for ongoing growth in the volume and complexity of health care services. In addition, because the SGR mechanism aggregates spending across all physicians, it does not provide any incentive for individual physicians to control cost growth. Each year the volume of health care services continues to increase and, consequently, health care spending continues to outpace overall economic growth. In turn, each year the SGR calls for downward adjustments to the CF and, by extension, cuts in physician payment. However, the mere mention of reduced Medicare payments reflexively triggers alarm in the elderly community, concerned that they will lose access to care. Afraid to alienate this important constituency, each year (since 2003) Congress has passed last-minute legislative fixes that avert payment cuts, although leaving the SGR otherwise intact. However, because spending targets are cumulative (ie, last year’s expenditure target ∗ SGR = current year’s expenditure target), spending that exceeds the target one year accumulates in future years until it is recouped. Other legislative imperatives make payment of this accumulating debt mandatory so it cannot be ignored from a fiscal perspective. Thus, these short-term legislative fixes have made the long-term solution more expensive. For instance, in 2012 physicians face a 30% reduction.
PPACA did not address the SGR mechanism, primarily because doing so would have added $210 billion to the price tag of the bill. Over the long-term this situation leaves physicians (particularly those who are procedural based, such as gastroenterologists) vulnerable to massive payment cuts. The Medicare Payment Advisory Commission, the Congressional agency that advises Congress on issues pertaining to Medicare, stated that “Replacing the SGR and expenditure targets with a different payment structure – without the current scheduled cuts – presents an opportunity to introduce needed payment reforms. That is, in exchange for eliminating the future fee cuts, reforms could be made in FFS Medicare to improve the accuracy of payments under the physician fee schedule, to increase payments for cognitive (or nonprocedural) services relative to procedural services, and to give the Secretary discretion to adjust payments.”
Although PPACA largely preserved the FFS model in the short-term, and did not address the SGR mechanism, it did implement 2 main changes to the FFS system. First, PPACA assumes $200 billion can be saved by tying Medicare market-basket payment updates to productivity gains in the rest of the private sector economy. Because health care providers are unlikely to be able to increase their productivity enough (ie, to the same degree as firms in the private economy at large) to offset these reduced payments, the result will be shrinking (and possibly negative) Medicare profit margins. In turn, providers will likely threaten to stop accepting Medicare patients unless Congress intervenes.
Gastroenterologists are more likely to be affected by the second main change to FFS, codified in PPACA Section 3134, which instructs the Secretary of Health and Human Services (HHS) to “periodically identify services as potentially misvalued … and review [them] and make appropriate adjustments.” Scrutiny will be directed toward codes for which there has been the fastest growth or substantial changes in practice expenses, as well as codes for recently established technologies, and those that have not been subject to review since implementation of the RVU system. Based on these criteria, 4 endoscopy codes are slated for review in 2011: Current Procedural Terminology (CPT) codes 43235 (upper gastrointestinal endoscopy), 43239 (upper gastrointestinal endoscopy with biopsy), 45380 (colonoscopy with biopsy), and 45385 (colonoscopy with removal of lesion by snare technique). For each of these procedures the Secretary will conduct surveys, collect data, and perform analyses to determine whether and how to adjust the amount of work these services require (which, as stated earlier, accounts for 52% of the RVU). This adjustment will be largely determined by the amount of time it takes to perform a service (intraservice time), as well as the preservice and postservice time. Because time estimates previously used to determine work requirements for these procedures ( Table 1 ) are likely less than real-world time requirements, gastroenterologists will probably see reduced Medicare reimbursement for these procedures.
| CPT | Descriptor | Preservice (min) | Intraservice (min) | Postservice (min) | Total (min) |
|---|---|---|---|---|---|
| 43235 | Upper endoscopy | 18 | 20 | 25 | 63 |
| 43239 | Upper endoscopy with biopsy | 27 | 34 | 23.5 | 84.5 |
| 45380 | Colonoscopy with biopsy | 45 | 51.5 | 22 | 118.5 |
| 45385 | Colonoscopy with snare polypectomy | 16 | 43 | 15 | 74 |
Quality Reporting
A series of laws passed between 2006 and 2008 (including the Tax Relief and Health Care Act, The Medicare, Medicaid, and SCHIP Extension Act of 2007, and the Medicare Improvements for Patients and Providers Act of 2008) established the Physician Quality Reporting Initiative (PQRI), which offered bonus payments to providers who reported performance on select quality measures. For gastroenterologists the choice of measures was limited to those related to treatment and management of hepatitis C (measures 84–87, 89–90, and 183–184) and several related to gastroesophageal reflux (subsequently deleted from the measure set). A colorectal cancer screening measure was included, but was used mostly by primary care providers (measure 113). Later measure 185 (colonoscopy interval for patients with a history of adenomatous polyps–avoidance of inappropriate use) was added. In 2009 only 866 gastroenterologists (15% of those eligible) participated in PQRI. Participants earned, on average, $2635 (range $3–$13,842) in bonuses. PPACA made several changes to the program that should encourage more gastroenterologists to participate. Most visibly, recognizing that it is no longer an initiative, PQRI was renamed the Physician Quality Reporting System (PQRS). In addition, PPACA extends pay-for-reporting bonus payments to 2014; physicians who report quality data using Medicare Part B claims, a qualified PQRS registry, or a qualified electronic health record (EHR) will receive a 0.5% bonus. Starting in 2015 the carrot is swapped for a stick; physicians who do not participate will be subject to 1.5% (2% in 2016 and beyond) cuts in Medicare reimbursement.
Value-based Purchasing
Value-based purchasing programs offer financial incentives to providers who deliver demonstrably high-value care, defined as “high benefits of services in relation to their cost.” CMS views “value-based purchasing as an important step to revamping how Medicare pays for health care services, moving the program toward rewarding better value, outcomes, and innovations, instead of merely volume.” In this vein, PPACA extends Medicare value-based payment programs to physicians, hospitals, and ambulatory surgery centers (ASCs).
For physicians, by 2017 Medicare FFS payments will be adjusted based on a value-based payment modifier that reflects the quality and cost of the care that they provide. Higher-value providers will receive across-the-board bonuses, whereas low-value providers will be penalized. Defining quality and cost of care is both theoretically and practically difficult. CMS pledges to use transparent methods and work with physicians to develop composite, risk-adjusted quality and cost measures that can then be used as payment modifiers. It will publish the initial set of these measures by January 1, 2012.
CMS will also soon extend value-based purchasing to hospitals. Between 2013 and 2017 hospital reimbursement for all Diagnostic Related Groups under the prospective payment system will be gradually cut from 1% to 2%. Hospitals will then be given a chance to earn back reduced revenue through value-based bonuses. These bonuses will be determined by performance on a set of yet-to-be-decided composite measures that will blend quality, efficiency, and patient experience metrics for select conditions (initially these will include myocardial infarction, congestive heart failure, and pneumonia, as well as certain surgical procedures).
PPACA also requires CMS to extend value-based purchasing to ASCs. As outlined in a recently released roadmap, CMS intends to use “reliable and straightforward scoring methodologies” to compare ASC performance on a set of nationally endorsed measures with both national benchmarks and past performance. Higher-performing centers will receive increased Medicare payments, which, given budget-neutrality requirements, will likely come at the expense of their lower-performing counterparts.
Bundled Payments
FFS has been vilified for encouraging quantity over quality, penalizing certain labor-intensive activities (eg, spending time talking with patients and coordinating care), favoring procedures over cognitive services, and ultimately fueling the fragmentation of care. It also places physicians at financial risk when they try to undertake innovative ideas that may improve health and reduce use. Consequently, many argue that radically new payment models are needed to improve quality and reducing costs. To this end, PPACA established the CMS Innovation Center to develop, pilot test, and implement various novel payment models that shift reimbursement away from discrete services (ie, FFS) toward broader units of care.
One such effort is using a single bundled payment that combines payments across multiple providers and settings, thereby encouraging providers to coordinate care and work together to reduce costs across all the services within a bundle. Mandatory quality metrics are also included to help ensure that efforts to reduce costs do not diminish quality. For instance, the Medicare Acute Care Episode demonstration project pays a fixed amount to both hospitals and physicians for all orthopedic and cardiac procedure related services, spanning both inpatient and outpatient settings. PPACA requires CMS to start implementing episode-based bundles for an initial set of conditions by 2013. Doing so will require overcoming major technical challenges, such as defining episodes of care, identifying appropriate quality measures, and negotiating single payments across multiple providers. For the gastroenterologist, calculating appropriate reimbursement will require careful definition of what services fall within their responsibility vis-à-vis the primary care provider or other specialists. Such definitions have not yet been negotiated, much less embedded in payer databases.
Shared Savings and Accountable Care Organizations
The shared savings model is an alternative to bundled payments that circumvents the complexities of defining episodes of care (as is required for bundled payments), although it still creates incentives for providers to work together to deliver better care at lower costs. In this model, groups of providers who join together to deliver care are allowed to share savings achieved in overall per capita spending. Certain quality benchmarks are attached to shared savings to prevent merely skimping on care.
Shared savings models set the stage for accountable care organizations (ACOs), defined as integrated groups of providers who jointly assume responsibility for the cost and quality of all care delivered to a defined population. PPACA Section 3022 established ACOs as a permanent program (rather than a pilot program) that will take effect by January 1, 2012. Although the legislation flexibly allows ACO providers to assume various organizational forms (including integrated delivery systems, multispecialty group practices, physician hospital organizations, and independent practice associations ), it requires that they have formal legal, leadership, and management structures, care for at least 5000 Medicare beneficiaries, fulfill certain patient-centeredness criteria, use defined processes to measure and report quality and cost data, promote evidenced-based medicine, and coordinate care.
ACOs may be paid under several variations of the shared savings model. The asymmetric (also known as 1-sided risk) shared savings model continues to reimburse ACOs’ FFS payments for each service delivered, and offers a bonus to those ACOs that spend less than their target and meet quality requirements. Alternatively, the symmetric (also known as 2-sided risk) savings model allows ACOs to share a greater proportion of cost savings, as long as they are willing to risk penalties for spending more than the target. The desire to avoid penalties and to reap rewards creates a double incentive to save, and therefore symmetric models may more effectively limit costs. Further along the spectrum is partial capitation, which mixes limited FFS payments with prospective lump-sum payments that are made regardless of use, thereby putting ACOs at the greatest financial risk, although allowing for the greatest possible rewards.
From the start, critics have argued that considerable organizational, cultural, and legal barriers will make forming ACOs challenging. Others have questioned whether ACOs can save costs. For instance, in the Physician Group Practice Demonstration project, which served as an early ACO model, only 5 of the 10 already integrated practices achieved cost savings, which, on subsequent analysis, may have been more the result of previous cost trends than changes in care delivery.
Criticism toward ACOs grew sharper on March 31, 2011 after the Secretary of HHS released a set of ACO draft regulations. Among other things, various provider groups, hospitals, and professional associations complained that the limited available savings (which would be based on historical costs, thereby making it more difficult for already efficient ACOs to generate savings) would not justify the considerable ACO start-up costs, and that quality reporting requirements were too burdensome (ACOs would be required to measure and report 65 quality measures). The American Medical Group Association (AMGA) commented that the draft rule is “overly prescriptive, operationally burdensome, and the incentives are too difficult to achieve….[and that] 93% of AMGA members would not enroll as an ACO under the current regulatory framework.” At the time of this writing, the draft regulations are undergoing revision. The final ruling will strongly determine the fate of ACOs.
Independent Payment Advisory Board
A key PPACA mechanism for controlling cost growth is the Independent Payment Advisory Board (IPAB), a 15 member nonpartisan board tasked with presenting Congress with comprehensive proposals for holding Medicare spending at or less than targeted levels. Starting in 2015 the target is set to the general rate of health care inflation. By 2019 the target resets to percent change in the gross domestic product plus 1 percentage point. If Medicare growth exceeds these targets (which, based on historical trends seems nearly certain) then IPAB must formulate a set of recommendations to reduce spending. These recommendations cannot include anything that rations care, raises taxes, increases premiums, or changes benefits. However, IPAB can recommend reducing physician payments. Congress must then consider IPAB’s recommendation and either approve it through a vote or devise a suitable alternative. If no legislation is passed then the IPAB recommendations are automatically sent to the Secretary of HHS who is required to implement them. Not surprisingly, IPAB has been one of the most controversial PPACA provisions. Its full impact (and fate) will be determined by ongoing political challenges.
Changing incentives
According to former CMS Administrator Mark McClellan, “The way Medicare pays physicians and health professionals is the linchpin for real reform because of the importance of physician decisions in overall health care quality and cost.” Over the short-term the currently dominant fee-for-service (FFS) model is preserved, although PPACA requires revaluation of certain procedure codes, and extends pay for quality reporting and value-based purchasing initiatives. Over the longer-term, PPACA sets in place a series of efforts designed to shift payment toward broader units of service.
FFS Under PPACA
Over the short-term most physicians will continue to be paid under the FFS model. FFS reimburses physicians for discrete services rendered. Through an intricate process of time and intensity analysis based on surveys of practitioners and cross-walking with like procedures, each service is assigned several relative value units (RVUs) on the Medicare Resource Based Relative Value Scale fee schedule, which guides reimbursement for all Medicare plans as well as most Medicaid and private insurance plans. The number of RVUs is equal to the weighted sum of the estimated amount of physician work (W) (52% of RVU), practice expenses (PE) (44% of RVU), and malpractice costs (MP) (4% of RVU) required to furnish a service, each of which is adjusted based on geographic location (Geographic Practice Cost Index [GPCI]). Next, RVUs are multiplied by a conversion factor (CF) to determine actual dollar payments.
Related posts:
Electronic Medical Records and the Gastroenterologist
A Letter to Fellows: Transitioning From Training into Practice in Uncertain Times
Medical Practice Integration: Going Big in Private Practice
Gastroenterologists and the Triple Aim: How to Become Accountable
Demonstrating Value: Registries and Beyond
Gastroenterologists and Accountable Care Organizations
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