APMA CAC-PIAC Representatives’ Meeting November 8, 2013

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Medicare Physician Fee Schedule Proposed rule for CY 2014

Medicare Hospital Outpatient Prospective Payment

System New packaging policies (affecting skin substitutes)

Medicare Delivery System Changes Accountable Care Organizations Bundled Payment for Care Improvement Initiative

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SGR Reform Proposals House Energy and Commerce Committee bill Discussion Draft released by House Ways & Means

and Senate Finance Committees

Obamacare Abridged

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The proposed rule was published July 19, 2013

The public comment period ended September 6, 2013

The final rule would normally have been unveiled by November 1, 2013

The final rule has been delayed due to the government shutdown; timing and implications uncertain

Final rules can always differ in important ways from their corresponding proposed regulations

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Projected Net DPM Impact: 0% Major Winners:

Nurse Anesthetists (+4%), Anesthesiology (+3%), Emergency Medicine (+3%), Clinical Psychologists (+3%), and Social Workers (+3%)

Major Losers:

Pathology (-5%), Radiation Oncology (-5%), Diagnostic Testing Facilities (-7%), Radiation Therapy Centers (-13%), and Independent Labs (-26%)

Impacts ignore potential effect of a Sustainable Growth Rate (SGR)-induced cut, estimated at -24.4%

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2013 Conversion Factor: $34.0230

2013 Conversion Factor adjusted for budget neutrality to account for CY 2014 regulatory proposals and changes: $35.6653

Estimated 2014 conversion factor: $25.7109

Estimated 2014 conversion factor adjusted for budget

neutrality: $26.8199

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Beware of ever more vigorous search for potentially overvalued services—adjustments generally made on a budget neutral basis, meaning that some services win when others lose

The RAND Corporation has been hired to build a validation model to

predict work RVUs and their time/intensity components The Urban Institute has been hired to collect objective time data for

selected physicians’ services (to compare against current RUC time estimates)

Could ultimately lead to RVU cuts, especially for procedural services

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For the 2014 PQRS incentive payment and the CY 2016 PQRS

payment adjustment, CMS generally proposes to increase measure reporting to at least 9 measures covering at least 3 domains

CMS proposes to implement the qualified clinical data registry reporting option (under which reported measures need not be those officially adopted by CMS), as required by American Taxpayer Relief Act of 2012

CMS proposes to increase the minimum number of measures in a

measures group from 4 to 6 and to restrict measures group reporting to the qualified registry reporting mechanism (not via claims)

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In CY 2016, modifier would apply to groups of physicians

with 10 or more eligible professionals (for CY 2015, it is 100 or more)

Quality-tiering would be mandatory for CY 2016 (rather than voluntary) but groups of physicians with between 10 and 99 EPs would only be subject to upward or neutral adjustments

The amount of payment at risk would increase from 1% to 2% in CY 2016

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A new Medicare Spending Per Beneficiary (MSPB) measure would

be added to the total per capita costs for all attributed beneficiaries domain (episode spans from 3 days prior to an index admission through 30 days post discharge)

The cost measure benchmarking methodology would account for the physician specialties in a group

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Quality/cost Low cost Average cost High cost High quality +2.0x* +1.0x* +0.0% Average quality +1.0x* +0.0% -1.0% Low quality +0.0% -1.0% -2.0%

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* Groups of physicians eligible for an additional +1.0x if reporting measures and average beneficiary risk score in the top 25 percent of all risk scores.

Proposed expansion of the items and services packaged together

(rather than paid separately)

Would include all drugs and biologicals that function as supplies or devices in a surgical procedure

Would affect skin substitutes, despite the fact that prices for these products and the way they are used vary significantly

Final rule pending and also delayed due to the government shutdown

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As many as 4 million Medicare beneficiaries (about 8% of total enrollment) now being served by accountable care organizations.

Under the Medicare Shared Savings Program (MSSP), 27 ACOs began serving beneficiaries on April 1, 2012, 89 more on July 1, 2012, and another 106 on January 1, 2013.

32 Pioneer ACOs began serving beneficiaries on January 1, 2012.

Now about 250 ACOs in all, with a wide geographic distribution.

CMS has accepted applications for 2014; further growth in the number of ACOs expected.

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MSSP and Pioneer ACO Counts by County: May 2013 (counties with more than 1 percent of an ACO’s assignees)

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A Center for Medicare and Medicaid Innovation Center (CMMI) initiative

Voluntary participation; 3-year agreement with possibility of further

2-year extension Over 500 organizations have been selected to participate, but may not all

end up doing so Four different models Different amounts of care bundled (episodes of care) An episode is triggered by a hospital inpatient admission

Models 1-3 involve regular FFS payments (with reconciliation

against the agreed-upon bundled amount); Model 4 involves payment to a single entity, which distributes payments to others

Applicants must guarantee Medicare a “discount”

Model 1: Inpatient hospital services (all DRGs)

Model 2: All inpatient services, including physician

services (and hospital readmission services) plus post-discharge (post-acute) services for selected DRGs for 30, 60 or 90 days post discharge

Model 3: Post-discharge (post-acute) services (plus

hospital readmission services) for selected DRGs Model 4: All inpatient services, including physician

services (plus hospital readmission services) for selected DRGs

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For models 2-4, participants can select from up to 48 different clinical condition episodes Need not include all DRGs

The 48 episode types include groups of DRGs for the following: Amputation Major joint replacement of the lower extremity Lower extremity and humerus procedure except hip, foot, femur Removal of orthopedic devices

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Gainsharing possible under all models

Defined as “[p]ayments shared among providers that represent a portion of the gains achieved due to more coordinated, efficient, higher quality care”

CMS extends the concept “to enable hospitals, post-

acute care providers, physicians, and nonphysician practitioners to all benefit from the gains achieved”

What are beneficiaries being told about “their” ACO, how are they reacting, and what do they think about the care they are getting under the ACO model?

Will beneficiary choice of provider be compromised in any way by ACOs and bundled payment schemes, and will this matter?

What tensions, if any, are developing among and between providers on different sides of the ACO “fence” or providing different portions of a service bundle?

Will the bundled payment concept be applied to episodes that do not involve an inpatient hospital stay?

Do policy makers have unrealistic expectations regarding what ACOs and bundled payment schemes can accomplish and, if so, what happens next?

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Annual threat of significant reductions in the conversion factor under the Medicare Physician Fee Schedule (PFS).

Challenges in achieving consensus on a permanent

replacement.

Challenges in achieving consensus on offsetting savings. CBO estimate of SGR reform 10-year costs at $138 billion BUT

this assumes freezing the conversion factor for 10 years. CBO estimate of the Energy & Commerce Committee-approved

SGR reform bill is $175 billion.

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Approved by a vote of 51-0 on July 31, 2013.

Repeals the SGR and provides for an annual 0.5 percent update to the PFS conversion factor for 2014 through 2018 (period of stability).

Beginning in 2019, updates to the conversion factor for each physician or physician group would depend upon their performance on certain quality measures and, if applicable, clinical practice improvement activities. Baseline updates would continue to be 0.5 percent annually. But actual updates could range from -0.5 percent to +1.5 percent

annually.

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Methodology divides eligible professionals into peer cohorts, which they self-select from among available options.

Peer cohorts would likely be specialty-based, would need to include one or more multi-specialty options (for use by groups), and could take into account other factors.

Each peer cohort would have its own core measure set, and the performance of each member of the cohort would be assessed against this measure set.

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Quality measures would address 5 domains. 1. Clinical Care 2. Safety 3. Care Coordination 4. Patient and Caregiver Experience 5. Population Health and Prevention

A 6th domain under the National Quality Strategy, efficiency and cost reduction, is not included.

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Professional associations and other stakeholders could submit best practices and clinical practice guidelines for the development of quality measures.

If quality measures are insufficient for some or all domains, core measure sets must include clinical practice improvement activities.

The term “clinical practice improvement activity” defined as “an activity that relevant eligible professional organizations and other stakeholders identify as improving clinical practice or care delivery and that the Secretary determines, when effectively executed, is likely to result in improved outcomes.”

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H.R. 2810 directs the Secretary to establish one or more methods to assess the performance of eligible professionals using a scoring scale of 0-100. Score of 67+ = +1% quality adjustment (total update: +1.5%) Score of 34-66 = 0 quality adjustment (total update: +0.5%) Score of 0-33 = -1% quality adjustment (total update: -0.5%)

Disagreement regarding whether prescribed methodology would allow all EPs to receive maximum update (based on performance) or whether it would require one-third of them to receive a negative update each year. Legislation appears to permit either outcome.

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QUIP not relevant to EPs in recognized APMs.

Bill provides a two-track process for recognizing APMs that warrant evaluation through demonstration or that have already proven their value and should be implemented.

Independent APM contracting entity would assess whether submitted APMs meet long list of criteria and make recommendations to the Secretary, who would have final say.

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Would repeal SGR but substitute a 10 year freeze (through 2023) Beginning in 2017, physicians could earn incentive payments based

on their performance on quality, resource use, clinical practice improvement activities, and EHR meaningful use, but these payments would be budget neutral (winners and losers) Would substitute for the currently separate PQRS, value modifier and EHR

meaningful use programs OR, beginning in 2016, physicians receiving at least a certain

proportion of their Medicare and/or non-Medicare revenues under an “advanced” alternative payment model (A-APM) involving two-sided risk and a quality measurement component would receive a 5 percent annual bonus through 2021 (and not be subject to the preceding performance-based incentive program).

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Four performance categories (quality, resource use, etc.) would be assigned weights and a composite score calculated

Performance could be based on group performance (including “virtual” groups for professionals in practices of 10 or fewer)

Performance Categories Quality: PQRS measures and measures used in other incentive programs Resource use: Value modifier metrics and other factors Clinical practice improvement activities: e.g., expanded practice access (same-day

appointments and after-hours access), beneficiary engagement, and care coordination EHR meaningful use

Aggregate incentive payments would be equal to 8-10% or more of total estimated spending for eligible professionals But remember that incentive payments must be budget neutral (winners and losers)

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Definition of A-APM limited to one involving two-sided risk and a quality measurement component Medicare Shared Savings (ACO) Program would presumably be

one example BUT only where two-sided risk applies

Revenue thresholds to qualify as an APM participant: 2016-2017: 25% of Medicare revenue 2018-2019: 50% of Medicare revenue or 50% of total revenue

with at least 25% of Medicare revenue 2020-2021: 75% of Medicare revenue or 75% of total revenue

with at least 25% of Medicare revenue

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A-APM participant bonus payments of 5% per year from 2016-2021 No mention of conditions other than being an A-APM participant Remember that A-APM participants might also qualify for shared

savings

Beyond 2023, A-APM participants would receive annual updates of 2% (non-participants would get 1% updates)

No explanation for apparent gap in 2022 and 2023

No specific discussion of how A-APM participants are paid for their services (at frozen fee schedule amounts?)

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Beginning in 2015: Code(s) for complex care management services adopted on a budget neutral basis

For 2016-2018, CMS must identify misvalued services worth 1% of physician fee schedule payments and redistribute these RVUs (if the 1% target is not met, fee schedule payments would be cut to make up the difference)

Secretary to ensure that the global payment for the work component of surgical procedures accurately reflects the average/type of visits following surgery

Beginning in 2015: Any downward adjustment in total RVUs for a service of more than 20% must be phased in over 2 years

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GAO to study RUC processes

Ordering health professionals would be required to consult with appropriate use criteria for advanced imaging and electrocardiogram services (outlier professionals would be subject to prior authorization requirement)

CMS would be required to publish utilization and payment data for physicians on the Physician Compare website

CMS would be required to collect information from selected physician practices to help in accurately valuing physicians’ services (practices could be compensated and would incur a 10% payment penalty if they failed to submit requested information)

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Stakeholders have until November 12 to submit comments on the discussion draft released by the House Ways & Means and Senate Finance Committees. There are lots of unanswered questions about the proposal This proposal is likely to evolve and must be converted into

legislative language

Offsetting savings proposals must be identified and approved.

House and Senate must both approve the same reform plan…or approve another short-term fix. The Congress could approve a “short-term fix” to give themselves

additional time to consider more fundamental SGR reform in 2014. Tempus fugit!

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By A Republican

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Considerable uncertainty regarding the delayed Medicare rules Timing and nature of SGR “fix” also uncertain Budget sequestration “cloud” could mean a 2% cut in Medicare

payments in 2014 The health care financing and delivery system is in considerable

flux, but impact is far from clear Obamacare rollout uneven across the States and not problem-free,

and its future/impact uncertain Good news to follow. Stay tuned. CAC and PIAC Representatives

Unite!

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