[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
OPTIONS TO IMPROVE QUALITY AND
EFFICIENCY AMONG MEDICARE PHYSICIANS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HEALTH
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
MAY 10, 2007
__________
Serial No. 110-39
__________
Printed for the use of the Committee on Ways and Means
----------
U.S. GOVERNMENT PRINTING OFFICE
46-971 PDF WASHINGTON : 2009
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
Washington, DC 20402-0001
COMMITTEE ON WAYS AND MEANS
CHARLES B. RANGEL, New York, Chairman
FORTNEY PETE STARK, California JIM MCCRERY, Louisiana
SANDER M. LEVIN, Michigan WALLY HERGER, California
JIM MCDERMOTT, Washington DAVE CAMP, Michigan
JOHN LEWIS, Georgia JIM RAMSTAD, Minnesota
RICHARD E. NEAL, Massachusetts SAM JOHNSON, Texas
MICHAEL R. MCNULTY, New York PHIL ENGLISH, Pennsylvania
JOHN S. TANNER, Tennessee JERRY WELLER, Illinois
XAVIER BECERRA, California KENNY HULSHOF, Missouri
LLOYD DOGGETT, Texas RON LEWIS, Kentucky
EARL POMEROY, North Dakota KEVIN BRADY, Texas
STEPHANIE TUBBS JONES, Ohio THOMAS M. REYNOLDS, New York
MIKE THOMPSON, California PAUL RYAN, Wisconsin
JOHN B. LARSON, Connecticut ERIC CANTOR, Virginia
RAHM EMANUEL, Illinois JOHN LINDER, Georgia
EARL BLUMENAUER, Oregon DEVIN NUNES, California
RON KIND, Wisconsin PAT TIBERI, Ohio
BILL PASCRELL, JR., New Jersey JON PORTER, Nevada
SHELLEY BERKLEY, Nevada
JOSEPH CROWLEY, New York
CHRIS VAN HOLLEN, Maryland
KENDRICK MEEK, Florida
ALLYSON Y. SCHWARTZ, Pennsylvania
ARTUR DAVIS, Alabama
Janice Mays, Chief Counsel and Staff Director
Brett Loper, Minority Staff Director
______
SUBCOMMITTEE ON HEALTH
FORTNEY PETE STARK, California, Chairman
LLOYD DOGGETT, Texas DAVE CAMP, Michigan
MIKE THOMPSON, California SAM JOHNSON, Texas
RAHM EMANUEL, Illinois JIM RAMSTAD, Minnesota
XAVIER BECERRA, California PHIL ENGLISH, Pennsylvania
EARL POMEROY, North Dakota KENNY HULSHOF, Missouri
STEPHANIE TUBBS JONES, Ohio
RON KIND, Wisconsin
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also, published
in electronic form. The printed hearing record remains the official
version. Because electronic submissions are used to prepare both
printed and electronic versions of the hearing record, the process of
converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
__________
Page
Advisory of May 10, 2007, announcing the hearing................. 2
WITNESS
A. Bruce Steinwald, Director, Health Care, government
Accountability Office.......................................... 6
Herb Kuhn, Acting Deputy Administrator, Centers for Medicare and
Medicaid Services.............................................. 25
Glenn M. Hackbarth, Chairman, Medicare Payment Advisory
Commission..................................................... 37
Robert A. Berenson, M.D., Senior Fellow, the Urban Institute..... 60
Rick Kellerman, M.D., President, American Academy of Family
Physicians, Shawnee Mission, KS................................ 66
Anmol S. Mahal, M.D., President, California Medical Association,
Freemont, CA................................................... 73
John E. Mayer, Jr., M.D President, Society of Thoracic Surgeons.. 79
SUBMISSIONS FOR THE RECORD
American Academy of Ophthalmology, statement..................... 90
American College of Physicians, statement........................ 92
American College of Radiology, statement......................... 98
American Health Information Management Association, statement.... 100
American Occupational Therapy Association, statement............. 102
Renal Physicians Association, statement.......................... 103
University of North Carolina at Chapel Hill, statement........... 105
OPTIONS TO IMPROVE QUALITY AND
EFFICIENCY AMONG MEDICARE PHYSICIANS
----------
THURSDAY, MAY 10, 2007
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Health,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:00 a.m., in
room 1102, Longworth House Office Building, Hon. Fortney Pete
Stark (Chairman of the Subcommittee) presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE
COMMITTEE
ON WAYS
AND
MEANS
SUBCOMMITTEE ON HEALTH
CONTACT: (202) 225-3943
FOR IMMEDIATE RELEASE
May 10, 2007
HL-10
Chairman Stark Announces a Hearing on Options to Improve Quality and
Efficiency Among Medicare Physicians
House Ways and Means Health Subcommittee Chairman Pete Stark (D-CA)
announced today that the Subcommittee on Health will hold a hearing on
options to improve quality and efficiency among Medicare physicians.
The hearing will take place at 10:00 a.m. on Thursday, May 10, 2007, in
Room 1100, Longworth House Office Building.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from the invited witness only.
However, any individual or organization not scheduled for an oral
appearance may submit a written statement for consideration by the
Committee and for inclusion in the printed record of the hearing.
BACKGROUND:
Medicare spending for physician services will likely exceed $60
billion in 2007, more than 14 percent of spending on program benefits.
Spending for physician services has grown considerably in recent years,
largely due to the 5.5 percent average annual increase in the number of
services provided per beneficiary (volume) and the increase in the
average complexity and costliness of services (intensity). Analyses by
the Medicare Payment Advisory Commission (MedPAC) and the government
Accountability Office (GAO) have suggested that some of the higher
volume and intensity that drives spending growth may not be medically
beneficial. In fact, the wide geographic variation in Medicare spending
per beneficiary--unrelated to beneficiary health status or outcomes--
provides evidence that health needs alone do not determine spending.
Furthermore, recent analyses by GAO, MedPAC and others indicate the
growth in volume and intensity of physician services varies
dramatically across providers and specialties. Excessive volume and
intensity not only increase program spending, but also may represent
unnecessary services that can put beneficiaries at greater risk.
Strategies to evaluate growth in volume and intensity, and address
unnecessary spending are currently being explored. One such strategy
would bundle services in the physician fee schedule to create a global
fee for patient care management. Bundled payments are used for most of
part A through various Prospective Payment Systems that use Diagnostic
Related Groups and other similar mechanisms. In Part B, Medicare
bundles payments for End Stage Renal Disease and for certain surgeries.
Bundled payments could facilitate more careful patient management,
while reducing administrative burden for physicians.
Another strategy being used to address growth in volume and
intensity relies on providing feedback to individual physicians about
how their practice patterns compare with their peers. This approach is
intended to generate dialog so that Medicare physicians can learn from
each other how to achieve the highest quality outcomes with efficient
use of resources. Such programs have been used effectively in the
private sector.
In announcing this hearing, Chairman Stark said: ``As Medicare's
steward, Congress needs to ensure that Medicare resources are being
used efficiently and effectively to achieve high quality outcomes. This
hearing will bring out some concrete actions we can take to achieve
this important goal.''
FOCUS OF THE HEARING:
The hearing will focus on potential methods to improve efficiency
among physicians in Medicare. In particular, witnesses will review the
potential of bundling services in the physician fee schedule and the
effect of providing feedback to physicians on how their clinical
practice patterns and resource use compare to their peers.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Please Note: Any person(s) and/or organization(s) wishing to submit
for the hearing record must follow the appropriate link on the hearing
page of the Committee website and complete the informational forms.
From the Committee homepage, http://waysandmeans.house.gov, select
``110th Congress'' from the menu entitled, ``Committee Hearings''
(http://waysandmeans.house.gov/Hearings.asp?congress=18). Select the
hearing for which you would like to submit, and click on the link
entitled, ``Click here to provide a submission for the record.'' Once
you have followed the online instructions, completing all informational
forms and clicking ``submit'' on the final page, an email will be sent
to the address which you supply confirming your interest in providing a
submission for the record. You MUST REPLY to the email and ATTACH your
submission as a Word or WordPerfect document, in compliance with the
formatting requirements listed below, by close of business Thursday,
May 24, 2007. Finally, please note that due to the change in House mail
policy, the U.S. Capitol Police will refuse sealed-package deliveries
to all House Office Buildings. For questions, or if you encounter
technical problems, please call (202) 225-1721.
FORMATTING REQUIREMENTS:
The Committee relies on electronic submissions for printing the
official hearing record. As always, submissions will be included in the
record according to the discretion of the Committee. The Committee will
not alter the content of your submission, but we reserve the right to
format it according to our guidelines. Any submission provided to the
Committee by a witness, any supplementary materials submitted for the
printed record, and any written comments in response to a request for
written comments must conform to the guidelines listed below. Any
submission or supplementary item not in compliance with these
guidelines will not be printed, but will be maintained in the Committee
files for review and use by the Committee.
1. All submissions and supplementary materials must be provided in
Word or WordPerfect format and MUST NOT exceed a total of 10 pages,
including attachments. Witnesses and submitters are advised that the
Committee relies on electronic submissions for printing the official
hearing record.
2. Copies of whole documents submitted as exhibit material will not
be accepted for printing. Instead, exhibit material should be
referenced and quoted or paraphrased. All exhibit material not meeting
these specifications will be maintained in the Committee files for
review and use by the Committee.
3. All submissions must include a list of all clients, persons,
and/or organizations on whose behalf the witness appears. A
supplemental sheet must accompany each submission listing the name,
company, address, and telephone and fax numbers of each witness.
Note: All Committee advisories and news releases are available on
the World Wide Web at http://waysandmeans.house.gov.
The Committee seeks to make its facilities accessible to persons
with disabilities. If you are in need of special accommodations, please
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four
business days notice is requested). Questions with regard to special
accommodation needs in general (including availability of Committee
materials in alternative formats) may be directed to the Committee as
noted above.
Chairman STARK. Good morning. We'll proceed with a hearing
that we hoped would build on our recent hearing with MedPAC,
trying to outline the possibilities to reform or change the
physician payments in Medicare, and we'll focus today on
possible long-term solutions to improve efficiency among the
Medicare physicians.
Hoping, our goal is to move from the sustainable growth
rate, henceforth SGR, to a more refined system that still
contains volume control but may direct us toward improve
quality. Physicians play a critical role in caring for us
seniors and people with disabilities, and paying them
appropriately is an important part of I think any delivery
system such as Medicare.
When I last chaired this Subcommittee, we created the
Physician Fee Schedule to replace the cost-based reimbursement
for physicians, and I was pleased at that time to work closely
with the physician community to find a bipartisan consensus on
that approach. The system was successful. Many private payers
have adopted it since. But despite the success of the fee
schedule, the solution to growth and volume and intensity still
eludes us.
Analysis by GAO, MedPAC and others have shown us that the
growth in volume and intensity of physician services varies
dramatically across regions, providers and specialties. Even
worse, we find that regional variations in volume and intensity
of physician services don't relate to higher quality care or
better outcomes. To the contrary, beneficiaries may be put at
greater risk when they're subjected to more and more
complicated procedures.
These trends should be a cause of serious concern for
beneficiaries and taxpayers alike. Unfortunately, as MedPAC
testified before our Committee in March, the solutions today
won't solve all the problems for tomorrow. In 2007, tomorrow is
here. There are several strategies to revise Medicare physician
payment to more efficiently reward appropriate medical care,
and that's what we're here to discuss today.
We're pleased to be joined by experts who have spent years
studying ways to improve physician spending in Medicare as well
as by practicing physicians who have many years of experience
caring for Medicare beneficiaries. Our witnesses will review
some tangible steps we can take to improve the current
situation. Specifically, we'll hear testimony about whether
Medicare should implement a system to feedback to physicians on
how their practice patterns compare with their peers. Witnesses
will also discuss whether Medicare should develop bundled
payments for services in the physician fee schedule, both for
coordinated management of chronic illness, such as a medical
home, or as well as for episodes of highly specialized care. I
look forward to working with my colleagues, the physician
community and other health professionals, the administration
and patients in the coming weeks.
I'd like to make one personal comment. We'll hear this
morning from my friend and constituent, Dr. Mahal. He's here
from Freemont, California to testify before us on behalf of the
California Medical Association, and I want to take this moment
to welcome Dr. Mahal and thank him for all the work that he's
undertaken, along with his colleagues in the California Medical
Association to help us come to a reasonable solution. Mr. Camp,
would you like to comment?
Mr. CAMP. Thank you very much, Mr. Chairman, and thank you
for holding this hearing. The Medicare payment formula known as
a sustainable growth rate or SGR, is scheduled to reduce
payments to physicians by 10 percent in 2008. It will also
cause physician payments to be reduced by approximately 5
percent for each of the next 9 years. The SGR formula is
obviously unsustainable. The SGR does not reward physicians for
high quality or cost effective care. Under the SGR, physicians
are paid more for the number of services they provide. This
rewards physicians for the quantity but not the quality of
their services.
We know that under the current system that the total number
of procedures performed and images taken have increased, but it
cannot tell us if patients are receiving better care. We need a
better system that creates incentives for individual physicians
to provide comprehensive, efficient and high-quality care.
In this hearing, we will look into two potential ideas to
reform the physician payment system. One is the idea to provide
resource use data to physicians and to compare their practice
data with their peers. Private plans are already using this
data in setting payments for physicians.
The second idea involves the bundling of payments. CMS did
a demonstration in 1991 on bundling payments for cardiac bypass
surgery. The demonstration was found to save money, but it was
discontinued after 5 years. This hearing will hopefully examine
these and other ideas for reform. I appreciate the witnesses
being with us today, and I'm interested to know their views on
these and other possible payment systems. While I'm eager to
discuss long-term changes to the SGR, I recognize that we must
still solve the immediate problem of the impending cuts.
From past experience, we've learned that short-term fixes
don't always work. Sometimes they only exacerbate the problem.
That being said, I look forward to working with the Chairman on
an attempt to reform Medicare so that physicians are paid
appropriately for their services and seniors get access to
high-quality, affordable care.
Thank you, Mr. Chairman, and I yield back the balance of my
time.
Chairman STARK. Thank you. Any other Members have an urgent
statement to make? If not, I'd like to recognize our first
panel and welcome back A. Bruce Steinwald, the Director of
Health Care for the government Accountability Office, fondly
known as GAO; Mr. Herb Kuhn, the Acting Deputy Administrator of
the Centers for Medicare and Medicaid Services, CMS, and Mr.
Glenn Hackbarth, Chairman of the Medicare Payment Advisory
Commission, again, fondly known as MedPAC.
I want to first of all thank all of these gentleman for the
help you've given the Subcommittee and the Members. In addition
to these hearings, I think spending countless hours counseling
and advising and educating us on the problems of the matter
before us and other problems in the Medicare arena. We deeply
appreciate it. There's a lot of work ahead of us, and the extra
time that you take has been invaluable to the Members.
Why don't we start with Mr. Steinwald and run down the
line, and you may proceed to inform us. If you care to
summarize, we have your written testimony, which without
objection will appear in the record. If you care to summarize
your testimony, we will then be able to inquire for more
information. Mr. Steinwald.
STATEMENT OF A. BRUCE STEINWALD, DIRECTOR, HEALTH CARE,
GOVERNMENT ACCOUNTABILITY OFFICE (GAO)
Mr. STEINWALD. Thank you, Chairman Stark and Mr. Camp and
Members of the Subcommittee. Thank you for inviting me here
today as you consider ways to encourage Medicare's physician
payment system to be more efficient.
The Medicare Modernization Act required us conduct a study
of the SGR system that's used to update physician fees from
year to year, and to also conduct a study of physician
compensation more generally.
Our SGR study concluded that the annual growth over the
past several years and the volume and complexity of services
delivered to Medicare beneficiaries has been the underlying
reason that the SGR system has been, to put it mildly,
problematic. This trend generates spending increases that are
excessive under the SGR formula, which requires offsetting
reductions in physicians fees and an annual headache for the
Congress.
The SGR is a blunt instrument that treats every Medicare
doctor the same, regardless of whether the doctor is conserving
of resources or profligate. When we were planning our second
MMA-mandated study, we wanted to investigate approaches that
could look at individual doctor behavior, and this led us to
profiling. Under profiling, the health care resources provided
or ordered by a physician and consumed by that physician's
patients can be compared to the average for similar doctors and
patients. The doctors who appear to be practicing an efficient
style of medicine can be identified individually.
We conducted an analysis of Medicare claims data pertaining
to services provided to Medicare beneficiaries in 12
metropolitan areas to determine whether we could identify
doctors who appeared to be practicing medicine inefficiently. I
won't go into the details of the study at this time. But it
will come as no surprise to you that we found evidence of
inefficiency in all 12 areas.
We also concluded that if inefficient doctors' practices
were brought into the normal range with their peer groups,
Medicare could realize substantial savings. We also looked at
outside of Medicare for other payers who are profiling doctors
to see if there might be lessons for Medicare in what other
organizations are doing to improve the efficiency of health
care delivery.
We reported on 10 organizations ranging from traditional
insurers to government payers who collect data on patient's
health care expenditures at the physician or physician group
level, and compared those expenditures to an average for
comparable physicians. Among other things, we found that nearly
all of these organizations established standards for quality as
well as efficiency. They examined total health expenditures,
not just physician service expenditures. The educate doctors
about their profiling programs and how their performance
compares to standards for efficiency and quality, and they
created financial and other incentives for doctors to change
their behavior or for patients to seek care from the more
efficient doctors.
Medicare currently has the tools necessary to conduct
physician profiling on a large scale. It has a comprehensive
claims database that can be used to calculate individual
doctor's patients expenditures. It has enough physicians
participating in Medicare in most geographic areas to ensure
statistically valid comparisons, and it has experience in using
methods to account for differences in patient health status,
which is a central ingredient for profiling to be meaningful.
Medicare also faces some limitations which will need to be
addressed. For example, in its comments on our draft report,
CMS noted that profiling on a broad scale would be resource-
intensive. We agree that any effort likely to improve
efficiency program-wide would have to be adequately funded.
Second, CMS lacks the authority to use profiling results in
some of the ways that the 10 payers that we studied to, such as
varying patient copayments or physicians' fees, depending on
whether quality and efficiency standards are met. Thus, to
achieve the full potential that profiling offers to improve
program efficiency will almost certainly require Congressional
action.
CMS does have the authority to provide feedback to doctors
who care for Medicare patients on how their care compares to
peer groups. Provided that such an effort could get underway
soon, showing doctors evidence that their practice styles may
be inefficient compared to a peer group is a promising step to
encourage them to conserve Medicare's resources. Such feedback
may, if implemented program-wide, achieve some program savings
in its own right.
However, to realize the full potential for profiling to
affect physician behavior and to moderate the spending trend,
financial incentives will almost certainly have to be imposed.
Mr. Chairman, this concludes my remarks, and I would be
happy to answer your questions.
[The prepared statement of Mr. Steinwald follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman STARK. Thank you.
Mr. Kuhn.
STATEMENT OF HERBERT B. KUHN, ACTING DEPUTY ADMINISTRATOR,
CENTERS FOR MEDICARE & MEDICAID SERVICES
Mr. KUHN. Chairman Stark, Mr. Camp, Members of the
Subcommittee, thank you for inviting me here today to discuss
quality and efficiency in Medicare physician payment. The fee-
for-service Medicare Program has largely been a passive payer
of health-care services. Given the size and impact of Medicare,
it is a top priority at the Centers for Medicare & Medicaid
Services to transform Medicare from a passive payer to an
active purchaser of high quality, efficient care.
Medicare payment systems should encourage reliable, high
quality and efficient care, rather than payment based simply on
the quantity of services provided and resources consumed. CMS
has taken a leadership role in a multi-pronged approach to
addressing value-based purchasing for physician services.
Strategies to measure and encourage quality services, to
understand appropriate resource use, and to examine current
value-based purchasing models are all at the heart of CMS
efforts to help modernize the physician payment system.
One such method would be to refine the payment system,
including the additional use of bundled payments for physician
services. As with other payment systems, Medicare supports
efforts to identify opportunities for paying physicians and
providers a single or bundled amount to take care of the
patient for the range of services that are necessary to manage
the patient through an episode of care. This contrasts to the
current fee schedule and physician payment system where we
typically pay for the individual services.
We have limited experience in this area for physician
services. Accordingly, it would take additional research and
analytical work before we could make substantive changes in
this area. However, we have had experience with bundling, and
our results are mixed. I'd like to share with you some of those
results.
For example, one, we have established national definitions
for global surgical packages so that the payment is made
consistently for all pre-and post-operative visits. We believe
this has promoted efficiency in the delivery of surgical
services and fostered continuity of care by the surgeon. It has
also led to greater payment predictability for the surgeon and
for the Medicare beneficiary in terms of their copayments.
However, there are issues about how accurate we are at
estimating the number and the level of services in the bundle.
We also would pay physicians a monthly capitated payment
for managing the care of ESRD patients receiving dialysis
services. At one time this was a single payment for the visits
and services the physician performed during the month of care.
However, based on concerns that physicians were not performing
the visits during the month, we split the Codes, and payment
now varies depending on the number of visits provided.
In general, bundling works very well, but it's more
problematic in the physician payment setting. Bundled payment
approaches rely upon a system of averages. This can work very
well for providers, such as hospitals or large physician groups
or clinics, that provide a wide range of services for a diverse
mix of patients. But bundling can be problematic for small
physician groups that tend to specialize or treat a more
limited set of patients.
While there are certainly limitations to bundling for
physician services, there are areas where additional research
on bundling options could be considered in the physician
payment area. One are might be to develop a more comprehensive
office visit package. Another payment option might allow for
bundling to eliminate incentives for physicians to furnish
services on different days in order to avoid the current
Medicare payment discounts for multiple services furnished on
the same day.
It is important, however, as we move in this area of
payment reform, that we make sure that we provide the
safeguards against any misalignments of payment incentives
could diminish the level of care of Medicare beneficiaries, and
this is important to all of us.
A second area of payment reform deals with the extensive
variation of physician use of resources to treat a given
condition, particularly geographic variation. Studies show that
greater volume of services does not appear to correlate with
high-quality care or improved outcomes.
Measuring physician resource use in Medicare is an
ambitious undertaking. Nearly 700,000 physicians receive
Medicare payments, and those physicians submit about 800
million claims per year. As with the development of the
Medicare payment systems, which typically are multi-year,
multi-step processes, so too will the measurement of physician
resource use take some time.
A tool used in assessing resource use for an episode of
care is the episode grouper, which organizes the different
services furnished to the beneficiary into clinical meaningful
episodes using the diagnosis and other information that are
present on the physician claim. When services are grouped, the
total cost of all services involved with treating the condition
or illness can be compiled and then compared.
CMS is currently evaluating two commercial and proprietary
episode grouper software products currently on the market and
used by other payers. Episode groupers have a great promise as
a way to organize Medicare data to make meaningful resource use
comparisons among physicians. However, there are multiple
issues that we need to sort through as we look at this to make
sure that we accurately measure physician resource use. This
includes attribution. This includes patient characteristics,
such as severity adjustments. Finally, it really is to make
sure that we have appropriate comparison groups.
We have also begun the effort to engage physicians on the
use of these tools, including asking physician groups to share
with us clinical scenarios that then we can pass through the
groupers to see if we come out with the same outcome as they do
when they do it manually; again, a validation process. Also
we'd be taking some of the reports we've gotten from these
groupers and sharing them with physicians and focus groups to
make sure that they're meaningful, that they're accurate, and
that they can be actionable for physicians as they move
forward.
We hope to have more information for all of you later this
year in terms of our evaluation.
Mr. Chairman, thank you again for this opportunity to
testify on quality and efficiency in Medicare physician
payment. We look forward to working with Congress, the
physician community, MedPAC and other stakeholders as we
continue to analyze the various appropriate to physician
payment.
We look forward to answering any questions the Committee
might have.
[The prepared statement of Mr. Kuhn follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman STARK. Thank you.
Glenn, would you like to enlighten us?
STATEMENT OF GLENN M. HACKBARTH, J.D., CHAIRMAN, MEDICARE
PAYMENT ADVISORY COMMISSION
Mr. HACKBARTH. Thank you, Mr. Chairman, Mr. Camp, other
Members of the Subcommittee. It's good to see you again. The
medical care provided to Medicare patients, indeed, all
Americans, is often amazing. It saves lives, reduces pain and
disability, yet as has been alluded to already, there's growing
evidence of uneven quality in the care provided. The care is
often too fragmented and often more expensive than perhaps it
needs to be. However, hard experience has taught us that the
momentum toward more sophisticated, costly and fragmented care
is very, very powerful and it will not be easily reversed.
Today we're discussing a number of polices that hold some
promise, we believe, for redirecting the system's momentum,
thus increasing the value that Medicare beneficiaries and
taxpayers receive for their substantial investment in the
Medicare Program.
In this opening statement, I want to highlight four
policies of particular interest to MedPAC. First is profiling
physicians, already discussed at some length by Bruce, we refer
to it as a measuring resource use.
In 2005, MedPAC recommended that CMS provide physicians
with confidential feedback on their practice patterns and how
those patterns compare with their peers. With additional study
over the last couple of years, we're even more convinced that
this is a doable and worthwhile effort. I might add it's one
that's enthusiastically endorsed by all of the physician
members of MedPAC. Like GAO, we believe confidential feedback
is the first step. Ultimately, the information should be used
to adjust payments for physicians based on their cost and
quality.
A second policy direction that I want to highlight is
improving pricing accuracy for physician services meaning doing
everything we can to get the price right for individual
services. Last year MedPAC made a series of recommendations
about how the current process for updating physician relative
values might be improved. If payments, the prices we pay are
too high, a service may be provided too often. On the other
hand, if they're too low, the service may be underprovided. If
errors persist over long periods of time, they may even begin
to affect decisions about choice of specialty among medical
students.
Getting prices exactly right is impossible, and indeed
there are some important conceptual issues about how you define
what the right price is. Nevertheless, MedPAC sees evidence of
some fairly large errors in the physician payment system that
are skewing the system toward the production of costly services
at the expense of basic services of very high value.
A third policy direction is care management and
coordination. Medicare patients, especially those with multiple
chronic conditions, may see eight, ten, a dozen or more
physicians in a given year. Without a concerted effort to
coordinate and integrate that care, there's a great risk of
patient confusion, unnecessary duplication and waste, important
matters falling through the cracks, or even dangerous
interactions among treatments. Yet Medicare does not properly
reward physicians for taking the time and effort to manage the
care of these complex patients. Indeed, Medicare's payment
system is contributing, we fear, to the steady, even
accelerating erosion of the nation's primary care workforce. In
our June 2006 report, we discussed potential models for
improving care coordination in Medicare.
The final policy direction I wanted to mention is
comparative effectiveness. As you know all too well, the U.S.
spends a very large share of its national wealth on health
care, yet we often know very little about how alternative
treatments compare in their effectiveness. There's too little
incentive for private parties to invest in such research, and
when they do, the results may be compromised by proprietary
interests. MedPAC believes that knowledge about what works in
medicine is a public good that will always be underproduced by
the private marketplace. Therefore, we believe a significant
increase in public investment is required.
In our June 2007 report, we recommended that Congress
charge an entity with expanding our knowledge base while taking
steps to assure the entity's independence as well as adequate
and secure funding.
In conclusion, let me state the obvious. None of these
steps is a panacea for the problems facing the Medicare
program. Some of the proposals are technically complex, and all
of them are probably politically complex. There is, however, no
silver bullet for Medicare's cost and quality problems. There's
much work to be done on many fronts.
CMS has many important projects underway, including several
important demonstrations and pilots that Congress has
specifically requested. The problem is that it currently takes
too long to develop, implement and refine new payment policies,
despite heroic efforts by CMS staff. Because there's so much to
be done, and because we feel growing urgency about getting it
done, we urge Congress to give serious consideration to a
substantial increase in its investment in CMS's capacity for
innovation.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Hackbarth follows:]
Statement of Glenn M. Hackbarth, Chairman, Medicare Payment Advisory
Commission
Chairman Stark, Ranking Member Camp, distinguished Subcommittee
members, I am Glenn Hackbarth, Chairman of the Medicare Payment
Advisory Commission (MedPAC). I appreciate the opportunity to be here
with you this morning to discuss ways that Medicare can improve its
physician payment system.
Since 2000, total Medicare spending for physician services has
climbed more than 9 percent per year (Figure 1). Slowing the increase
in Medicare outlays is important; indeed, it is becoming urgent.
Medicare's rising costs, particularly when coupled with the projected
growth in the number of beneficiaries, threaten the sustainability of
the program. The Medicare Trustees' warn that even their
unrealistically constrained estimate of Part B spending growth (due to
multiple years of fee reductions mandated under current law) will still
significantly outpace growth in the U.S. economy. Part B and total
Medicare spending growth will continue to put pressure on the federal
budget. That pressure puts other national priorities, such as homeland
security and education, at risk.
Figure 1. FFS Medicare spending for physician services, 1996--2006
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Note: FFS (fee-for-service). Dollars are Medicare spending only and
do not include beneficiary coinsurance.
Source: 2006 annual report of the Boards of Trustees of the
Medicare trust funds.
Rapid growth in expenditures also threatens to make the program
unaffordable for beneficiaries. It contributes, directly and
indirectly, to higher out-of-pocket costs through increased copayments,
premiums for Medicare Part B, and premiums for supplemental coverage.
As beneficiaries receive more services, they are required to make more
copayments. Growth in copayments, in turn, pushes up the cost of
supplemental insurance. In addition, because the monthly Part B premium
is determined by average Part B spending for aged beneficiaries, an
increase in expenditures affects the premium directly. From 1999 to
2002, the premium grew by an average of 5.8 percent per year, but the
cost-of-living increases for Social Security benefits averaged only 2.5
percent per year. Since 2002, the Part B premium has increased even
faster--by 13.5 percent in 2004, 17.3 percent in 2005, and 13.2 percent
in 2006 (Figure 2).
Figure 2. Monthly Part B premiums, 1999--2007
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Note: Beginning in 2007, monthly Part B premiums are income-
adjusted. The standard premium for 2007 is $93.50.
Source: Congressional Research Service. 2004. Medicare: Part B
premiums. Washington, DC: CRS; CMS press release, dated September 12,
2006, Medicare premiums and deductibles for 2007; and CMS press
release, dated September 16, 2005, Medicare premiums and deductibles
for 2006.
Spending for physician services has grown largely because of
increased volume--the number of services furnished and the complexity,
or intensity, of those services. Some observers have hypothesized that
new technology, demographic changes, and shifts in site of service spur
growth in the volume of physician services. Changes in medical
protocols and a rise in the prevalence of certain conditions may also
play a role. But analyses by MedPAC and others suggest that much of the
rise in volume is unexplained. A RAND study found that technological
advances and changes in medical protocols that are specific to
particular illnesses do not fully account for volume growth. Other
studies suggest that, after controlling for input prices and health
status, differences in the volume of physician services are driven in
large part by practice patterns and physician supply and
specialization. As Elliott Fisher and others described in a series of
articles, in geographic areas with more health care providers and more
physician specialists, beneficiaries receive more services but do not
experience better quality of care or better outcomes, nor do they
report greater satisfaction with their care. John Wennberg identified
some discretionary services that can be overprovided as preference-
sensitive care because they involve significant trade-offs and should
be selected only by patients capable of making an informed decision.
This suggests that some services may be unnecessary, exposing some
beneficiaries to needless risk and generating unwarranted costs for
beneficiaries and the program. At the same time, evidence shows that
beneficiaries do not always receive the care they need, and too often
the care they do receive is not high quality.
To help address Medicare's growing financial crisis, MedPAC focuses
much of its work on improving efficiency--getting more in terms of
quality and outcomes for each Medicare dollar spent. Increasing the
value of the program to both beneficiaries and taxpayers will require
efforts to improve the incentives inherent in Medicare's fee-for-
service (FFS) physician payment system.
Ideally, payment systems will give providers incentives to furnish
better quality of care, to coordinate care (across settings, for
chronic conditions), and to use resources judiciously. However,
Medicare pays its providers the same regardless of the quality of their
care, which perpetuates poor care for some beneficiaries, misspends
program resources, and is unfair to providers who furnish high-quality
care and use resources judiciously. Medicare's payment system does not
reward physicians for coordinating patients' care across health care
settings and providers, and it does little to encourage the provision
of primary care services, even though such actions may improve the
quality of care and reduce costs. Further, inaccurate prices may
inappropriately affect physician decisions about whether and what
services to furnish. And Medicare's FFS method of paying for physician
services contributes to volume growth by giving physicians a financial
incentive to increase volume.
As discussed in our March 2007 report on Assessing Alternatives to
the Sustainable Growth Rate System, Medicare needs to change the
incentives of the payment system by ensuring that its prices are
accurate, furnishing information to providers about how their practice
styles compare with their peers' practice styles, encouraging
coordination of care and provision of primary care, and bundling and
packaging services where appropriate to reduce overuse. In addition,
Medicare should promote quality by instituting pay for performance,
encouraging the use of comparative-effectiveness information, and,
where appropriate, imposing standards for providers as a condition of
payment. If Medicare's FFS program is to function more efficiently, the
Congress needs to provide CMS with the necessary time, financial
resources, and administrative flexibility. CMS will need to invest in
information systems; develop, update, and improve payment systems and
measures of quality and resource use; and contract for specialized
services.
Ensuring accurate prices
Misvalued services can distort the price signals for physician
services as well as for other health care services that physicians
order, such as hospital services. Some overvalued services may be
overprovided because they are more profitable than other services.
Conversely, some providers may opt not to furnish undervalued services,
which can threaten access to care, or they may opt to furnish other,
more profitable services instead, which can be costly to Medicare and
to beneficiaries.
A service can become overvalued for a number of reasons. For
example, when a new service is added to the physician fee schedule, it
may be assigned a relatively high value because of the time, technical
skill, and psychological stress that are required to perform it. Over
time, the time, skill, and stress involved may decline as physicians
become more familiar with the service and more efficient at providing
it. The amount of physician work needed to furnish an existing service
may decrease when new technologies are incorporated. Services can also
become overvalued when practice expenses decline. This can happen when
the costs of equipment and supplies fall, or when equipment is used
more frequently, reducing its cost per use. Likewise, services can
become undervalued when physician work increases or practice expenses
rise. CMS--with the assistance of the American Medical Association/
Specialty Society Relative Value Scale Update Committee (RUC)--reviews
the relative values assigned to some physician services every five
years. But many services likely continue to be misvalued.
In recent years, per capita volume for different types of services
has grown at widely disparate rates, with volume growth in imaging and
non-major procedures (e.g., endoscopies) outpacing that for office
visits and major procedures. Volume growth differs across services for
several reasons, including variability in the extent to which demand
for services is discretionary and subject to the judgment of a
physician or beneficiary, as well as advances in technology that expand
access and can improve patient outcomes. The Commission and others have
voiced concerns, however, that differential growth in volume is due in
part to differences in the profitability of furnishing services. One
reason that different services have varying opportunities for profit is
their prices. In some instances, prices for services have been set too
high relative to costs. For example, MedPAC and CMS have raised issues
about the equipment use rate assumptions for imaging services. This
rate may be set too low for some imaging services, meaning that
Medicare's payment rate is set too high for these services.
To the extent that the Medicare's sustainable growth rate (SGR)
system limits growth in aggregate physician spending, differences in
the rate of volume increases across services mean that certain types of
services--such as imaging--are capturing a growing portion of Medicare
physician spending at the expense of other services. As discussed
below, the Commission has expressed particular concern about the
tendency of primary care services to become undervalued relative to
procedural services over time. This creates disincentives to furnish
primary care services and over time can affect the willingness of
physicians to enter the primary care specialties. (For more discussion
of this issue, see p. 13.) Based on the
RUC's recommendation, CMS recently increased the work relative
values of many evaluation and management services. Because the fee
schedule changes are implemented in a budget-neutral manner, their
impact is partially limited.
Given the importance of accurate payment, the Commission concluded
in the March 2006 report to the Congress that CMS must improve its
process for reviewing the work relative values of physician services.
CMS looks to the RUC to make recommendations about which services
should be revalued. But the RUC's three reviews--completed in 1996,
2001, and 2006--recommended substantially more increases than decreases
in the relative values of services, even though one might expect many
services to become overvalued over time. We have noted that physician
specialty societies have a financial stake in the process and therefore
have little incentive to identify overvalued services. Although we
recognize the valuable contribution the RUC makes, we concluded in our
2006 report that CMS relies too heavily on physician specialty
societies, which tend to identify undervalued services without
identifying overvalued ones. We found that CMS also relies too heavily
on the societies for supporting evidence.
To maintain the integrity of the physician fee schedule, we
recommended that CMS play a lead role in identifying overvalued
services so that they are not overlooked in the process of revising the
fee schedule's relative weights; we also recommended that CMS establish
a group of experts, separate from the RUC, to help the agency conduct
these and other activities. This recommendation was intended not to
supplant the RUC but to augment it. To that end, the new group should
include members who do not directly benefit from changes to Medicare's
payment rates, such as physicians who are salaried, retired, or serve
as carrier medical directors and experts in medical economics and
technology diffusion. The Commission has also urged CMS to update the
data and some of the assumptions it uses to estimate the practice
expenses associated with physician services.
In addition, we recommended that the Secretary, in consultation
with the expert panel, initiate reviews of services that have
experienced substantial changes in volume, length of stay, site of
service, and other factors that may indicate changes in physician work.
For example, when a service becomes easier, quicker, or less costly to
perform, physicians may be able to provide more of it. Rapid growth in
volume for a specific service may therefore signal that Medicare's
payment for that service is too high relative to the time and effort
needed to furnish it. The Secretary could examine services that show
rapid volume increases per physician over a given period. Volume
calculations would need to consider changes in the number of physicians
furnishing the service to Medicare beneficiaries and in the hours those
physicians work. CMS could use the results from these analyses to flag
services for closer examination (by CMS or by the RUC) of their
relative work values. The RUC could also conduct such volume analyses
when making its work value recommendations to CMS, but its current
process (every five years) may not be timely enough to capture services
with rapid increases in volume.
Alternatively, the Secretary could automatically correct such
misvalued services, and the RUC would review the changes during its
regular five-year review. In this scenario, CMS would identify specific
service codes with volume increases exceeding a standard, such as
average historical growth. The Secretary of Health and Human Services
would then automatically adjust work values for these codes down. The
RUC would consider the changes as part of their next five-year review.
Corrections to the practice expense values may also be in order.
MedPAC is currently studying the impact of CMS's recent changes to the
fee schedule practice expense calculation, including the use of newer
practice cost data from some, but not all, specialties. We are also
analyzing equipment pricing assumptions that are used to derive the
practice expense values, particularly for imaging services. Ensuring
that practice expense values are accurately priced reduces market
distortions that make some services considerably more profitable than
others, thus creating financial incentives to provide some services
more than others.
Finally, revisiting the conceptual basis of the resource-based
Relative Value Scale system may be in order. Some observers suggest
that the pricing of individual services should account not just for
time, complexity, and other resources but also for the value of the
service and the price needed to ensure an adequate supply.
Measuring resource use and providing feedback
Elliott Fisher and others have found that Medicare beneficiaries in
regions of the country where physicians and hospitals deliver many more
health care services do not experience better quality of care or
outcomes, nor do they report greater satisfaction with their care.
Thus, the nation could spend less on health care, without sacrificing
quality, if physicians whose practice styles are more resource
intensive reduced the intensity of their practice.
In the March 2005 report to the Congress, the Commission
recommended that CMS measure physicians' resource use over time and
share the results with physicians. Physicians would then be able to
assess their practice styles, evaluate whether they tend to use more
resources than their peers or what evidence-based research (when
available) recommends, and revise their practice styles as appropriate.
Moreover, when physicians are able to use this information in tandem
with information on their quality of care, they will have a foundation
for improving the value of care beneficiaries receive.
Private insurers increasingly measure physicians' resource use to
contain costs and improve quality. Evidence on whether measuring
resource use contains private sector costs is mixed and varies
depending on how the results are used. Providing feedback on use
patterns to physicians alone has been shown to have a statistically
significant, but small, downward effect on resource use. However, John
Eisenberg found that, when feedback is paired with additional
incentives, the effect on physician behavior can be considerably
larger.
Medicare's feedback on resource use has the potential to be more
successful than previous experience in the private sector. As Medicare
is the single largest purchaser of health care, its reports should
command greater attention. In addition, because Medicare's reports
would be based on more patients than private plan reports, they might
have greater statistical validity and acceptance from physicians.
Confidential feedback of the results to physicians might induce some
change. Many physicians are highly motivated individuals who strive for
excellence and peer approval. If identified by CMS as having an
unusually resource-intensive style of practice, some physicians may
respond by reducing the intensity of their practice. However,
confidential information alone may not have a sustained, large-scale
impact on physician behavior.
Using results for physician education would provide CMS with
experience using the measurement tool and allow the agency to explore
the need for refinements. Similarly, physicians could review the
results, make changes to their practice as they deem appropriate, and
help shape the measurement tool. Once greater experience and confidence
were gained, Medicare could use the results for payment--for example,
as a component of a pay-for-performance program (which rewards both
quality and efficiency). Alternatively, Medicare could use the results
to create other financial incentives for greater efficiency or could
make the results public to enable beneficiaries to identify physicians
with high-quality care and more conservative practice styles.
Eventually, collaboration between the program and private plans could
result in the development of a standard report card.
MedPAC has been conducting research using episode grouping tools
for the past two years and has found that they may be a promising tool
for measuring resource use among physicians. We have found that the
vast majority of Medicare claims can be assigned to an episode, and
that most episodes can be attributed to a responsible physician. Once
episodes are assigned to a responsible physician, each physician's
spending for a given episode can be compared to that of his or her
peers and the results aggregated into an overall ``score.'' Episode
groupers also permit analysis of the reasons for higher or lower
resource use: Each episode can be subdivided into its component costs
(e.g., hospital inpatient admissions, diagnostic testing, physician
visits, post-acute care).
Additional research remains, however, to ensure that resource use
measurement consistently groups claims into episodes and attributes
episodes to physicians in a manner that correctly classifies physicians
as high, average, or low users of resources. We also want to integrate
quality measures into our comparisons of resource use. Adequate risk
adjustment is crucial to ensure that episode grouping tools are
measuring actual variation in resource use rather than variation in the
health status of the beneficiaries being treated. Further, we and
others have found significant variations in practice patterns for some
conditions across the nation. As a first step it may be prudent to hold
physicians to a local standard (e.g., metropolitan statistical area or
state) rather than a national one and to compare physicians only to
others in the same specialty. For example, in our March 1 report to the
Congress on the SGR, we compare a selected cardiologist in Boston to
his local peers for his treatment of a specific condition (Table 1). In
this way, we control for some of the differences in practice patterns
and patient health status that can drive resource use.
Table 1. Hypertension episode resource use and scores by type of
service
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Note: E&M (evaluation and management). Stage indicates the
progression of the disease, with 1 being the mildest form. Resource use
score is the ratio of the cardiologist's resource use to the average
for cardiologists in Boston.
Source: MedPAC analysis of 100 percent sample of 2001--2003
Medicare claims using the Medstat Episode Group grouper from Thomson
Medstat.
Encouraging coordination of care and the use of care management
processes
The Commission has explored multiple strategies to provide
incentives for high-quality, low-cost care and thus improve value in
the Medicare program. However, even if individual providers are
efficient, a beneficiary may still receive less-than-optimal care if
providers do not communicate well with each other or if they do not
monitor patient progress over time. To address this problem, we have
considered ways to promote care coordination and care management by
creating incentives for providers to share clinical information with
other providers, monitor patient status between visits, and fully
communicate with patients about how they should care for themselves
between physician visits.
While many patients could benefit from better coordination of care
and care management, the patients most in need are those with multiple
chronic conditions and other complex needs. Gerard Anderson found that,
in 2001, 23 percent of Medicare beneficiaries had five or more chronic
conditions and accounted for 68 percent of program spending. But
according to researchers at RAND, beneficiaries with chronic conditions
do not receive recommended care and may have hospitalizations that
could have been avoided with better primary care. Studies attribute
this problem to poor monitoring of treatment--especially between
visits--for all beneficiaries and to a general lack of communication
among providers. Physician offices, on their own, struggle to find time
to provide this type of care, and few practices have invested in the
necessary tools--namely, clinical information technology (IT) systems
and care manager staff. At the same time, beneficiaries may not be
educated about steps they can take to monitor and improve their
conditions. Coordinated care may improve patients' understanding of
their conditions and compliance with medical advice and, in turn,
reduce the use of high-cost settings such as emergency rooms and
inpatient care. Ideally, better care coordination and care management
will improve communication among providers, eliminating redundancy and
improving quality.
Research suggests that, without the support of IT and nonphysician
staff, physicians can only do so much to improve care coordination.
Individual physicians may not have the time or be well suited to
provide the necessary evaluation, education, and coordination to help
beneficiaries, especially those with multiple chronic conditions. One
study found that older patients with select conditions that require
time-consuming processes, such as history taking and counseling, are at
risk for worse quality of care. Further, physicians may lack training
or resources that would allow them to educate patients about self-care
or to set up systems for monitoring between visits. Physicians' use of
basic care management tools is low, even in group practices where
building the infrastructure for care coordination, including the use of
clinical IT, may be more feasible.
Care coordination is difficult to accomplish in the FFS program
because it requires managing patients across settings and over time,
neither of which is supported by current payment methods or
organizational structures. Further, because patients have the freedom
to go to any willing physician or other provider, it is difficult to
identify the practitioner most responsible for the patient's care,
especially if the patient chooses to see multiple providers. The
challenge is to find ways to create incentives in the FFS system to
better coordinate and manage care.
In our June 2006 report to the Congress, the Commission outlined
two illustrative care coordination models for complex patients in the
FFS program: (1) Medicare could contract with providers in large or
small groups that are capable of integrating the IT and care manager
infrastructure into patient clinical care, and (2) CMS could contract
with stand-alone care management organizations that would work with
individual physicians. In the second model, the care management
organization would have the IT and care manager capacity.
In either model, payment for services to coordinate care would
depend on negotiated levels of performance in cost savings and quality
improvements. Given that Medicare faces long-term sustainability
problems and needs to learn more about the most cost-effective
interventions, the entities furnishing the care managers and
information systems should initially be required to produce some
savings as a condition of payment. However, demonstrating continued
savings may not be necessary or feasible once strategies for
coordinating care are broadly used.
To encourage individual physicians to work with care coordination
programs, Medicare might pay a small monthly fee to a beneficiary's
personal physician or medical group for time spent coordinating with
the program. As with other fee schedule services, these expenditures
would be accommodated by reallocating dollars among all services in the
fee schedule.
In either model, patients would volunteer to see a specific
physician or care provider (e.g., a medical group or other entity) for
their care. CMS could help beneficiaries identify the physician or
physicians who provide most of their care. Beneficiaries could then
designate the practitioner they wanted to oversee most aspects of their
care to be the contact with the care management program. The physician
and the beneficiary would agree that the beneficiary would consult
first with that physician but would not be restricted to seeing only
that physician. The physician, or the medical group on behalf of the
practitioner in the case of a provider-based program, would receive the
monthly fee when the beneficiary enrolls in the care management
program. This designated physician (which need not be a primary care
physician, because a specialist might be the appropriate person for
patients with certain conditions) would serve as a sort of medical
home.
These models do not represent the only ways care coordination might
work in Medicare. The American College of Physicians recently advocated
using advanced medical homes. In addition, other strategies, such as
pay for performance, complement care coordination models by focusing on
improving care. In addition, adjusting Medicare's compensation to
physicians to reflect the longer time spent caring for patients with
complex issues may be warranted if the current fees do not compensate
for this extra time. (For example, CMS could apply a multiplier to the
relative value of certain services for identified patients with
multiple chronic conditions.) Medicare could also establish billing
codes to enhance payments for chronic care patients for services such
as case management. The Medicare Health Care Quality Demonstration,
which tests the ability of innovative payment arrangements for
providers in integrated delivery systems to improve quality, may
provide further models for improving coordination of care.
Evidence shows that care coordination programs improve quality,
particularly as measured by the provision of necessary care. Evidence
on cost savings is less clear and may depend on how well the target
population is chosen. When cost savings are shown, they are often
limited to a specific type of patient, the intervention used, or the
time frame for the intervention. Indeed, researchers at Mathematical
have suggested that cost and quality improvements are more likely to be
achieved if programs are specifically targeted and the interventions
are carefully chosen to benefit the targeted patient group. If care
coordination programs work, annual spending may decrease, but
beneficiaries may live longer with a better quality of life--a positive
outcome for Medicare beneficiaries, but the Medicare program may not
spend less than it otherwise would have. This possibility argues for
assessing programs on the basis of whether they provide the
interventions known to be effective or achieve certain quality
improvements rather than on the basis of cost savings.
Promoting the use of primary care
Research shows that geographic areas with more specialist-oriented
patterns of care are not associated with improved access to care,
higher quality, better outcomes, or greater patient satisfaction.
Cross-national comparisons of primary care infrastructures and health
status have demonstrated that nations with greater reliance on primary
care have lower rates of premature deaths and deaths from treatable
conditions, even after accounting for differences in demographics and
gross domestic product. Increasing the use of primary care in the
United States, therefore, and reducing reliance on specialty care,
could improve the efficiency of health care delivery without
compromising quality.
But many observers worry that the United States is not training
enough primary care physicians. Indeed, the growth in the supply of
physicians in recent decades has occurred almost solely due to growth
in the supply of specialists, while the supply of generalists--family
physicians, general practitioners, general internists, and
pediatricians--has remained relatively constant. A study by Perry Pugno
and others found that the share of U.S. medical graduates choosing
family medicine fell from 14 percent in 2000 to 8 percent in 2005. A
2006 study by Colin West and others found that 75 percent of internal
medicine residents become subspecialists or hospitalists. There are
many reasons why an increasing number of physicians choose to
specialize, but one factor may be differences in the profitability of
services.
Historically, Medicare's payment system has valued primary care
services less highly than other types of services. For example,
according to a recent Annals of Internal Medicine article by Thomas
Bodenheimer and others, the 2005 fee for a typical 30-minute physician
office visit in Chicago was $90 while the fee for an outpatient
colonoscopy, also about 30 minutes, was $227. In addition, primary care
services also may be more likely than other services to become
undervalued over time. While other types of services become more
productive with the development of new techniques and technology,
primary care services do not lend themselves as easily to these gains.
Primary care is largely composed of cognitive services that require
that the physician spend time with the beneficiary. In addition, many
beneficiaries have multiple chronic conditions and a compromised
ability to communicate with and understand their physician, both of
which increase the time required for visits. It is difficult to reduce
the length of these visits without reducing quality. (For that reason,
physicians also find it difficult to increase the volume of primary
care services furnished in a work day.) Over time, the specialties that
perform those services may become less financially attractive.
Some Commissioners have argued that the relative value units of the
physician fee schedule should be at least partly based on a service's
value to Medicare. Such an approach would focus on primary care
services as well as other valuable services. For example, if analysis
of clinical effectiveness for a given condition were to show that one
service were superior to an alternative service for a given condition,
then Medicare's process of setting relative values might reflect that.
This process would be a significant departure from the established
method of setting relative values based only on the time, mental
effort, technical skill and effort, psychological stress, and risk of
performing the service.
In the longer term, the Commission is concerned that the nation's
medical schools and residency programs are not adequately training
physicians to be leaders in shaping and implementing needed changes in
the health care system. Physician training programs must emphasize a
new set of skills and knowledge. For example, programs need to train
residents to measure their performance against quality benchmarks, use
patient registries and evidence-based care guidelines, work in
multidisciplinary teams, manage the hand-off of patients, and initiate
improvements in the process of caring for patients to reduce medication
and other costly errors. Policymakers may want to consider tying a
portion of the medical education subsidy to specific programs or
curriculum characteristics that promote such educational improvements.
In addition, policymakers may want to consider policies that promote
the education of primary care providers and geriatricians. Bear in mind
that physicians' motivations to enter certain specialties go beyond
income, including lifestyle concerns and professional interests.
Medicare's cost-sharing requirements provide no encouragement for
beneficiaries to seek services, when appropriate, from primary care
practitioners instead of specialists, unlike most cost sharing in the
under-65 market, where primary care copayments are often lower than
those for specialists. Medicare's payment policies and cost-sharing
structure need to be aligned to encourage the use of primary care. The
Commission's pay-for-performance and care coordination recommendations
could also encourage the use of primary care.
Bundling to reduce overuse
A larger unit of payment puts physicians at greater financial risk
for the services provided and thus gives them an incentive to furnish
and order services judiciously. Medicare already bundles preoperative
and follow-up physician visits into global payments for surgical
services. Candidates for further bundling include services typically
provided during the same episode of care, particularly those episodes
for conditions with clear guidelines but large variations in actual use
of services, such as diabetes treatment.
Bundled payments could lead to fewer unnecessary services, but they
could also lead to stinting or unbundling (e.g., referring patients to
other providers for services that should be included in a bundle).
Medicare should explore options for increasing the size of the unit of
payment to include bundles of services that physicians often furnish
together or during the same episode of care, similar to the approach
used in the hospital inpatient prospective payment system.
The Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (MMA) changed the way Medicare pays for dialysis treatments and
dialysis drugs. However, the MMA did not change the two-part structure
of the outpatient dialysis payment system. One part is a prospective
payment called the composite rate that covers the bundle of services
routinely required for dialysis treatment; the other part includes
separate payments for certain dialysis drugs, such as erythropoietin,
iron, and vitamin D analogs that were not available when Medicare
implemented the composite rate. Providers receive the composite rate
for each dialysis treatment provided in dialysis facilities (in-center)
or in patients' homes.
The Commission has recommended that the Congress broaden the
payment bundle to modernize this payment system. Medicare could provide
incentives for controlling costs and promoting quality care by
broadening the payment bundle to include drugs, laboratory services,
and other commonly furnished items that providers currently bill
separately and by linking payment to quality.
A bundled rate would create incentives for providers to furnish
services more efficiently. For example, a bundled rate would remove the
financial incentive for facilities to overuse separately billable drugs
under the current payment method. In addition to an expanded bundle,
changing the unit of payment to a week or a month might give providers
more flexibility in furnishing care and better enable Medicare to
include services that patients do not receive during each dialysis
treatment.
MedPAC is examining bundling the hospital and physician payments
for a selected set of diagnosis related groups (DRGs), which could
increase efficiency and improve coordination of care. This approach to
bundling could be expanded in the future to capture periods of time
(e.g., one or two weeks) after the admission but likely to include care
(e.g., post-acute care, physician services) strongly related to the
admission, further boosting efficiency and coordination across sites of
care. Bundled payments could be adjusted to provide incentives for
hospitals and physicians to avoid unnecessary readmissions. Bundling
services could be structured so that savings go to the providers, the
program, or both. The Commission is also examining bundling physician
payments with payments for other providers, such as hospital outpatient
departments and clinical laboratories. In addition, MedPAC plans to
examine the physician services furnished to patients before, during,
and after inpatient hospitalizations for medical DRGs to assess whether
a global fee should be applied to these services, as it is for surgical
DRGs.
Hospital readmissions are sometimes indicators of poor care or
missed opportunities to better coordinate care. Research shows that
specific hospital-based initiatives to improve communication with
beneficiaries and their other caregivers, coordinate care after
discharge, and improve the quality of care during the initial admission
can avert many readmissions. Medicare does not reward these efforts. In
fact, the program generally pays for readmissions, creating a
disincentive to avoid them. To encourage hospitals to adopt strategies
to reduce readmissions, policymakers could consider requiring public
reporting of hospital-specific readmission rates for a subset of
conditions and adjusting the underlying payment method to financially
encourage lower readmission rates.
Episode grouper software, which is used to measure physician
resource use and was discussed earlier, could also serve as a platform
for bundling services for selected conditions.
Linking payment to quality
Medicare, the single largest payer in the U.S. health care system,
pays all health care providers without differentiating on the basis of
quality. Those providers who improve quality are not rewarded for their
efforts. In fact, Medicare often pays more when poor care results in
complications that require additional treatment.
To rectify this situation, MedPAC has recommended that Medicare
change the incentives of the system by basing a portion of provider
payment on performance. We recommended that CMS start by collecting
information on structural measures associated with use of IT, such as
whether a physician's office tracks whether patients receive
appropriate follow-up care, and claims-based process measures for a
broad set of conditions important to Medicare beneficiaries. At the
outset, CMS should base rewards only on the IT structural measures,
with claims-based process measures being added to the pay-for-
performance program within two to three years. Two other structural
measures--certification and education--could become part of a measure
set, but the link with improved care would need to be clear. The
program should be funded initially by setting aside a small portion of
budgeted payments--for example, 1 percent to 2 percent. The program
should be budget neutral; all monies set aside would be redistributed
to those providers who perform as required.
The Institute of Medicine (IOM) and MedPAC have stated that,
ideally, pay-for-performance measures should be developed and used for
all physician service providers to create incentives to provide better
quality care. However, currently we do not have well-established
measures for all providers of physician services. Thus, initially,
policymakers might consider prioritizing the implementation of some
pay-for-performance measures over others. Focusing measures on high-
cost, widespread, chronic conditions (e.g., congestive heart failure)
might be a good short-term strategy that will maximize benefits to the
Medicare program and to beneficiaries. Further, measures that reflect
coordination between health sectors will encourage and reward
communication between providers, which may improve patient outcomes and
reduce Medicare costs. The Commission considers that pay-for-
performance initiatives would be implemented in a budget-neutral
manner.
IOM and MedPAC assessments of the current state of quality
measurement are similar. The indicators that are available now could
form a starter quality measurement set. However, the measures that are
currently available are fragmented across different users for different
purposes and cannot be tied explicitly to the overarching, national
goals laid out by IOM. Composite scores that could bring together
multiple measures of different aspects of quality into a meaningful
summary are needed, but judging the relative value of competing goals
that would underpin such a summary is a challenge.
Both IOM and MedPAC have recommended that a national entity is
needed to:
set and prioritize the goals of the health care system;
monitor the nation's progress toward these goals;
ensure the implementation of data collection, validation,
and aggregation;
coordinate public and private efforts at local, state,
and national levels;
establish public reporting methods;
identify and fund development of the measures; and
evaluate the impact of quality improvement initiatives.
Encouraging the use of comparative-effectiveness information
Increasing the value of the Medicare program to beneficiaries and
taxpayers requires knowledge about the costs and health outcomes of
services. Comparative-effectiveness information, which compares the
outcomes associated with different therapies for the same condition,
could help Medicare use its resources more efficiently. Comparative
effectiveness has the potential to identify medical services that are
more likely to improve patient outcomes and discourage the use of
services with fewer benefits. CMS already assesses the clinical
effectiveness of services when making decisions about national coverage
and paying for certain services. But to date FFS Medicare has not
routinely used comparative information on the costs of services,
although Medicare Part D plans and other payers and providers, such as
the Veterans Health Administration, do use comparative information
(e.g., in drug formulary decision-making processes).
Medicare could use comparative-effectiveness information in a
number of ways to improve the quality of care beneficiaries receive.
Medicare could use such information to inform providers and patients
about the value of services, since there is some evidence that both
might consider comparative-effectiveness information when weighing
treatment options. Medicare might also use the information to
prioritize pay-for-performance measures, target screening programs, or
prioritize disease management initiatives. In addition, Medicare could
use comparative-effectiveness information in its rate-setting process
or in coverage decisions.
Given the potential utility of comparative-effectiveness
information to the Medicare program, an increased role of the Federal
Government in sponsoring the research is warranted. In our forthcoming
June report, MedPAC will recommend that the Congress should establish
an independent entity whose sole mission is to produce and provide
information about the comparative effectiveness of health care
services. The entity should set priorities and standards for new
clinical- and cost-effectiveness research, examine comparative
effectiveness of interventions over time and disseminate information to
providers, patients, and federal and private health plans. The entity
could be funded jointly by the Federal Government and the private
sector, with an independent board of experts overseeing the development
of research agendas and ensuring that research is objective and
methodologically rigorous.
Using standards to ensure quality
CMS has set standards to ensure minimum qualifications for various
types of providers (e.g., hospitals and skilled nursing facilities),
but there are few examples of federal standards that apply to physician
offices. The Commission has recommended that such standards be
implemented for physicians who perform and interpret imaging studies.
This recommendation was motivated by rapid growth in the volume of
imaging. This growth was driven in part by imaging being increasingly
provided in physician offices rather than in facility settings. (The
growth is not fully offset with a corresponding decrease in imaging use
in facilities.) The lack of quality standards for imaging conducted in
physician offices raises a number of quality concerns. Therefore, the
Commission recommended standards for physicians, facilities, and
technicians that perform imaging studies. In the future, other types of
services may be candidates for such standards.
Chairman STARK. Thank you all. If I can divide this
discussion into two parts. We have the question of the payment
per procedure and then volume. Glenn, you suggested that if we
had the wrong payment for a procedure we can influence volume
up or down, depending on where it is. Mr. Steinwald talks about
whether we have enough information to really identify
individual physician's behavior relative to volume. Is that
what you told us?
Mr. STEINWALD. Yes, sir. Primarily through the 800 million
claims that Herb Kuhn referred to earlier.
Chairman STARK. Now, Mr. Kuhn, are those 800 million
claims--that's a year?
Mr. KUHN. That is correct. Every year.
Chairman STARK. Are they all digitized? I mean, can you
slice and dice those on your laptop so you could give me all
kinds of information in specifics, down to specific physicians
in specific neighborhoods? Is it a pretty comprehensive
database?
Mr. KUHN. It is that comprehensive, and we hope to be able
to do exactly what you said, be able to get it down by
physician and area.
Chairman STARK. Then let me make a suggestion and see
whether you agree or disagree. I think we're a lot closer to
identifying or being able to accept both by the providers and
us and CMS and the taxpayers the individual procedure payments,
recognizing that we may get it wrong. But there's been a lot
more agreement--what disagreement comes, and we can let
physicians fight that out among themselves. Certainly we're not
capable of deciding that. That the bigger problem that has
occurred me is how do we control what's referred to as volume?
So, I guess I'd start with Mr. Steinwald. Do we have enough
information and do we have the mechanical or computer ability
to actually adjust volume on a basis of individual
practitioners? Can we get down that fine?
Mr. STEINWALD. My first response is yes, I think we have
sufficient information certainly to begin a process of
providing feedback to physicians. And----
Chairman STARK. I didn't say the feedback. How about money?
Mr. STEINWALD. Well, the first question is, will the
feedback in itself create a behavioral response that will
achieve program savings? I'd like to think that if the program
were rolled out in large scope and conducted properly that it
would. But I think the other shoe that has to drop is that if
you want to get the full benefit, there need to be incentives
that go with the profiling.
Chairman STARK. Okay. Let me just say it a little bit
different way. We could probably go back to the old volume
performance, and let's assume that we're about close enough for
government work to the procedural payment, per procedure. So,
that if volume is our big--and particularly in things like
diagnostic imaging, things like that, which seem to go off the
charts, we could take groups, physicians in a state--let's take
radiologists, across the country. We could narrow it, I
suppose, to statistical areas. Or we could drill down to the
individual radiologist. My guess is that we're not quite ready
to do that in the next few months for us to legislate.
But would it make sense to--are we at a place where we
could start that? Get out immediately the information to groups
of physicians such as peers are doing in terms of volume, and
then begin to refine that to see whether we could get a more
sophisticated method than just every radiologist in the
country, if they go above a certain amount, cutting the fees by
a certain amount, perhaps adjusting that so that those who
are--become outliers get a large reduction than those who
perhaps are judicious in their utilization? Is that--do we have
the data and the technical ability to approach that?
Mr. STEINWALD. I believe we do. There are those who will
argue that our system for adjusting for patient health status
is imperfect and needs to be improved. But our position is that
there is sufficient data and tools there to begin the process.
Chairman STARK. Mr. Kuhn, can--are you ready to do that for
us next week?
Mr. KUHN. We've been doing a lot of work in this area and
on evaluation, and I would like to think that, with the proper
authority and resources, we could be in a position sometime
mid-'08 to begin putting that kind of information----
Chairman STARK. You're kidding?
Mr. KUHN. Yeah. I don't want to have a sense of bravado
here that, you know, we can perform miracles, but I think----
Chairman STARK. What kind of resources would you need from
us----
Mr. KUHN. I'm not sure----
Chairman Stark [continuing]. Or legislation even?
Mr. KUHN. I'm not sure of the resources. I think that's
something we'd like to talk to the Committee, about but to give
you a sense here, I mean, to churn the data is probably the
smallest part. Really, we've got to clean the data and make
sure it's good. It's the old issue of "garbage in, garbage out.
So, we've got to make sure" it's good, clean data and it works.
The fact that we've got 700,000 physicians, depending on
how fast and how frequently we want to give reports--is it
monthly, is it quarterly? That cost to get the resources out to
them, and then, ultimately, get it in the hands of physicians.
You just don't want to drop it at their doorstep. There's got
to be some kind of educational program around that.
It's what Bruce--and I think, Glenn--have both talked
about--How do they compare to their peers, and what kind of
program. Are there educational tools we can provide? Are there
educational tools that will help facilitate data exchange and
physician specialists can provide? Do we engage the QIOs, for
example, to come in and work with physicians so they can
understand it so that it's actionable once they are able to
receive it?
So, I think we're talking a package like that, and that's
something we'd like to talk further with you and the Committee
about.
Chairman STARK. Glenn, I know you're not in as much--in
terms of volume containment, but how does this strike you?
Mr. HACKBARTH. Well, we did recommend a couple of years ago
now that Medicare move down this path of using tools that are
widely used in the private sector to assess physician practice
patterns. We think they can be an effective tool for altering
those patterns, both initial information feedback, but
ultimately through changes in payment. So I largely agree with
what Bruce and Herb have said on that.
The other point that I would like to raise, Mr. Chairman is
that looking at price adjustments can be an important tool in
addressing the volume issue. Let me take the area of imaging.
As you well know, as the Committee well knows, a lot of the
growth in imaging is great stuff. It's improving care for
patients, and for sure we don't want to stop that. On the other
hand, there is some reason for concern that some of the growth
is not very high value care.
There are ways that we might approach the pricing of
imaging services that would automatically result in some price
reductions on rapidly growing services and create a rebuttal
presumption, if you will, that the costs of providing those
services are falling with the rapid growth. That's what happens
in most parts of the economy. What happens now in Medicare is
prices are set at a given level for new stuff, and they often
stay at a high level and they're never adjusted downward.
So, building some mechanisms into the program that would
facilitate price adjustment, and there is a rapid growth and
rapid dispersion of new technology, we think would be the
fairer system in relative prices and help address volume.
Chairman STARK. Do you have the resources at MedPAC to
monitor this as--enough to create a system. I know you can
study it from time to time, but do you have the resources to
continuously monitor that and adjust for what I would call
productivity gains in areas where we should be getting a lower
price because it takes less time or it's done?
Mr. HACKBARTH. Well, ultimately, we think that the
responsibility for ongoing monitoring needs to reside in CMS.
Chairman STARK. Yes.
Mr. Hackbarth. We've made some proposals, in fact, on how
to augment their resources and their process, bring in some
experts to help them do that.
Chairman STARK. I thank you. I thank all of you. Mr. Camp?
Mr. CAMP. Well, thank you, Mr. Chairman. Again, thank you
all for coming. Obviously, Mr. Steinwald, you've said that
health needs alone haven't been determining spending, and
clearly with Medicare spending on physicians increasing at 9
percent per year and certain distortions based upon the value
of services occurring in the market, you're suggesting that an
analyzation of claims data will help address this issue.
I guess my question for all of you is if you look at claims
data alone, that can tell us the volume of services provided
certainly, but how do we address the issue of medical
necessity? If you each want to answer that.
Mr. STEINWALD. It's essential in a profiling system to
recognize variations in patient needs. But the point that we
made in our report and the testimony to you is that there are
tools that enable one to do that. In a study that we conducted,
for example, we divided patients into 30 cohorts based on their
health status. Their health status was measured in terms of
their diagnoses, their chronic diseases and some demographic
characteristics.
So, when we examine--we identified physicians who appear to
be practicing medicine inefficiently, we were attempting to
hold health status constant. Health status is our measure of
the degree of patient need. So, we think that the tools are
there and sufficient to at least go forward with a feedback
program, and then during the time that the feedback program is
in effect, these tools can be refined.
Mr. CAMP. All right. Mr. Kuhn.
Mr. Kuhn. I agree with Bruce. I think the necessity issue
is there in terms of the Codes that we use, the Codes that we
have, and the way we have to go back and look at the claims
that come through the system.
Obviously, we have opportunities with both the QIOs and
with our contractors to go back and follow up with providers to
make sure that the care that is given appropriate and
necessary. But I agree with him. The fact that once you begin
to put together these episodes and begin to look at them, I
think that it gets to the core function of--Are we having a lot
of overuse of services here, and do we have people who are
operating outside the norm? I think that would give us
additional tools to be able to look at that.
Mr. CAMP. You're really thinking of practice patterns here,
I think, is what I hear you saying?
Mr. KUHN. I think, it's kind of a two-part. One would be on
evidence-based guidelines and certainly practice patterns based
on good evidence. But at the same time, you don't want to be so
restrictive that you eliminate the art of medicine and don't
allow physicians to deal with different patients who have
different characteristics. So, finding that fine line is going
to be key for us here, but I think we could do that.
Mr. CAMP. All right. Mr. Hackbarth.
Mr. HACKBARTH. Yeah. I have a couple of points, Mr. Camp.
One is that what MedPAC envisions, recommends is that the
system look not just at the cost of the care provided, but also
integrate into the system quality measures. So, what we want to
do ultimately is to award physicians who are truly efficient;
namely, providing high quality care at a lower cost. So, we
need to have both cost and quality in the analysis.
Second, as an initial step, what we envision is that the
comparison could be to peers by specialty within their
geographic area to increase the comfort level among physicians
that they're being compared to a reasonable target. So, it
would be a cardiologist in Boston compared to other
cardiologists in Boston. Here's how you fare. We've actually
provided some examples of how those data look in some of our
reports.
The third point I make is that we do need to, for the long
run, find research on what works so we can better evaluate
practice patterns so we know what's good and what's bad. That's
a long-term project, and that's why we think it's important to
increase funding for that effort as soon as possible.
Mr. CAMP. All right. Thank you. Mr. Kuhn, where is the CMS
physician quality reporting initiative implementation going?
How is that going?
Mr. KUHN. We're moving along very well on that. As I think
people know, it begins in July and will allow physicians to
report quality measures. We have 74 measures that we've posted
on the website already, with good descriptors on each, and
we're ahead of the timeline on that. Physicians will be
reporting in July for the 6 months till the end of the year,
and then with a payment differential of up to 1.5 percent in
the next year.
So far, I think development of the measures, the good
collaboration of the physicians has gone well. Where we're
spending most of our time right now is in developing good
educational information and outreach to the physician
community. We don't want anybody to be left behind or to not
understand how to participate in this program. So we think with
our ten regional offices, good support from the AMA and the
other physician specialty groups out there, we've done some
extensive outreach. So I feel pretty good about where we are at
this stage. As the issues come up, we try to address them. I
think the real test will probably be in September or October
when we start to get the initial reports back and see how many
physicians are reporting and whether we have any glitches in
system. But for right now, we feel very secure about where we
are in the development and implementation.
Mr. CAMP. Thank you. Thank you very much. Thank you, Mr.
Chairman.
Chairman STARK. Ms. Tubbs Jones, would you like to inquire?
Ms. TUBBS JONES. Mr. Chairman, yes I would. Thank you very
much. Good morning, gentlemen. This is my first service on the
Subcommittee on Health, and I'm reading through one of the
reports. It, for some reason, some of this stuff seems to make
it out like it's rocket scientist. We all understand that
primary care to a senior is what will make them hopefully live
longer and the coordination of their benefits will hopefully
make the dollar go through--stretch out or have greater value.
Is this rocket scientist you're putting forth in this report or
is it something that we've always known but we've not been able
to reach it in the Medicare Program?
Mr. Hackbarth, I think this is your report I'm referring
to.
Mr. HACKBARTH. Yeah. Well, I suppose sometimes we do try to
make things complicated, but we try to be precise and analytic.
There is a lot of evidence that good primary care improves
results to patients and perhaps even saves money. I think the
real challenge is how to operationalize that.
Ms. TUBBS JONES. Would you say, then, that in the United
States where we have the greatest health care in the world, is
it the delivery of the health care that we're not able to put
our arms around to provide the kind of health care that people
need in the United States?
Mr. HACKBARTH. Yeah. American health care is wonderful in
its sophistication, the technology that's used to provide it.
But there are large-scale problems in the delivery of services,
problems in getting the right services to the right patients at
the right time, large problems with equity and access and the
like. So, yeah, our problems are delivery problems. The
financing system often shapes delivery.
Ms. TUBBS JONES. Obviously. My next question is, there is a
discussion of a lot of friends that are physicians, a lot of
friends that are dentists, and on and on and on, who are saying
that the undervaluation of their services is driving them away
from rendering care to Medicare beneficiaries. What are we
doing to address that particular area? Anybody can answer that
question. Mr. Kuhn, I didn't mean that leave you all out.
Mr. KUHN. No, not a problem. You're right. The
undervaluation of services also creates a real severe problem
in terms of making sure physicians get the correct resources
they need and beneficiaries have access to those services.
What happened was----
Ms. TUBBS JONES. Say that again?
Mr. KUHN.One of the things we did last year is that every 5
years by statute, we're supposed to go back and look at the
physician payment system to make sure that the relative values
are set appropriately. It's called the 5-year review. It's
managed by the AMA's Relative Value Update Committee, also
known as the RUC.
The good thing and the exciting thing that happened last
year is they came back with a set of recommendations that we
had never seen before to actually reward what we call E&M codes
or evaluation and management codes--basically, those used
predominately by primary care physicians, people who are doing
family medicine and others. We increased those substantially,
basically saying "let's pay physicians more for spending time
with the patients, talking with the patients, meeting with
them." And we accepted 100 percent of those recommendations as
we went forward.
So, I hope that we'll see this year and next year--we'll
move forward the results of that charge because it was probably
one of the most significant changes out there in terms of
payment in the last decade. It represented real realignment.
So, we're making those changes. They're probably not as
aggressive as some probably thought they were or should be. But
that was a good, significant move and one we were happy to
adopt and implement last year.
Ms. TUBBS JONES. Mr. Steinwald, I don't want to leave you.
I have one little other area I want to go real quick so we've
got probably seconds. So, go ahead.
Mr. STEINWALD. Yes ma'am. In general, the number of
services performed for Medicare beneficiaries is up in almost
every specialty area and in every part of the country. The
trend over this decade has been for more beneficiaries to
receive services and each beneficiary getting more services in
a period of time.
I won't dispute what Glenn said about the relative
valuation of primary care versus specialty care. But the data
generally shows that Medicare beneficiaries are receiving
services and there are very few places where you can identify
what you would regard as an access problem.
Ms. TUBBS JONES. But the real problem, however, may well be
the coordination of the services. You've got seniors and
doctors who are not talking to one another, and delivery of
service is a real problem. I'm probably out of time, but I
think--my biggest concern is that we do all this research and
all these studies, which are real important to me, and my
seniors are not getting the services that they need. So,
somehow I'm asking you to do both. Study but deliver.
Chairman STARK. Mr. Ramstad, would you like to inquire?
Mr. RAMSTAD. Thank you, Mr. Chairman. Chairman Hackbarth,
both in your written testimony and in your colloquy today with
Mr. Camp, you mentioned--discussed what I think is the obvious,
that Medicare does not pay providers based on quality or
efficiency of care.
I'd like to ask you to elaborate or the other two
distinguished panelists, this is nowhere better exemplified
than in my home state of Minnesota where physicians provide
some of the highest quality and lowest priced, lowest cost care
in the country, and instead of being rewarded for providing
high quality and low cost care, they're penalized consistently
through inequitable payments pursuant to the archaic, arcane,
outrageous and unfair AAPCC formula for managed care, and also
the geographic adjustments in traditional fee-for-service
Medicare.
In my judgment, this--well, both payment systems are
perverse, because they perversely reward high cost and
inefficiency. Isn't it time--and, again, I welcome your input,
Chairman Hackbarth, and you, Mr. Kuhn, and you, Mr. Steinwald--
isn't it time to scrap this arcane payment system? Isn't it
time for Congress, working with experts like you, to develop a
system where we finally are able to reward providers for high
quality and lower cost care?
Mr. HACKBARTH. Absolutely. We've over the years proposed a
lot of different ways that you might go about doing that. We
talked about several of them this morning.
I would say, Mr. Ramstad, though, that given Medicare's
long-term financing issues, what we need to do is not bring the
low cost, high quality areas up in terms of their expenditure,
but rather bring the high cost areas down to where they are.
It's an understandable reaction for people to say, well, we're
being efficient with the low cost and high quality and those
other guys are getting all the money, and we should be getting
that money. But a terrible long-term financing problem requires
that we move down and not go up.
Mr. RAMSTAD. Recognizing that--pardon my interruption.
Recognizing that fact, on that point, there isn't enough
money--God doesn't have enough money to do it that way.
Certainly Medicare doesn't. So, my fundamental question, the
only way we're going to resolve this, isn't it true to say,
isn't it fair to say, is by scrapping the present system? We
can't do it pursuant to the current system.
Mr. HACKBARTH. Which system?
Mr. RAMSTAD. The AAPCC formula for managed care and the
geographic adjustments in traditional fee-for-care.
Mr. HACKBARTH. Well, the Medicare Advantage issue is a
separate topic that we've discussed a lot. Again, the basic
point that MedPAC made, for example, in our report on the SGR
in March, is that if we've got geographic disparities in
aggregate expenditures, what we need to do is squeeze the high-
cost states down, not bring the low-cost states up. That's what
the long-term financing does.
Mr. RAMSTAD. But how do we do that short of scrapping the
present formula? How do we do that? That's what I've heard for
12 years here, and then I've heard we can't scrap the present
formula because there are more Members, more votes from Florida
and New York and California than there are from Minnesota and
Iowa and North Dakota and Wyoming, the states that are
penalized. So, how we do that short of scrapping the formula?
Mr. HACKBARTH. Well, it would involve scrapping the formula
and making significant changes, yes, absolutely.
Mr. RAMSTAD. That's the answer I was looking for, and I
appreciate your candor and your recognition of that fact. Do
either of you have anything to add?
Mr. KUHN. Just one thing I'd add to that, Mr. Ramstad, is
you're absolutely right. The judicious use of resources is
absolutely essential to the Medicare Program and how we can put
together payment systems that drive us in that direction is
key. The issue of the wage index that you raised, one of the
things for this Committee to look forward to which will be
arriving soon, is that part of the tax relief bill was passed
last year was a mandate for a report to Congress on how we
develop other alternatives to the wage index.
MedPAC has taken the lead on that. They're going to produce
a report I think in June that will be handed off to us, and
then we will take that work that they've done and subsequently
give a report to Congress. So, the opportunity for further
dialog on that issue with some options coming forward is near.
Mr. RAMSTAD. Thank you. Briefly.
Mr. STEINWALD. Back to fee-for-service Medicare. The blunt
instrument I referred to earlier that the SGR system poses. If
we were able to replace that with programs that recognize
individual doctor's adherence to the practice standards, those
doctors who do adhere to practice standards will be better off
than those that are costing us these big payment increases.
Mr. RAMSTAD. Well, thank you for your expertise, and thank
you for your candor. Thank you, Mr. Chairman.
Chairman STARK. Mr. Becerra, I think we'll have time for
two more Members to inquire before we have to go vote. Would
you like to inquire?
Mr. BECERRA. Yes, Mr. Chairman. Thank you. Gentlemen, thank
you for your testimony. Let me step back a second ask you to
help me compare what we do in this country with other countries
that offer their seniors a universal system of health care.
Tell me what you see as the differences between our system
from its initial starting point versus another system that's
perhaps comparable. I'm not sure what country would have a
system comparable in terms of its population profiles and it's
way of administering services and its level of sophistication
in services.
So, let's say whether it's Great Britain or Canada, are
there any countries that you can use as a base model to compare
both our population and our system for providing health care to
our seniors? I'd ask you to be as brief as possible so I can
then follow up.
Mr. HACKBARTH. Yeah. I'd hesitate to choose any one
particular country. I can make some general statements. As is
well known, we tend to spend significantly more per capita than
even other wealthy countries. The growth in expenditures,
though, tend to be about the same. So, it's not like we're
growing dramatically faster than others. They're pretty
similar.
There has been some research that shows the major reason
for the difference in cost in the U.S. versus other countries
is the prices paid for services, prices paid for physician
services and hospitals and drugs and the like, tend to be
significantly higher, and those translate into a higher income
for physicians and all health care professionals in the U.S.
than in foreign countries.
Mr. BECERRA. Utilization rates, are they similar?
Mr. HACKBARTH. You know, they vary somewhat. The research I
was just referring to about price differences says that, you
know, on most important issues of utilization, access to the
care and the like, lower-cost countries compare favorably to
the U.S. They get access to new technology, et cetera. The big
difference is price differentials.
Mr. BECERRA. Mr. Hackbarth, my understanding is, it's sort
of what you've just said, is that we typically start our
baseline at a higher level than other advanced countries do
when it comes to what they're paying for a service. We seem to
have a higher utilization rate in some cases of some of the
more expensive services that are provided than do other
countries. So, we start off already, before the first dollar is
out the door, paying more than other advanced countries do for
health care for seniors, and we seem to find that the more
expensive services are used more often in this country.
Mr. HACKBARTH. Yeah. Perhaps----
Mr. BECERRA. Perhaps our seniors are no better off, in some
cases worse off, than the population of seniors in those other
countries.
Mr. HACKBARTH. Yeah. We're really generalizing here, and
there's always risks in doing that. But often, the U.S., there
will be faster access to the new technology, lower thresholds
on who qualifies for an expensive new technology, and in many
cases, that's a difference and it increases costs in the
Medicare system.
Mr. BECERRA. I thank you for that. I hope we explore more
what other countries are doing, because other countries have
had long-term experience in the ways we have to some degree, in
providing universal health care to our seniors. But they
certainly seem to do it for a lot less and in many cases,
they're outcomes seem to be as good if not better than ours.
So, they're getting far more bang for the buck for our seniors.
The other question is, this whole description of the
primary physician, gatekeeper, or what's the other term, home?
Mr. HACKBARTH. Medical home.
Mr. BECERRA. The medical home. I know when you talk to some
physicians, especially the specialists and they hear the word
"gatekeeper,'' they get somewhat concerned about what--or how
we describe that primary care physician, and they tend to think
more in terms of a gatekeeper versus a medical home.
Can you give us a sense of how you get the physician
community to feel comfortable that we may move more toward a
system of a medical home or gatekeeper?
Mr. KUHN. I'm not sure. You know, this is going to be a
maturation process for all of us as we go forward here. We are
trying to put together a demonstration on a medical home model
right now, and we've been meeting with a lot of the physician
groups to help them help us describe what a medical home is.
I'll tell you, every physician group you talk to has a
different idea. As some people describe it, it almost sounds
like a medical lean-to. On the other side of the spectrum, it's
almost a medical mansion. But what is a "medical home"? It's
somewhere in the middle. How can you get a good description of
that so that you have the coordination of care that you're
after?
Mr. BECERRA. Let me ask one last question. My time has
expired. Do any of you believe that we can move forward in a
productive way with Medicare without coming up with some
definition of a "medical home" or a gatekeeper system?
Mr. KUHN. I think the "medical home" as Glenn laid out
through, in his opening remarks, about four different
initiatives. It's going to be one of many things we're going to
need to explore. I don't think there's a silver bullet here
anywhere. But it's one of many things that I think will be
helpful to us.
Mr. BECERRA. Thank you very much. Thank you, Mr. Chairman.
Chairman STARK. Ron, do you want to ask a question?
Mr. KIND. Yes. Thank you, Mr. Chairman. We just have a few
minutes before we have to run to vote, but we appreciate your
testimony today. I personally kind of went through medical home
type of process myself, having walked through with my older
sister, breast cancer treatment in my hometown in La Crosse.
They called it the integrated team approach, but it sounds very
comparable where the patient is taken and then instead of just
being handed off to physician to physician, there was that team
that was formed around her so there was no slipping through the
cracks. Let me tell you, for her confidence and reassurance and
the whole family, it worked marvelously. Of course the quality
of care standards have improved dramatically as well. It's been
a real model that they're trying to help other providers
throughout the country.
But I just echo and ditto what my friend from Minnesota
said earlier in regards to the high quality, low reimbursed
areas and the frustration many of our providers have over that.
I assume you're all looking at states to see what type of
innovative practices they're making to improve quality and
reporting requirements. In Wisconsin, for instance, we have
since 2004, hospital quality reporting program called
Checkpoint. It's a voluntary consortium of providers throughout
the state and 128 hospitals are participating. This reflects 99
percent of the hospital admissions, and it's getting
information out to the public, and they're holding themselves
to some very high standards of care.
Then a year earlier in 2003, Wisconsin formed for the
Collaborative for Health Care Quality, which again is another
voluntary consortium on establishing quality standards and then
a self-reporting mechanism that's available to the public. It
seems to be helping drive competition but increasing quality of
care. So, I'm hoping that we're paying very close attention to
what states are doing innovatively and creatively to come up
with some of the solutions themselves.
The question I have for you, however, and taking a step
back from this conversation, something a little more
fundamental, because, again, a lot of my providers back home
are doing it, is they're instituting lean programs in their
hospitals to increase efficiency. Because as I visited a lot of
them, and as they tell me, there's a lot of low-lying fruit out
there just to increase the way service is being provided and
getting doctors to think more efficiently in how they're
handling their own practice areas.
Are we looking at that? Or perhaps the better question is,
what can we do to incentivize that so more providers are
implementing or instituting programs like lean, which seems to
be easier to do than Six Sigma, which requires a few more
hurdles to do?
Mr. HACKBARTH. Yeah. Actually, we had panel on that very
topic I guess a year or so ago and heard from some people
actively involved in trying to streamline their system, and
heard a couple of things. They think is a potential for both
improving quality and patient satisfaction while reducing cost
is very large. A significant barrier that they run into,
however, is the payment system, not just the one used by
Medicare, payment systems used by private payers as well.
Often if you change, you make the system more efficient
over here, you may increase costs somewhat over there, and the
payment systems don't really properly adjust. So what you end
up with is you don't reap rewards of your efforts to improve
efficiency.
A generic approach, a generic way of thinking about how to
create stronger incentives, is increase the size of the
bundles. The larger the bundle the provider has responsibility
for, the more flexibility they have to change the mix of
inputs, change their processes and still benefit from
improvements in efficiencies. If you have narrow bundles, then
there's a lot of leakage, and they're not rewarded for their
efforts.
Mr. KIND. Well, I'd like to--given the time, we've got to
run and go to vote--just follow up with you on that. I'm very
interested in trying to pursue it. So, the problem with the
reimbursement system that creates disincentives for them to
increase their own efficiency, we've got to address that as
well. Because the feedback we're getting from our providers who
do institute these programs is they are efficient, more
efficient. It frees up physician time. They're able to spend
more time with their patients, see more patients. The quality
of care is being increased, because medical errors are also
being reduced at the same time.
So, I think there's a lot of win-win-win as to why we
should be doing this. But if there is a disincentive in the
reimbursement system, we need to be taking a look at that, too.
So, I'd like to just follow up with you at some point, probing
this conversation.
Thank you again for being here. Thank you, Mr. Chairman.
Chairman STARK. I want to thank the panel. I'm sorry to
rush off. I wish we could--well, I know we'll be back talking
with each of you and all of you some more as we try to resolve
this. We will recess, subject to the call of the chair, it will
be another 20 minutes I guess, and then we'll, for the benefit
of the second panel, we'll reconvene.
Thank you very much, gentlemen. We're in recess
[Recess until 12:20 p.m.]
AFTERNOON SESSION
Chairman STARK. Thank the panel for their patience as we
proceed to salvage small business from bankruptcy. We'll
proceed. We're pleased to have you here. Bob Berenson, Dr. Bob
Berenson from the Urban Institute. Dr. Rick Kellerman from the
American Association of Family Physicians. Dr. John--you got
out of order there, didn't you? Dr. John Mayer, and Dr. Anmol
Mahal, my constituent and neighbor in Freemont, California, who
is President of the California Medical Association and the
Society of Thoracic Surgeons represented by Dr. John Mayer.
If you gentleman would like to proceed to, starting with
Dr. Berenson, summarize your printed testimony, I'd ask
unanimous consent that your entire testimony will appear in the
record. If you'd summarize it in any way you care, and my
colleagues will try and weasel more information out of you in
the questioning period.
Bob.
STATEMENT OF ROBERT A. BERENSON, M.D., SENIOR FELLOW, THE URBAN
INSTITUTE
Dr. BERENSON. Thank you, Mr. Stark, Mr. Camp and Members--
well, no other Members of the Committee.
[Laughter.]
Dr. BERENSON. I appreciate the opportunity to provide
testimony to the Subcommittee on Health on a subject I have
been deeply involved with through most of my professional
career as a practicing internist, medical director of a PPO, a
senior official at TMS, and now as a researcher and policy
analyst.
I believe that this is an important hearing because the
focus of the hearing is not on how to use marginal dollars, 1
to 2 percent, to try to influence physician performance, or on
paying third-party disease management organizations that are
separate from the physicians actually providing the medical
care to beneficiaries with chronic conditions, but rather
explores how the program might better spend 100 percent base of
physician spending to include quality and efficiency.
Many policymakers still use the--or commonly use the term
"fee-for-service Medicare'' to designate the original Medicare
Program and to distinguish it from the various kinds of
Medicare Advantage products. However, this convenient shorthand
actually mischaracterizes how the traditional Medicare Program
pays providers. In fact, the physician fee schedule is one of
the last payment approaches in Medicare that remains truly fee-
for-service. Accumulated evidence documents that prospective
payments based on episodes of care have moderated cost
increases in the traditional Medicare Program.
In contrast, the physician payment system remains fee-for-
service, although even the fee schedule, there are significant
examples of bundled or packaged payments, as Herb Kuhn
discussed in his testimony earlier. These longstanding
approaches to bundling can be looked to for guidance on how to
expand episode-based payments to physicians.
The program is now experiencing an explosion of volume and
intensity growth in some clinical areas. For the first decade
or so of the Medicare fee schedule, the evolving expenditure
target approach has actually worked reasonably well to
constrain spending growth. The situation has clearly changed in
the last 6 years, and Congress, with the exception of 2002, has
acted to override the across-the-board fee reductions called
for under the SGR mechanism.
Because of the volume growth of services that are
inherently discretionary in nature and increasingly where
physicians have a financial interest, in my opinion there is
little question that bundling payments for episodes of care
needs to be a primary objective of physician payment reform,
just as it has been successful when applied to other providers
in Medicare.
I will provide one important example of why moving to
bundled payments for physicians, in contrast to fee-for-
service, makes good policy sense. The work of Dr. Edward Wagner
at the MacColl Institute in Seattle makes this clear. He
describes a chronic care model in which the proper management
of patients with one or more severe chronic conditions, such as
diabetes and congestive heart failure, involves lots of
communication with patients outside of standard office visits
by phone, and possibly e-mail, care by multidisciplinary
professional teams, active use of patient registries and
enhanced coordination among professionals and providers
practicing in many locations.
In my view, for reasons that are in my written statement,
it would be foolhardy to try to pay for most of these
additional services on an a la carte basis as fee-for-service
does. Episode-based payment not only for primary care
physicians but specialists caring for a variety of acute and
chronic health care medical problems has an inherent appeal.
There will be important in implementation issues that will need
be worked through.
I think it is time to recognize that a one-size-fits-all
physician payment system may no longer work properly to support
the increasing diversity of physician activity that has
resulted from subspecialization. Medicare should develop and
maintain different payment approaches for real and virtual
multi-specialty groups able and willing to believe accountable
for cost and quality, rather than pay them on the lowest common
denominator approach that would apply to a solo practitioner.
At the same time, fee-for-service will be with us a long
time, for those physicians unable or unwilling to accept
bundled places that places them at significant financial risk
and for physicians outside of large groups who provide
specialized, one-time services.
Therefore, I would like to make a couple of comments about
Medicare physician fee schedule. The Resource-Based Relative
Value Scale approach first implemented in 1992 and still a work
in progress, is a marked improvement over the charge-based use
schedule that preceded it in Medicare. For all of RBRVS's
complexity, the right institutions are in place to make
important and overdue improvements to the fee schedule
refinement process. To use a sports metaphor, attempting to get
the prices right is the blocking and tackling of a fee
schedule. Yet in recent years, fee schedule prices have become
distorted, but without much notice. These pricing distortions
have occurred in Medicare but even more so in most commercial
health plan fee schedules which are based on Medicare's. Prices
have been allowed increasingly to deviate from the underlying
costs of production, producing unfortunate behavioral responses
by physicians, contributing to the explosion in volume of
services in areas such as imaging.
In my view, it would be relatively straightforward
technically to correct many of these distorted prices, if there
were the political will and support to do so. Correcting
distorted prices would help control the utilization of services
that are leading to the expenditure problems and the need for
an SGR fix.
With that, I will pass it on to the next witness. Thank
you.
[The prepared statement of Dr. Berenson follows:]
Statement of Robert A. Berenson, M.D., Senior Fellow, the Urban
Institute
Chairman Stark, Mr. Camp, and members of the Committee:
I appreciate the opportunity to provide testimony to the Health
Subcommittee on a subject I have been deeply involved with through most
of my professional career. I practiced internal medicine for over
twenty years, twelve of which were in a group practice just a few
blocks from here. I was the first representative of the American
College of Physicians to the American Medical Association's Resource-
Based Relative Value Scale (RBRVS) Update Committee (RUC). In the last
part of the Clinton Administration, I had operational responsibility
for the Medicare Physician Fee Schedule at the Centers for Medicare and
Medicaid Services (CMS). Finally, in recent years as a Senior Fellow at
the Urban Institute, I have had a chance to study how well the Medicare
Physician Fee Schedule has worked and what might be done to improve it.
I believe that this is an important hearing--because the focus of
the hearing is not on how to use marginal dollars--1-2 percent--to try
to influence physician performance or on paying third-party disease
management organizations that are separated from the physicians
actually providing the medical care to beneficiaries with chronic
conditions--but rather explores how the program might better spend the
100 percent base of physician spending, which is now approaching $60
billion. It is important to explore the likely effects of these newer
approaches to improving quality and efficiency on beneficiaries,
physicians, and the Medicare program overall.
The hearing is also important because it signifies that the
budgetary pressure of finding a solution to the shortfall created by
the cumulative deficit produced by the sustainable growth rate (SGR)
formula should not occupy all of the time and attention of health
policy makers. Indeed, as I will try to make clear, I believe that
greater attention to how we spend the base of $60 billion can provide
both short-term and long-term improvement to the financial bottom-line
and ease off some of the SGR pressure that currently exists. In recent
months, very constructive ideas, including some presented at today's
hearing, have been raised. I hope to contribute to that discussion in
my remarks today.
Many policy makers use the term ``fee-for-service Medicare'' to
designate the original Medicare program and to distinguish it from the
various kinds of Medicare Advantage products. However, this convenient
short-hand actually mischaracterizes how the traditional Medicare
program pays providers. Indeed, in a book on Medicare prospective
payment that I co-authored with Rick Mayes last year, I emphasize that
the Medicare Fee Schedule (MFS) is one the last payment approaches in
Medicare that remains truly fee-for-service (FFS).\1\ Initially, with
the Hospital Inpatient Prospective Payment System and then subsequently
with a series of prospective payment systems created in the Balanced
Budget Act of 1997 and later legislation, providers typically receive
bundled payments for an episode of care, appropriately case-mix
adjusted to take into account patient severity. Under these bundled
payment approaches, providers have an incentive to provide services
more efficiently, for less than the average costs on which payment
amounts are based. Accumulated evidence documents that prospective
payments based on episodes of care have moderated cost increases in the
traditional Medicare program.
---------------------------------------------------------------------------
\1\ Rick Mayes and Robert A. Berenson, Prospective Payment and the
Shaping of U.S. Health Care, (Baltimore: Johns Hopkins University
Press, 2006)
---------------------------------------------------------------------------
In contrast, the physician payment system remains FFS, although
even in the fee schedule there are significant examples of bundled or
packaged payments, most notably the 90-day global fees for surgical
procedures under which routine pre- and post-operative services are
included into the global payment amount, and the monthly payment to
renal physicians overseeing renal dialysis for patients with End Stage
Renal Disease. These long-standing approaches to bundling can be looked
to for guidance on how to expand episode-based payments to physicians.
Because the physician payment system is almost purely FFS, it was
understandable that Congress, in OBRA 1989, placed a volume expenditure
target--then called the Volume Performance Standard--as an admittedly
crude approach to containing spending growth under the MFS that began
in 1992. It is interesting to note that the 1989 Physician Payment
Review Commission Report thought that the expenditure target mechanism
could work only for a few years and that organized medicine needed to
actively develop clinical practice guidelines, with accompanying
physician education efforts, as a needed long-term solution to
constrain volume growth. Unfortunately, efforts to find alternatives to
the top-down expenditure target approach were not sustained. And the
program is now experiencing an explosion of volume and intensity growth
in some clinical areas.
Yet, for the first decade or so of the MFS, the evolving
expenditure target approaches actually worked reasonably well to
constrain spending growth. The situation has clearly changed in the
past 6 years, and Congress, with the exception of 2002, has acted to
override the across-the-board fee reductions called for under the SGR
mechanism. In the absence of broad-based clinical practice guidelines
and because of the volume growth of services that are inherently
discretionary in nature and, increasingly, under physicians direct
control, in my opinion there is little question that bundling payments
for episodes of care needs to be a primary objective of physician
payment reform, just as it has been successful when applied to other
providers in Medicare.
Examples of Bundled Services
I will provide one important example of why moving to bundled
payments for physicians, in contrast to fee-for-service, makes good
policy sense. The work of Dr. Edward Wagner, at the MacColl Institute
for Healthcare Innovation in Seattle, Washington, on what he calls the
Chronic Care Model makes clear that the proper management of patients
with one or more severe chronic conditions, such as diabetes and
congestive heart failure, involves lots of communication with patients
outside of standard office visits by phone and, possibly, email; care
by multi-disciplinary professional teams; active use of patient
registries; and enhanced coordination among professionals and providers
practicing in many locations. In my view, it would be foolhardy to try
to pay for most of these additional services on an a la carte basis, as
FFS does.
Consider, as an example, phone calls. The transaction costs of
billing and collecting would be more than the reimbursement for most of
the individual services; program integrity concerns would abound; and
the inevitable explosion of volume on easily provided and well-
appreciated phone calls would become financially prohibitive. The
alternative that MedPAC and others have discussed is a chronic care
management fee for primary and principal care physicians who would
agree to be accountable for providing the array of services in the
Chronic Care Model, much as the American Academy of Family Practice,
the American College of Physicians and others have envisioned in the
patient-centered medical home. My own preference would be to provide a
``per beneficiary per month'' fee not only for care coordination but
also for some or all of the actual medical services provided by the
same practice.\2\ The right approach, which should be tested in multi-
payer demonstrations, might actually be a mixture of reduced fee-for-
services combined with monthly fees for specified bundles of services.
---------------------------------------------------------------------------
\2\ Goroll, HA, Berenson RA, Schoenbaum SC, Gardner, LB.
Fundamental Reform of Payment for Adult Primary Care: Comprehensive
Payment for Comprehensive Care. Journal of General Internal Medicine,
22(3):410-415, 2007.
---------------------------------------------------------------------------
The medical home concept presents a number of specific operational
challenges, which I am prepared to discuss, but the main point to make
is that it is the conceptually right thing to do. The approach not only
should improve the care provided to beneficiaries with chronic health
problems, but importantly, would provided involved practices with
improved incentives to avoid unnecessary downstream utilization by
other providers. In this context, pay-for-performance to reward
efficiency and to protect against under-provision of important primary
and secondary preventive services might play a useful, supportive role.
Episode-based payment not only for primary care physicians but also
for specialists caring for a variety of acute and chronic health care
medical problems has inherent appeal. There, are, however, important
implementation issues regarding specialist bundling as well. In
particular, given the documented problem of inappropriate procedures
producing unjustifiable and costly practice variations, any episode-
based payment system should not incorporate an inherent bias for
performance of procedures, as already exists in the RBRVS-based fee
schedule. Although the costs of an episode need to recognize that there
are direct physician expenses associated with the procedure provision
itself, the valuation of condition-specific episodes should minimize
payment differentials that reward clinical decisions to provide the
procedural intervention.
Further, as with all episode or period of time based payment
approaches, clinically sophisticated case-mix adjustment is needed to
prevent perverse effects, such as physicians giving preference to less
severe patients within a cohort with a particular condition or over-
diagnosing relatively minor complaints to generate compensable
episodes. All payment systems offer ``gaming'' opportunities. The work
on developing payment bundles and episodes needs to protect against
such behavior. Fortuitously, in recent years, we now have much more
sophisticated approaches to case-mix adjustment such that payment
approaches, such as capitation, that often foundered when used by
private health plans in the past, now might be much more successful.
One size no longer fits all
It is time to recognize that a ``one size fits all'' physician
payment system may no longer work properly to support the increasing
diversity of physician activity that has resulted from sub-
specialization. Primary care physicians and particular sub-specialists
typically care for patients over many years, and much of their value
derives from continuity and consistency. As already noted, an immediate
Medicare challenge is to develop a payment approach to support robust
chronic care coordination and management. At the other end of the
physician spectrum, some physicians, including radiologists,
pathologists, anesthesiologists, and emergency room physicians, mostly
provide one-time, discrete services and typically do not have ongoing
responsibilities regarding individual patients. For these physicians,
FFS would seem to be an appropriate reimbursement mechanism for a
third-party payer, such as Medicare, which does not employ physicians
and thus are unable to pay a salary. In the middle of the spectrum,
many physicians provide both discrete, one-time services and have
ongoing care responsibilities.
Ideally, all specialties would work together, either in real multi-
specialty group practices or in virtual multi-specialty collaborations,
with payment made to the organization on a per beneficiary per month
basis for ``medical home'' services, with payment adjustments for
episodes of illness that require highly specialized services. The
current physician group practice demonstration is a very important one
in recognizing the opportunity to compensate large real and virtual
groups differently from the payment approaches that apply to individual
physicians or single specialty groups. Further, physician pay-for-
performance, generally should attempt to measure group-level, rather
than individual, physician performance.
In sum, Medicare should develop and maintain different payment
approaches for multi-specialty groups and collaboratives able and
willing to be accountable for costs and quality, rather than pay them
on the lowest common denominator approach that would apply to a solo
practitioner. At the same time, FFS will be with us for a long time--
for those physicians unable or unwilling to accept bundled payments
that places them at significant financial risk and for physicians
outside of large groups who provide specialized, one-time services.
Improving the RBRVS System to Promote Efficiency
I have recently co-authored medical journal articles critiquing
recent implementation of the MFS, especially the RBRVS component.\3\
But I do not want these published comments and concerns to be
misunderstood. The RBRVS approach, first implemented in 1992 and still
a work in progress, was a marked improvement over the charge-based fee
schedule that preceded it in Medicare. And for all of RBRVS's
complexity, the right institutions are in place to make important and
overdue improvements to the fee schedule refinement process.
Unfortunately, the MFS, I believe, has suffered from a relative lack of
attention in recent years by Federal policy makers--at CMS, at MedPAC,
and in Congress, as policy interest has focused elsewhere. As a result,
the program has spent unnecessarily because of a failure to anticipate
and guard against highly inflationary increases in the volume and
intensity of many physician services.
---------------------------------------------------------------------------
\3\ Bodenheimer T, Berenson RA, and Rudolf P. The Primary Care-
Specialty Income Gap: Why It Matters, Annals of Internal Medicine
146(4):301-306, 2007; Ginsburg PB and Berenson RA. Revising Medicare's
Physician Fess Schedule--Much Activity, Little Change. New England
Journal of Medicine 356(12):1201-1203, 2007; Maxwell S, Zuckerman, S,
and Berenson RA. Use of Physicians' Services Under Medicare's Resource-
Based Payments, New England Journal of Medicine 356(18):1853-1861,
2007.
---------------------------------------------------------------------------
To use a sports metaphor, attempting to get the prices right is the
blocking and tackling of a fee schedule. Yet, in recent years, fee
schedule prices have become distorted, but without much notice. These
pricing distortions have occurred in Medicare but even more so in most
commercial health plan fee schedules, which are based on Medicare's.
Prices have been allowed, increasingly, to deviate from the underlying
costs of production, producing unfortunate behavior responses by
physician, which I will detail in a moment. Yet, in my view, it would
be relatively straight-forward technically to correct the distorted
prices, if there were the political will and support to do so.
In the recent articles, colleagues and I have attempted to explain
some of the technical reasons why the prices became distorted. I will
emphasize two issues here. Keeping the relative values accurate
requires an effective process that reflects changes in medical practice
and trends in physician productivity. But, for the most part, relative
values have defied gravity--going up or staying the same but rarely
coming down.\4\ Because physician time spent is a crucial element in
estimating both the work and practice expense components that make up
the RBRVS approach, it is time to base time elements for high frequency
services on objective time data, rather than on surveys of self-
interested specialty groups. In that way, time estimates can be kept
more current and accurate than under the five-year review process that
is now used.
---------------------------------------------------------------------------
\4\ Ginsburg and Berenson
---------------------------------------------------------------------------
Second, problems with accurate estimation of relative values for
practice expenses have worsened as physicians in some specialties have
billed for more ancillary services associated with high equipment
expenses. CMS has used unrealistically low assumptions about rates of
use if equipment and unrealistically high assumptions about
amortization rates for large equipment purchases. Furthermore, the
payment of average costs for services whose variable costs are low
encourages physicians to order more services and to view the services
as profit centers. These services include imaging and clinical tests,
which are among the fastest growing services in Medicare. In short,
because of the failure to consider that the cost of providing a service
such as an MRI scan is reduced with every scan performed, Medicare's
reimbursements overpay and create an incentive for ordering and
providing too many such scans.
During site visits to twelve nationally representative metropolitan
areas through work conducted by the Center for Studying Health System
Change, my colleagues and I have observed increasing numbers of
physicians building capacity to compete with hospital outpatient
departments by offering these lucrative services.\5\ Indeed, such
market-based developments provide a direct signal to policy-makers of
distorted payment levels, pointing to priority targets for price error
corrections.
---------------------------------------------------------------------------
\5\ Berenson RA, Bodenheimer T and Pham, HH. Specialty-Service
Lines: Salvos in the New Medical Arms Race, Health Affairs 25:w337-
w343, 2006.
---------------------------------------------------------------------------
It is not by simple chance that CMS and MedPAC find the volume and
intensity of imaging, tests, and minor procedures--all discretionary
services which ostensibly produce little or no patient harm--are
growing much faster than the categories of major surgical procedures
and evaluation and management services. The latter services provide
much less opportunity for physician-induced demand.
We now see that single specialty groups are merging to have the
size and scope to purchase or lease imaging equipment, such as MRI and
PET scans. This behavior suggests that the prices for advanced imaging
services, such as MRI and PET scans are too high and can be safely
reduced without compromising patient access to these important
services. (Conversely, other imaging services, such as screening
mammograms and DEXA scans for osteoporosis, where access problems
appear to exist are likely under-priced.)
There are many technical reasons for why the RBRVS system has
gotten off track. The Congress can play an important role in assuring
that the technical experts within organized medicine, at MedPAC, and at
CMS make the needed corrections to currently distorted prices. And
while work proceeds to adopt bundled-based payments for physician
services, in my opinion there remains a strong policy rationale for
expenditure targets, but specifically targeted to discretionary
services that are growing rapidly. In sum, in the long-term we need
fundamental reform of how physicians are paid in traditional Medicare.
In the short-term, greater attention to correcting incorrect prices and
more carefully targeting expenditure targets can produce savings and
produce the climate needed to accomplish the needed fundamental reforms
that the witnesses have discussed at this hearing.
Chairman STARK. Thank you.
Dr. Kellerman.
STATEMENT OF RICK KELLERMAN, M.D., PRESIDENT, AMERICAN ACADEMY
OF FAMILY PHYSICIANS
Dr. KELLERMAN. Chairman Stark and Mr. Camp, I'm Dr. Rick
Kellerman of Wichita, Kansas, and I am president of the
American Academy of Family Physicians representing 93,800
members nationwide. On behalf of the Academy, thank you for
this opportunity to discuss proposals that we believe are
important elements of physician payment reform under Medicare.
The Academy appreciates the work that the Subcommittee has
undertaken to examine how Medicare pays for the services
physicians deliver to Medicare beneficiaries, and we share the
Subcommittee's concerns that the current system is inefficient,
inaccurate and outdated. For those reasons, the Academy
supports the restructuring of Medicare payments to reward
coordination of health care and quality improvement.
Medicare should focus attention on how a coordinated
physician can integrate the health care patients receive from
different providers in different settings with the goal of
preventing duplication of tests and procedures and assuring
comprehensive patient care, not unlike a network administrator
keeps a computer system functioning efficiently.
More than 20 years of evidence shows that having a health
care system based on primary care reduces costs and benefits
the patient's health. By using a system of health care that is
not predicated on primary care physicians coordinating
patients' care, the U.S. health care system pays a steep
economic price, and our Medicare beneficiaries pay a steeper
price in terms of their quality of care.
Currently, 82 percent of the Medicare population has at
least one chronic condition, and two-thirds have more than one
chronic condition. Moreover, 20 percent of beneficiaries have
five or more chronic conditions and account for two-thirds of
all Medicare spending.
There is strong evidence that adopting the chronic care
model that Dr. Berenson referred to would improve health care
quality and cost effectiveness, integrate patient care and
increase patient satisfaction. This well known model is based
on the fact that most health care for the chronically ill takes
place in primary care settings such as the offices of family
physicians.
The chronic care model focuses on several essential
components:
Enhanced self-management by patients of their disease;
An organized and sophisticated delivery system;
Evidence-based support for clinical decisions;
Information systems; and
Links to community support organizations.
This model with its emphasis on care coordination, has been
tested in dozens of studies and has repeatedly shown its value.
Because of the prevalence of chronic disease among the elderly,
applying the chronic care model to Medicare is appropriate.
Thus the
Academy proposes a new Medicare physician payment system that
includes:
Application of the chronic care model through adoption
of the patient-centered medical home;
Provision of a monthly care management stipend for
recognized physician practices designated by beneficiaries as
their medical home;
Continued use of the resource-based relative value scale
using a conversion factor updated annually by the MEI; and
Creation of an oversight entity to make recommendations
to the Secretary about the appropriate value of services.
Medicare should compensate physicians for coordinating
care, a concept supported by both the Institute of Medicine and
MedPAC. In addition, this concept is supported by ample
literature and is being advanced jointly by the AAFP, the
American Academy of Pediatrics; the American College of
Physicians; and the American Osteopathic Association.
In order to be recognized as a medical home, practices
would submit to a voluntary recognition process by an
appropriate nongovernmental entity to demonstrate that they
have the capability to provide patient-centered services
consistent with the model. Currently, the Academy and other
primary care specialty societies are in discussion with the
National Committee for Quality Assurance on creating such a
recognition program for the patient-centered medical home.
Herb Kuhn characterized in his testimony, testimony that
the medical home has been defined. I want the Subcommittee to
know that the four medical societies that I mentioned have
agreed on the principles of a patient-centered medical home.
Payment of a monthly stipend to the medical home for care
coordination and other designated activities would reflect the
value of work that falls outside of face-to-face visits, such
as ongoing coordination of care within a given practice, as
well as with consultants, ancillary providers and community
resources.
In conclusion, the Academy believes it is time to stabilize
and modernize Medicare by recognizing the importance of
appropriately valuing primary care, and by embracing the
patient-centered medical home model as an integral part of the
Medicare program.
[The prepared statement of Dr. Kellerman follows:]
Statement of Rick Kellerman, M.D., President, American Academy of
Family Physicians, Shawnee Mission, KS
Chairman Stark, and members of the subcommittee, I am Dr. Rick
Kellerman of Wichita, Kansas, and I am president of the American
Academy of Family Physicians representing 93,800 members nationwide. On
behalf of the Academy, thank you for this opportunity to share with the
subcommittee the proposals that AAFP believes to be important elements
of physician payment reform under Medicare.
The AAFP appreciates the work this subcommittee has undertaken to
examine how Medicare pays for services physicians deliver to Medicare
beneficiaries and we share the subcommittee's concerns that the current
system is inefficient, inaccurate and outdated. Finding a more
efficient and effective method of reimbursing physicians for services
delivered to Medicare beneficiaries with a large variety of health
conditions is a necessary but difficult endeavor, and one that has
tremendous implications for millions of patients and for the Medicare
program itself.
We particularly appreciate your asking us to discuss what we are
calling the Patient-Centered Medical Home as a component of a Medicare
program that offers better health care more efficiently. Family
physicians believe that the restructuring of Medicare payment should be
done with the needs of Medicare patients foremost in mind. Since most
of these patients have two or more chronic conditions that call for
continuous management and that depend on differing pharmaceutical
treatments, Medicare should focus on how physicians integrate the
health care these patients receive from different providers and
settings, with the goal of preventing duplicative tests and procedures
and assuring the availability to each provider of the most accurate and
complete information regarding each patient. We do not believe that the
Patient Centered Medical Home is business as usual, but rather a
significant step toward added value for the patient, for the complex
array of health care providers and for the Medicare program.
Current Payment Environment
The environment in which U.S. physicians practice and are paid is
challenging at best. Medicare has a history of making
disproportionately low payments to family physicians, largely because
its payment formula is based on a reimbursement scheme that rewards
procedural volume and fails to foster comprehensive, coordinated
management of patients. This formula has produced payment rates that
have declined, except for Congressional intervention, by 5-7 percent
annually for the last five years. As a result, the Medicare payment
rate for physicians has fallen to the 2001 level. These steep annual
cuts resulting from the flawed payment formula serve to undermine
confidence in the Medicare program. In this current environment,
physicians know that, without annual Congressional action, they will
face a 10-percent cut in the Medicare payment rate for 2008 and cuts in
the 5-percent range annually thereafter. Clearly, the Sustainable
Growth Rate (SGR) formula belies its name and simply is not
sustainable.
Primary Care Physicians in the U.S.
This persistent payment imbalance has led to a decline in the
numbers of graduates from U.S. medical schools choosing primary care
medicine. As a result, while other developed countries have a better
balance of primary care doctors and subspecialists, primary care
physicians make up less than one-third of the U.S. physician workforce.
Compared to those in other developed countries, Americans spend the
highest amount per capita on healthcare but have some of the worst
healthcare outcomes.
However, more than 20 years of evidence shows that having a health
care system based on primary care benefits the economy and the
patients' health. Three years ago, a study comparing the health and
economic outcomes of the physician workforce in the U.S. reached this
conclusion (Health Affairs, April 2004). By using a system of health
care that is not predicated on primary care physicians coordinating
patients' care, we the U.S. health care system pays a steep economic
price and our Medicare beneficiaries pay a steeper one in terms of
their quality of life.
The businesses that purchase health insurance for their employees
are recognizing the value of a health care system based on primary
care. For example, Martin-Jose Sep veda, MD, who is the Vice President
for Global Well-being Services and Health Benefits for IMB, Corp.,
recently wrote ``Why should major companies support patient-centered
primary care? Because research shows that patient-centered primary care
results in better health care, lower costs, greater satisfaction with
the health-care system and more equal access to health care for all
citizens.''
A Chronic Care Model in Medicare
If we do not change the Medicare payment system, the aging
population and the rising incidence of chronic disease will overwhelm
Medicare's ability to provide health care. Currently, 82 percent of the
Medicare population has at least one chronic condition and two-thirds
have more than one illness. However, the 20 percent of beneficiaries
with five or more chronic conditions account for two-thirds of all
Medicare spending.
There is strong evidence the Chronic Care Model (Ed Wagner, Robert
Wood Johnson Foundation) would improve health care quality and cost-
effectiveness, integrate patient care, and increase patient
satisfaction. This well-known model is based on the fact that most
health care for the chronically ill takes place in primary care
settings, such as the offices of family physicians. The model focuses
on six components:
self-management by patients of their disease
an organized and sophisticated delivery system
strong support by the sponsoring organization
evidence-based support for clinical decisions
information systems; and
links to community organizations.
This model, with its emphasis on care-coordination, has been tested
in some 39 studies and has repeatedly shown its value. While we believe
reimbursement should be provided to any physician who agrees to
coordinate a patient's care (and serve as a medical home), generally
this will be provided by a primary care doctor, such as a family
physician. According to the Institute of Medicine, primary care is
``the provision of integrated, accessible health care services by
clinicians who are accountable for addressing a large majority of
personal health care needs, developing a sustained partnership with
patients, and practicing in the context of family and community.''
Family physicians are trained specifically to provide exactly this sort
of coordinated health care to their patients.
The AAFP advocates for a new Medicare physician payment system that
embraces the following:
Adoption of the ``Medical Home'' model which would
provide a per month care management fee for physicians whom
beneficiaries designate as their ``Patient-centered Medical Home;''
Continued use of the resource-based relative value scale
(RBRVS) using a conversion factor updated annually by the Medicare
Economic Index (MEI);
No geographic adjustment in Medicare allowances except as
it relates to identified shortage areas;
A phased-in voluntary pay-for-reporting, then pay-for-
performance system consistent with the IOM recommendations.
Care Coordination and a Patient-Centered Medical From the outset,
the Medicare program has based physician payment on a fee-for-service
system. As a result, Medicare currently is a system of misaligned
incentives which rewards individual physicians for ordering more tests
and performing more procedures. The system provides no incentive for
physicians to coordinate the tests, procedures, or patient health care
generally and it puts very little emphasis on preventive services and
health maintenance. This payment method has produced an expensive,
fragmented Medicare program.
To correct these inverted incentives, the AAFP recommends that
beginning in 2008, Medicare compensate physicians for care coordination
services The Institute of Medicine (IOM) has repeatedly praised the
value of, and cited the need for, care coordination as has the Medicare
Payment Advisory Commission (MedPAC). And while there are a number of
possible methods to build this into the Medicare program, AAFP
recommends a blended model that combines fee-for-service with a per-
beneficiary, per-month stipend for care coordination in addition to
meaningful incentives for delivery of high-quality and effective
services in the Patient-Centered Medical Home.
The patient-centered, physician-guided medical home is being
advanced jointly by the AAAFP, the American Academy of Pediatrics
(AAP), the American College of Physicians (ACP) and the American
Osteopathic Association (AOA). This model would include the following
elements:
Personal physician--each patient has an ongoing
relationship with a personal physician trained to provide first
contact, continuous and comprehensive care.
Physician directed medical practice the personal
physician leads a team of individuals at the practice level who
collectively take responsibility for the ongoing care of patients.
Whole person orientation--the personal physician is
responsible for providing for all the patient's health care needs or
taking responsibility for appropriately arranging care with other
qualified professionals. This includes care for all stages of life;
acute care; chronic care; preventive services; and end of life care.
Care is coordinated and/or integrated across all
providers and settings of the health care system (e.g., subspecialty
care, hospitals, home health agencies, nursing homes) and the patient's
community (e.g., family, public and private community-based services)
facilitated by registries, information technology, health information
exchange and other means to assure that patients get the indicated care
when and where they need and want it in a culturally and linguistically
appropriate manner.
Quality and safety are hallmarks of the patient-centered
medical home.
Evidence-based medicine and clinical decision-support tools guide
decision making. Physicians in the practice accept accountability for
continuous quality improvement through voluntary engagement in
performance measurement and improvement. Patients actively participate
in decision-making and feedback is sought to ensure patients'
expectations are being met.
Information technology is utilized appropriately to support optimal
patient care, performance measurement, patient education, and enhanced
communication.
Practices go through a voluntary recognition process by an
appropriate non-governmental entity to demonstrate that they have the
capabilities to provide patient-centered services consistent with the
medical home model. To this end, the AAFP, AAFP, ACP and AOA are in
discussions with the National Committee for Quality Assurance (NCQA) on
creating such a recognition program for the Patient-Centered Medical
Home.
Enhanced access to care through systems such as open
scheduling, expanded hours and new options for communication
between patients, their personal physician, and office staff.
A reimbursement system with appropriate incentives for the patient
and the physician recognizes the time and effort involved in ongoing
care management.
The AAFP commends the Congress for incorporating the medical home
demonstration into the Medicare physician payment provisions of the Tax
Reform and Health Act. However, the statutory composition of the
provision including the requirement of the development of a procedural
code and establishing a value for same, will unduly delay the
implementation of the medical home. Code development and valuation
alone can take two plus years. Thus the results from a three-year
demonstration will not be available until well beyond 2011. Because of
the strength of the existing literature describing the effectiveness
(both health and economic) of the medical home, AAFP would urge the
committee to authorize the Centers for Medicare and Medicaid Services
(CMS) to adopt the Patient-centered Medical Home as an interim
component of physician payment while awaiting the implementation of and
results from the demonstration project.
Payment of the care management fee for the medical home would
reflect the value of physician and non-physician staff work that falls
outside of the face-to-face visit associated with patient-centered care
management, and it would pay for services associated with coordination
of care both within a given practice and between consultants, ancillary
providers, and community resources.
Patient-Centered Medical Home: A Gateway, not a ``Gatekeepter''
It is important to note that the patient-centered Medical Home
differs from the so-called "gatekeeper'' model employed in the ?80s and
?90s. The PC-MH model expands access rather than decreases it as a
capitated gatekeeper model could. The PC-MH model does not interfere
with patient choice or patient self-referral but it offers appropriate
incentives for physicians and patients to use resources more
appropriately. The Academy believes this is what patients want and need
and the mechanism that can improve quality of care and quality of life
for beneficiaries and increase cost-effectiveness for the Medicare
program.
In fact, patients and payers alike want a medical ``network
administrator'' for their employees, beneficiaries and patients. AAFP,
AAP, ACP and AOA have also conferred with major employers, like IBM, in
determining what these employers envision as an appropriate medical
home for their employees. The primary care physician organizations have
been working with IBM in Austin, Texas, to create a demonstration
project for their employees that will examine the characteristics of a
successful patient-centered medical home. And AAFP, ACP, AOA and the
National Association of Community Health Centers have joined with the
ERISA Industry Committee, the National Business Group on Health and
several major employers to form the Patient Centered Primary Care
Collaborative to advance the medical home as a way to improve the
health care system generally.
The Cost-Effectiveness of the Medical Home
We understand the very difficult budget constraints that Congress
faces as you try to determine how to improve Medicare. The
restructuring of payment that we are suggesting will include an
additional investment in the short term. But there is ample evidence
already that the potential savings are large and near-term. Community
Care of North Carolina (CCNC) is a state-wide health care delivery
program developed by Allan Dobson, MD, Assistant Secretary for the
North Carolina Department of Health and Human Services. The program
provides a primary care medical home for all the Medicaid recipients in
the state. It joins health care providers, like hospitals and nursing
homes, and necessary social service providers, like substance abuse and
mental health services, with the local physicians. The system pays the
physician practice an additional per-patient, per-month fee to
coordinate the care of the Medicaid patients, while also paying a
regional network administrator, who makes sure the necessary technical
and ancillary services (like transportation, health education
counselors and trained translators) are available within the region.
The state legislature has received a report from an independent
audit by Mercer that showed from July 1, 2003 to June 30, 2004 the
state spent $10.2 million on the CCNC program, but saved $124 million
compared to the previous fiscal year and $225 million if the same
population was served by the fee-for-service only system. The
conclusion is that for every Medicaid dollar spent on the medical home
in North Carolina, the state is saving $8. We realize that the
Congressional Budget Office is reluctant to include savings in how it
calculates the cost of a program, but a realistic view of what Medicare
patients need shows that a medical home will provide them their health
care at less cost to them and to the system. Somehow, CBO should take
that into account.
Information Technology in the Medical Office Setting
An effective system emphasizing coordinated care is predicated on
the presence of health information technology, i.e., the electronic
health record (EHR) in the physician's office. Using advances in health
information technology (HIT) also aids in reducing errors and allows
for ongoing care assessment and quality improvement in the practice
setting--two additional goals of recent IOM reports,. We have learned
from the experience of the Integrated Healthcare Association (IHA) in
California that when physicians and practices invested in EHRs and
other electronic tools to automate data reporting, they were both more
efficient and more effective, achieving improved quality results at a
more rapid pace than those that lacked advanced HIT capacity.
Family physicians are leading the transition to EHR systems in
large part due to the efforts of AAFP's Center for Health Information
Technology (CHiT). The AAFP created the CHiT in 2003 to increase the
availability and use of low-cost, standards-based information
technology among family physicians with the goal of improving the
quality and safety of medical care and increasing the efficiency of
medical practice. Since 2003, the rate of EHR adoption among AAFP
members has more than doubled, with over 30 percent of our family
physician members now utilizing these systems in their practices.
In an HHS-supported EHR Pilot Project conducted by the AAFP, we
learned that practices with a well-defined implementation plan and
analysis of workflow and processes had greater success in implementing
an EHR. CHiT used this information to develop a practice assessment
tool on its Web site, allowing physicians to assess their readiness for
EHRs.
In any discussion of increasing utilization of an EHR system, there
are a number of barriers, and cost is a top concern for family
physicians. The AAFP has worked aggressively with the vendor community
through our Partners for Patients Program to lower the prices of
appropriate information technology. The AAFP's Executive Vice President
serves on the American Health Information Community (AHIC), which is
working to increase confidence in these systems by developing
recommendations on interoperability. The AAFP sponsored the development
of the Continuity of Care Record (CCR) standard, now successfully
balloted through the American Society for Testing and Materials (ASTM).
We initiated the Physician EHR Coalition, now jointly chaired by ACP
and AAFP, to engage a broad base of medical specialties to advance EHR
adoption in small and medium size ambulatory care practices. In
preparation for greater adoption of EHR systems, every family medicine
residency will implement EHRs by the end of this year.
To facilitate accelerate care coordination, the AAFP joins the IOM
in encouraging federal funding for health care providers to purchase
HIT systems. According to the U.S. Department of Health & Human
Services, billions of dollars will be saved each year with the wide-
spread adoption of HIT systems. While the Federal Government has
already made a financial commitment to this technology, only a few
dollars trickle down to where the funding, unfortunately, is not
directed to these systems that will truly have the most impact and
where ultimately all health care is practiced--at the individual
patient level. We encourage you to include funding in the form of
grants, low interest loans or tax credits for those physicians
committed to integrating an HIT system in their practice.
Measures of quality and efficiency should include a mix of outcome,
process and structural measures. Clinical care measures must be
evidence-based. Physicians should be directly involved in determining
the measures used for assessing their performance.
Aligning Incentives
In replacing the outdated and dysfunctional SGR formula, Congress
should look to a method of determining physician reimbursement that is
sensitive to the costs of providing care, creates a stable and
predictable economic environment, and aligns the incentives to
encourage evidence-based practice and foster the delivery of services
that are known to be more effective and result in better health
outcomes for patients. Just as importantly, the reformed system should
facilitate efficient use of Medicare resources by paying for
appropriate utilization of effective services and not paying for
services that are unnecessary, redundant or known to be ineffective.
Such an approach is endorsed by the IOM in its 2001 publication
Crossing the Quality Chasm.
Another IOM report released in autumn of 2006 entitled Rewarding
Provider Performance: Aligning Incentives in Medicare states that
aligning payment incentives with quality improvement goals represents a
promising opportunity to encourage higher levels of quality and provide
better value for all Americans. The objective of aligning incentives
through pay-for-performance is to create payment incentives that will:
(1) encourage the most rapidly feasible performance improvement by all
providers; (2) support innovation and constructive change throughout
the health care system; and (3) promote better outcomes of care,
especially through coordination of care across provider settings and
time. The Academy concurs with the IOM recommendations that state:
Measures should allow for shared accountability and more
coordinated care across provider settings.
P4P programs should reward care that is patient-centered
and efficient. And they should reward providers who improve performance
as well as those who achieve high performance.
Providers should be offered (adequate) incentives to
report performance measures.
Because electronic health information technology will
increase the probability of a successful pay-for-performance program,
the Secretary should explore ways to assist providers in implementing
electronic data collection and reporting to strengthen the use of
consistent performance measures.
Aligning the incentives requires collecting and reporting data
through the use of meaningful quality measures. AAFP is supportive of
collecting and reporting quality measures and has demonstrated
leadership in the physician community in the development of such
measures. It is the Academy's belief that measures of quality and
efficiency should include a mix of outcome, process and structural
measures. Clinical care measures must be evidence-based and physicians
should be directly involved in determining the measures used for
assessing their performance.
Quality Reporting
AAFP is supportive of collecting and reporting quality measures and
has led the physician community in the development of meaningful
measures. Consistent with the philosophy of aligning incentives, the
reward for collecting and reporting data must be commensurate with the
effort and processes necessary to comply and must be sufficient to
obtain the desired response from providers. The Academy is skeptical
that the incentive of 1.5 percent of a physician's covered charges for
collecting and reporting quality measurement data will be sufficient to
cover the actual cost of operationalizing such a program. However, we
are generally and conceptually supportive of the policy and will
monitor its implementation closely.
A Framework for Pay-for-performance
The following is a proposed framework for phasing in a Medicare
pay-for-performance program for physicians that is designed to
improve the quality and safety of medical care for patients and
to increase the efficiency of medical practice.
Phase 1
All physicians would receive a positive update in 2008,
consistent with recommendations of MedPAC. Congress should
establish a floor for such updates in subsequent years.
Phase 2
Following the implementation of the Physician Quality
Reporting Initiative, Medicare would encourage structural and
system changes in practice, such as electronic health records
and registries, through a ``pay for reporting'' incentive
system such that physicians could improve their capacity to
deliver quality care. The update floor would apply to all
physicians.
Phase 3
Pay-for-reporting transitions to pay-for performance and
particular effort is made to ensure that the quality bonus is
sufficient to cover the costs of administration as well as
providing sufficient incentive to participate. Medicare
continues to encourage reporting of data on evidence-based
performance measures that have been appropriately vetted
through mechanisms such as the National Quality Forum and the
Ambulatory Care Quality Alliance. The update floor would apply
to all physicians.
Phase 4
Contingent on repeal of the SGR formula and development of a
long term solution allowing for annual payment updates linked
to inflation, Medicare would encourage continuous improvement
in the quality of care through incentive payments to physicians
for demonstrated improvements in outcomes and processes, using
evidence-based measures.
This type of phased-in approach is crucial for appropriate
implementation. While there is general agreement that initial
incentives should foster structural and system improvements in
practice, decisions about such structural measures, their reporting,
patient registries, threshold for rewards, etc., remain to be
determined.
The program must provide incentives--not punishment--to encourage
continuous quality improvement. For example, physicians are being asked
to bear the costs of acquiring, using and maintaining health
information technology in their offices, with benefits accruing across
the health care system--to patients, payers and insurance plans.
Appropriate incentives must be explicitly integrated into a Medicare
pay-for-performance program if we are to achieve the level of
infrastructure at the medical practice to support collection and
reporting of data.
Conculsion
It is time to stabilize and modernize Medicare by recognizing the
importance of, and appropriately valuing, primary care and by embracing
the patient-centered medical home model as an integral part of the
Medicare program.
Specifically, the AAFP encourages Congressional action to reform
the Medicare physician reimbursement system in the following manner:
Repeal the Sustainable Growth Rate formula at a date
certain and replace it with a stable and predictable annual update
based on changes in the costs of providing care as calculated by the
Medicare Economic Index.
Adopt the patient-centered medical home by giving
patients incentives to use this model and compensate physicians who
provide this function. The physician designated by the beneficiary as
the patient-centered medical home shall receive a per-member, per-month
stipend in addition to payment under the fee schedule for services
delivered.
Phase in value-based purchasing by starting with the
Physician Quality Reporting Initiative. Analyze compensation for
reporting and ensure that it is sufficient to cover costs associated
with the program and provide a sufficient incentive to report the
required data.
Ultimately, payment should be linked to health care
quality and efficiency and should reward the most effective patient and
physician behavior.
The Academy commends the Subcommittee for its commitment to
identify a more accurate and contemporary Medicare payment methodology
for physician services. Moreover, the AAFP is eager to work with
Congress toward the needed system changes that will improve not only
the efficiency of the program but also the effectiveness of the
services delivered to our nation's elderly.
Chairman STARK. Thank you.
Dr. Mahal.
STATEMENT OF ANMOL S. MAHAL, M.D., PRESIDENT, CALIFORNIA
MEDICAL ASSOCIATION
Dr. MAHAL. Chairman Stark, Mr. Camp, I am Anmol Mahal, the
president of the 150-year-old California Medical Association,
representing 35,000 physicians dedicated to the health of
Californians.
Thank you for this opportunity to testify on this most
important issue, the issue of having a viable health care
system for the most treasured part of our society, our elderly.
The Chairman and his staff and I have had the privilege of
engaging in discussions, as Mr. Stark is my congressman, and he
has requested me to comment on a profiling system that is used
in my community that I participate in in Northern California
that compares my practice pattern to that of my peers in my
community.
Providing for the purposes of comparative effectiveness is
a program that I participate in in my community. This is a
rather comprehensive program that has multi--or elements, and
is a multi-pronged program. Very briefly, sir, there are six
elements to the program.
There is a utilization profile that the program uses that
not only looks at professional services, but I have to stress
also importantly looks at ancillary services and pharmacy costs
and also looks at facility costs and hospital services as an
overall cost of care.
It looks at clinical profiles, mostly using HEDA's
criteria. For example, breast cancer screening, diabetic and
cholesterol screening.
It uses the participation profile criteria, which includes
regular participation in educational sessions held by the
group. It looks at prescribing, et cetera.
There is a satisfaction profile that is added on to the
profiling criteria that looks at results from a patient survey
that is very well crafted to meet some minimum thresholds.
It looks at patient risk adjustment, so that physicians are
not averse to taking care of the sickest and the most elderly
folks with the most chronic conditions.
Finally, a very important aspect of this program is a stop
loss adjustment so that a physician who desires to take care of
patients with HIV/AIDS, oncology patients, patients on dialysis
and expensive procedures like colonoscopy are all bundled in
and spread the risk in the entire group rather than the risk
being adjusted to the individual physicians.
In summary, the physicians in my community, Mr. Chairman,
I'm certain in California and indeed in the entire United
States, do what they think is right in their hearts and in
their experience and training as to what is required for their
given patients.
Physicians are constantly enhancing their education, and I
feel that education based on profiling and peer comparison
provided in a confidential way would be received well by
physicians. It would result, in my case, in my personal case,
perhaps even increased utilization in some areas where I may
not be doing appropriate studies compared to my peers, and in
other areas, more modulation of utilization where I'm out of
the bell curve when compared to my peers for similar patient
mix.
But the key, sir, is to have risk adjustment and to have
stop loss adjustment to have the total cost of care looked at.
Because a majority of the cost of care, while it's ordered by
physicians, it's really not in the physician's hands. It's on
pharmaceutical, it's on hospitals, it's on devices, and all of
that should be taken into consideration as we put a profiling
educational program together.
Done in the way that I have mentioned, we have to be
careful that we craft this program so that we do not
incentivize physicians to withhold care, but rather to do
what's right for their patients. We do not want to take the art
form of medicine, at least the way I practice medicine, Mr.
Chairman, today, I think it's as much of art as delivery of
technology and science to my patients. We need to maintain that
element. Physicians in my community will look positively at
peer data provided for educational purposes, provided in a
confidential way, and we look forward to working with you on
such a program.
Thank you.
[The prepared statement of Dr. Mahal follows:]
Statement of Anmol S. Mahal, M.D., President, California Medical
Association, Freemont, CA
Mr. Chairman and Members of the Committee, on behalf of the
California Medical Association, I want to thank you for inviting me to
testify before the Committee on the important Medicare issues facing
our nation. I hope to provide some insights about our California
experiences to help the Committee in its deliberations.
I also want to extend a special greeting to my Congressman, Mr.
Stark. Mr. Chairman, we sincerely appreciate your efforts to work with
us to design a Medicare physician payment system that will
appropriately reimburse physicians and ensure the highest quality
medical care for our Medicare patients.
I. Introduction
Mr. Chairman and Members of the Committee, California physicians
are keenly aware that Medicare is in precarious financial condition and
we are extremely concerned about the program's ability to continue
fulfilling its mission. We understand that Congress faces competing
goals for the Medicare program. The government must rein-in Medicare
spending at a time when the baby boomers will begin enrolling in the
program--thereby increasing the volume of services. But Congress must
also fix the physician payment system to ensure those same baby boomers
have access to doctors in the future.
Physicians face similar challenges on an individual level. Eighty-
three percent of Medicare patients have chronic conditions and the
numbers are growing. In ten years, physicians will spend nearly half
their time treating Medicare patients with multiple chronic conditions.
Physicians are concerned about their capacity to appropriately treat
these increasingly sick patients with diminishing resources and
reimbursement.
As California physicians, we agree we must do our part to provide
the highest quality care in the most efficient possible manner. We must
join Congress in being responsible stewards of the Medicare program,
just as we are stewards and advocates for our patients. We at the CMA
are committed to working with Congress to improve the Medicare program
by sharing our knowledge of evidence-based medicine and our experience
with programs that attempt to manage costs and care--such as the
physician peer comparison programs in California.
II. California Medical Association SGR Overhaul Plan
To that end, the California Medical Association recently unveiled a
long-term plan to overhaul the SGR system. Included in the plan are
recommendations for Congress to establish a series of demonstration
projects that would test different systems for appropriately managing
costs, incenting the efficient use of resources, and better
coordinating patient care. Ultimately, the successful programs would
replace the SGR as the volume control mechanism. We fully understand
that the Committee is searching for better tools to control the growth
in the volume of physician services, such as the physician peer
comparison programs.
The Chairman has asked me to comment on a program in which I
participate in Northern California, which compares my practice patterns
to my peers. The program is educational in nature and physician
performance on utilization, quality and patient satisfaction are
rewarded through bonus payments. Many safeguards would be necessary
before such a complex program could be considered in the Medicare fee-
for-service system.
I also should make clear at this point that the California Medical
Association has not yet taken a position regarding physician peer
comparison programs. We are currently in the process of thoroughly
evaluating the peer comparison programs operating in California. We
certainly believe that peer comparison information provided to
physicians on a confidential basis for educational purposes would be
beneficial to physicians and the Medicare program in general. However,
peer comparison programs that tie reimbursement to utilization
performance should be examined through Medicare demonstration projects
because of their complexity and potential impact on patient care.
III. A California Physician Peer Comparison Program
As a primary care physician, I participate in a physician peer
comparison program through a large Independent Practice Association
(IPA) in northern California. The IPA provides confidential comparative
information to individual doctors on how their quality, utilization,
and patient satisfaction compare to their peers. The IPA's program is
called the Primary Care Management Program.
Many California medical groups and IPAs who run sophisticated
managed care systems employ utilization profiling methods, but the vast
majority of these groups use them only for educational purposes. The
educational aspect of comparative information is vital to the success
of these programs. Such information has helped physicians better
understand their practice patterns compared to their peers and allowed
many physicians to improve their practice.
Overall, the group in which I practice employs two tools to manage
the care of its patients. The first tool is a physician peer comparison
tool that fosters self-improvement. The second tool is a financial
reward for meeting quality measures and utilizing services consistent
with one's peers. Such financial incentives have proven crucial to
maintaining access to primary care physicians in my community and in
helping physicians begin to invest in health information technology.
Compensation--Primary care physicians (PCPs) affiliated with the
group receive compensation in two distinct ways. They receive fees for
the services they provide to patients (fee-for-service payments), and
also receive a quarterly fee that rewards the effective management of
their patient population. As for the fee-for-service payments, PCPs are
paid for the services they actually provide, so there is no incentive
to underutilize, and they also receive a per member payment that is
based on their performance on specific metrics.
The quarterly fee for effective management is called the Primary
Care Management Fee (PMF), and is based on many different metrics
specific to the physician's practice. These metrics reside in one of
four profiles: The Utilization Profile, the Clinical Profile, the
Participation Profile, and the Satisfaction Profile. I will describe
each of the four.
Utilization Profile--The Utilization Profile measures the cost of
all health care services used by the group's physician members. Its
components include physician professional services, pharmacy and
facility costs. PCPs with fewer than 200 adjusted members are not
considered statistically relevant and are excluded from the
calculation.
The Pharmacy component of the Utilization Profile includes a
synopsis of the PCP's prescribing patterns and resulting PMPM costs.
The cost reported here represents 50 percent of the actual total
pharmacy costs. By contrast, facility costs are reported at the group
level due to statistical unreliability at the individual level. The
facility costs assigned to each physician represent 50 percent of the
total facility cost. Admission rates and lengths of stay are included
in the calculation. The total cost figure is the sum of professional,
pharmacy and facility costs, and the final calculation shows where the
physician's utilization costs stand relative to the panel average.
Clinical Profile--The second profile--the Clinical Profile--
measures the group's clinical initiatives. These metrics report
individual performance against that of the physician's panel, region
and system, and holds the physician to the system average. There are
currently eight clinical measures included in the profile. They are
designed to maintain a high standard of care and to improve patient
outcomes. The eight measures include: Breast Cancer Screening, Cervical
Cancer Screening, Diabetes HbA1c, Use of Appropriate Asthma Medication,
Childhood Immunizations, Comvax and Pediatric Use, Cholesterol
Screening, and Chlamydia Screening.
Participation Profile--With respect to the Participation Profile,
physicians earn points for participating in the group's activities.
Satisfaction Profile--The fourth and final profile is the
Satisfaction Profile. As its name suggests, the Satisfaction Profile is
based on a Patient Assessment Survey in which physicians are rated by
their patients. Patients are randomly selected to participate in the
survey. In order for a physician's scores to be counted, at least 20
surveys must be returned. The most heavily weighted question asks the
patient if he or she would recommend the doctor to family or friends.
Patient Calculations--Because the costs associated with treating
patients in a given practice are calculated on a per-member basis, it
is essential to acknowledge that not all members are the same.
Accordingly, the program makes adjustments based upon the demographics
of the physician's patient population, including an adjustment based
upon the number of Medicare patients the physician is treating. On this
last point I think it is important to note that Medicare patients are
weighted as four commercial private patients. Adjustments for age and
sex are computed based on system wide data.
Stop Loss Adjustment--There are some costs that are shared among an
entire region rather than assigning them at the physician level.
Maternity, HIV/AIDS, wellness (i.e., screenings and immunizations)
dialysis, oncology, colonoscopy, and ophthalmology costs are allocated
to all PCPs equally. This Stop Loss Adjustment was created to prevent a
few very costly patients from inappropriately overstating the total
cost in a PCP's profile.
IV. Recommendations for Physician Peer Comparison Programs
Based on California physician experiences, I would like to offer
the Committee a few recommendations to consider when implementing a
Physician Peer Comparison Program.
I would also like to differentiate between a physician peer
comparison program that provides confidential, educational feedback to
physicians as a tool for self-improvement and a comparison program that
ties reimbursement to efficiency. CMA physicians are interested in
self-improvement and we believe that the educational aspects of peer
comparison can be extremely helpful to physicians and effective in
improving practice patterns. We would support such programs.
However, as you can see from the background we provided to the
Committee, comparison programs are extremely complex if implemented
appropriately. Therefore, we would prefer to see any comparison
programs that are tied to performance payments to be examined in a
Demonstration Project environment before being adopted by Medicare.
The CMA recommendations for Peer Comparison Programs are set forth
below:
1. Overall, Physician Peer Comparison Programs are not a panacea
for Medicare's financial problems. However, they could be an effective
tool for identifying outliers and encouraging the efficient use of
resources. These programs can also produce accountability at the
individual physician level, which has been a source of criticism for
the SGR. Some California programs have produced a savings and allowed
physicians to further invest in meeting quality measures and adopting
health information technology.
The Medicare program should not focus myopically on whether
physicians are doing too much. Instead, it should assess whether they
are doing enough of the right things, such as providing evidence-based
care and preventive care. If physicians are providing preventive care,
hospitalizations will be reduced, patient outcomes will improve, and
Medicare will gain significant savings.
2. Physician education must be the focus of the program.
Comparative information is a strong tool to foster self-improvement.
California peer comparison programs have been effective in educating
physicians and helping them to improve.
3. Programs that provide positive incentives are the most
effective. Medicare's goal should be to encourage all physicians to
participate. In many communities, Medicare cannot afford to lose
primary care physicians.
4. Paramount to a successful program is reliable data that can be
verified.
The data must also be statistically valid based on the number
of patients per physicians.
5. The program must couple utilization and clinical/quality
criteria.
An extremely important and positive component of the
California program is that it combines utilization criteria with
clinical/quality measures. Physicians should not be inappropriately
incented to withhold preventive care merely because it would drive up
their utilization scores. Physicians providing more preventive services
will have higher utilization, but their overall hospital costs will be
less. This is a major point on which we disagree with the GAO.
Utilization and efficiency cannot be viewed independent of clinical
quality. It is important to note that in California, preventive quality
measures are the general focus of all physician profiling programs and
their associated bonus payments.
6. The program must examine the total cost of care provided to a
patient--facility costs, pharmacy costs and physician services--for
both primary care and specialty care.
An important component of the California program in which I
participate is that it calculates the total cost of care for each
patient. Lower physician utilization is not necessarily better for the
patient and--ultimately--may not save money. For instance, patients
with asthma should see a doctor often to manage their disease. As
physician office visit utilization goes up, the total cost of care goes
down by reducing unnecessary ER visits and hospitalizations.
On the other hand, many physicians have criticized the
profiling program in which I participate because it is difficult to
hold a primary care physician responsible for the services provided by
a specialist to whom they referred a patient, or a hospitalist caring
for a patient upon admission to the hospital or during home health
visits. Primary care physicians cannot control patient care beyond
their practice and, therefore, it is not appropriate to hold them
accountable for such utilization.
The utilization to which a physician is held accountable
requires precise and complex evaluation tools. Nonetheless, the
educational aspects of such information is extremely beneficial.
7. All data must be risk-adjusted for age, sex and health status.
However, it is important to note that risk adjustment methods
are still inadequate to fully capture differences in patient health
status. Patient compliance issues must also be considered. Most
sophisticated managed care groups in California only do risk adjustment
for age and sex. It is important to note that my IPA attributes four
commercial patients to one Medicare patient.
8. There must be a ``stop-loss'' type of adjustment for HIV/AIDS,
oncology, maternity, screenings and immunizations, dialysis,
colonoscopy so the costs are spread out across the entire system. It
would be truly perverse to penalize individual physicians for treating
seriously ill patients.
9. Patient Satisfaction Surveys are an important component of any
program.
10. Specialty Referral Issues Must Be Carefully Considered
The Specialty Referral tracking system in my group is
controversial. The group tracks referrals to specialists and accounts
for those referrals in a physician's overall score. Some specialty
referrals are more ``costly'' to the primary care physician than
others. In some instances, referrals to specialists are appropriate and
result in lower costs. In other instances, they may be unnecessary. But
some physicians and patients have questioned whether the specialty
referral incentive system has inappropriately denied patient access to
specialists. One positive aspect of the program is that primary care
physicians receive credit for referring patients to specialists to
receive treatments included in the set of clinical/quality measures.
This sort of primary care gatekeeper approach would be extremely
difficult to replicate in the Medicare Fee-for-Service program, where
patients can directly access specialists.
11. Physician-Designed and Directed
Programs that involve clinical utilization and quality
information must be designed and directed by physicians to ensure that
the highest quality care is provided.
12. Demonstration Programs To Protect Patients
For all of the reasons I have discussed, CMA would support
programs that soley focus on confidential education. However, programs
that financially reward certain practice patterns must include
safeguards against incentives that would reward physicians for
withholding care to the detriment of their patients. Therefore,
efficiency programs tied to payment should be tried on a Demonstration
basis first.
V. Geographic Variation
One further note, the CMA recommends that the Committee not only
examine practice variations between individual physicians, but also
variations in care between geographic regions. There are dramatic and
costly variations in care across the country. We need to better
understand why this occurs through careful demonstration programs, and
work together to reduce inappropriate differences.
VI. Conclusion
Physician Peer Comparison Programs can work if the emphasis is on
confidential physician education and self improvement. Such programs
must couple both utilization and clinical/quality criteria. They must
also examine the total costs of providing care to patients--physician,
hospital and pharmacy--and should be risk-adjusted.
While the CMA has not officially endorsed peer comparison programs
that tie payment to efficiency, we support the educational aspects of
such programs. If Congress is interested in going one step further by
adopting pay-for-performance based on utilization, we would recommend
demonstration programs. Because of the sophisticated quality and
clinical issues, it is essential that physicians are involved in the
design and implementation. Many safeguards must be included to protect
appropriate patient care.
Mr. Chairman and Members of the Committee, I hope this California
information will prove helpful to the Committee. On behalf of the
California Medical Association, I thank you for your time. We look
forward to working with you. Thank you.
Chairman STARK. Thank you very much.
Dr. Mayer.
STATEMENT OF JOHN E. MAYER, JR., M.D., PRESIDENT, SOCIETY OF
THORACIC SURGEONS
Dr. MAYER. Chairman. Stark, Mr. Camp, thank you for
inviting me to testify. My name is John Mayer. I'm a heart
surgeon at the Children's Hospital in Boston and Professor of
Surgery at Harvard Medical School, and the current president of
The Society of Thoracic Surgeons.
I wish to begin with the fundamental concept that if we are
to succeed in addressing our health care cost and quality
problems, physicians must be engaged not just with economic
incentives, but for the first time, as a profession. From this
perspective, I want to emphasize four main points:
First, measurement and feedback of performance to
physicians is the most effective way of improving physician
performance;
Second. feedback and profiling are really two very
different concepts, with differing goals and effects;
Third, bundling of payments is a critical step toward
aligning incentives for better quality and more appropriate
care; and
Fourth, if we measure both patient outcomes and the cost of
care in the right way, we can rapidly improve quality while
simultaneously reducing cost.
We base these recommendations on our specialty's experience
with the use of outcomes data to drive improvements in quality.
We've been willing to invest our volunteer time and resources
in these efforts as part of our professional responsibility to
our patients. However, you should recognize that physicians are
being pulled in opposite directions by their professional
responsibilities on the one hand, and the perverse incentives
in the current reimbursement system on the other. You have
already heard how Medicare still pays more if we perform more
services but does little to support quality improvement.
The two mechanisms you're investigating today, information
feedback to physicians and bundling payments to align
incentives with patient needs, can help resolve these
conflicts. Collection and analysis of data on the quality of
care, patient outcomes, is what should drive the health care
system.
There are many examples of how this works from our cardiac
surgical experience, including programs in the veterans
hospitals in Northern New England, Virginia, as well as
Michigan, and at the national level using the STS database. In
each case, collection of outcomes data, risk adjustment and
feedback to the local level has resulted in lower mortality
rates, less variation and fewer complications. The American
College of Cardiology has developed a heart cath outcomes
registry, and we are working with them to link our databases to
measure the quality and long-term effectiveness of
interventions in patients with coronary disease. We think this
is the way of the future.
However, there is a critical distinction between feedback
and profiling. Feedback is the use of data by the profession to
improve physician performance. Profiling uses data to steer
patients, assuming that economic carrots and sticks can best
change physician behavior. We believe that professional
feedback, not profiling, will be most likely to improve care on
a systemwide basis.
Bundling of payments is a critical step toward aligning
incentives for better quality and more appropriate care.
Surgeons have always been paid this way, which includes both
the surgical procedure and the post-operative care. As noted
earlier, major procedures accounted for only a very small
percentage of Medicare physician spending growth.
I agree with Dr. Berenson that bundled payments reward more
effective care, not just more care. Any system that pays a la
carte for each service or test only encourages more to be
performed. A single payment for the care of a patient's
condition for a defined period of time would free physicians to
practice their profession in the most efficient and effective
way. It would provide incentives to keep patients more involved
in their own care; would allow physicians to use e-mail,
telephone or home monitoring, physician extenders or whatever
other methods resulted in better outcomes. In high-cost
conditions, this approach should be the norm.
You have heard a little bit about the concerns about under-
utilization. We think that if you couple bundled payments with
outcome measurement, we can help prevent under-utilization and
encourage efficiency and innovation.
Finally, combining information on quality and cost can save
money. Our Virginia cardiac surgeons merged their STS clinical
outcomes data with hospital cost data, worked together to
identify and adopt best practices and reduced complications
that save literally millions of dollars in Virginia every year.
We are currently trying to combine our outcomes and quality
data with cost data from private health insurers and with
Medicare, and if we can do this, we'll have a more powerful
tool to improve quality and reduce costs for treating heart
disease, which is still the number one killer in the United
States.
In conclusion, I wish to recommend four steps that Congress
could take to allow and encourage the medical profession to
fulfill our responsibilities to patients and our responsibility
to self-regulate:
First, recognize that the medical profession must be an
integral part of any solution;
Second, provide Medicare support for the development of
specialty or condition-based clinical electronic databases
which are focused on patient outcomes;
Third, provide bonuses for measuring and analyzing patient
outcomes to improve quality; and
Fourth, realign the reimbursement system to focus on
integrated care based on specific patient needs by bundling
payment for treatment of the conditions.
If these options are implemented carefully, they could be a
major step toward improving quality and reducing costs in
Medicare, and in health care nationwide.
Thank you for the opportunity to share my views with you.
[The prepared statement of Dr. Mayer follows:]
Statement of John E. Mayer, Jr., M.D President, Society of Thoracic
Surgeons
Chairman Stark, Ranking Member Camp, members of the Subcommittee,
thank you for inviting me to testify before you today regarding methods
to improve both quality and efficiency among physicians treating
Medicare beneficiaries. I am a heart surgeon at Children's Hospital in
Boston and Professor of Surgery at Harvard Medical School, and I
currently serve as the President of the Society of Thoracic Surgeons.
I'd like to make four main points for you here today which have a
unifying theme of engaging medicine as a profession in addressing our
healthcare cost and quality problems:
Measurement and Feedback of performance to physicians is the
most effective way of improving physician performance, and we
have many examples. Feedback and profiling are two very
different concepts, with differing goals which must be
understood to achieve desired results. Bundling of payments is
a critical step toward aligning incentives for better quality
and more appropriate care. The ultimate goal is to measure both
patient outcomes and cost of care, which will rapidly improve
quality while simultaneously reducing cost.
Feedback as the most effective way to change how physicians make
decisions
Cardiothoracic surgeons have an extensive history and culture of
focusing on and improving the clinical outcomes of our patients, and
based on our 3 million patient cardiac surgical database, we believe
that we can legitimately claim to have prolonged millions of lives. We
have done this because we believe that this is part of our professional
responsibility without resorting to profiling, public reporting, or
monetary incentives. We also have data indicating that improvements in
clinical outcomes, such as reducing complications, result in cost
reductions as well. However, as I will outline for you in a moment,
physicians are now being pulled in opposite directions by our
professional responsibilities to our patients and to society on the one
hand and by the perverse incentives in the current reimbursement system
in the other. We believe that the two main mechanisms you are
investigating today--information feedback to physicians and bundling to
align payment incentives with patient need, can help to address these
conflicts. These two changes, if implemented correctly and executed
carefully, can realign the incentives to enlist the medical profession
in a rapid and continuous quality improvement cycle that can drive down
costs while treating patients better. We believe our experience can
serve as a guide for the Medicare program and physicians to get there.
To date, physician payment in Medicare has been set based on budget
targets. Whether it is the ``Sustainable'' Growth Rate (SGR), or the
Volume Performance Standards (VPS) before it, budget targets can look
good to CBO or on a balance sheet. But budgetary targets don't help
patient care. What's worse, the looming SGR-mandated payment reductions
do not affect individual physician decision-making. And perhaps most
tragic, budget driven reductions put off the more important work of
replacing poor care with high quality care, avoiding unnecessary
treatments, and preventing expensive complications.
What does help patients is clinical expertise, technical skill, and
physician responsibility--and these are the province of the Profession
of Medicine. The incentives in the Medicare program today are perverse,
and are contrary to our professional responsibility as doctors.
Medicare currently pays more if you perform more services, order more
images, schedule more office visits. Hospitals are paid more if
patients have more complications, and more ER visits. The primary care
physician who does the best at keeping his or her patients healthy
struggles because prevention is not rewarded at all. So in a sense, the
Medicare reimbursement system encourages worse outcomes for patients.
Our professional responsibility to society as physicians dictates
otherwise.
We believe the changes in policy you are examining have been
successful because they align with one very powerful motivator for all
physicians: their responsibility as a profession to provide societal
benefit in treating patients and responsibly shepherding scarce
resources. I strongly believe changes in policy must be made to re-
engage medicine as a profession in helping to solve some of the major
quality and financial issues facing healthcare in the U.S., in general,
and the Medicare program, in particular.
You may be thinking that we are simply saying ``Trust us, leave it
to the professional responsibility of physicians and all will be
well,'' but what we are really suggesting is a ``trust, but verify''
scenario. Collection of data on quality of care--patient outcomes--is
what should drive the healthcare system. We believe that a system of
bundled payments coupled to feedback of outcomes information to
physicians will help to do so. So trust physicians, but we also need to
collect the data.
In surgery, we have historically focused primarily on quality
improvement because our professional responsibility is foremost to
improve patient care. However, we now recognize that this focus on
quality can also reduce costs and that our professional responsibility
to society requires that we wisely use societal resources.
The impact of feedback to physicians--of both the quality of their
outcomes and their resource use--will be helpful. It has been said
that, ``You will improve that which you measure.'' We have found this
to be true. If we measure process compliance, process compliance
improves. If we measure patient results--or outcomes--that is what will
improve. We should avoid measuring only cost, for the cheapest care is
no care, and the least costly outcome may be death. Though feedback of
data on resource utilization is likely to improve those utilization
rates, we must be very careful in doing so. We believe that cost is
most appropriately measured only in conjunction with outcomes so that
we can provide care that is of value to the patient.
The STS experience with 18 years of quality measurement in cardiac
surgery shows that feedback to physicians on both quality and
efficiency may well be the most effective means of changing physician
behavior to improve patient care and increase efficiency.
Perhaps the earliest example of feedback improving quality and
reducing variation was the Northern New England Cardiovascular Study
Group project in the late 1980's--using variation in outcomes as a tool
for improvement, not as a means to profile. The surgeons in those
states met to discuss results and implement the best practices. The
mortality rate in cardiac surgery became the lowest in the country in
those states, and variation among institutions disappeared. This is the
goal of feedback.
In the VA system, cardiothoracic surgeons have been using an
outcomes measurement/feedback system and have evaluated the observed-
to-expected mortality rates in open heart surgery for two decades.
While patients have been arriving older and much more ill, the results
have steadily improved. Thus the ratio of the observed mortality rate
to the expected mortality rate has declined continuously. The American
College of Surgeons has adopted the VA methodology for their National
Surgical Quality Improvement Program (NSQIP). These exemplify the type
of Continuous Quality Improvement we could expect in Medicare if all of
medicine could measure results and feed the data back to physicians.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
It was an STS leader who performed the landmark clinical trial
based upon the STS database with a grant from AHRQ. This was the
largest Continuous Quality Improvement (CQI) trial in medicine where
Dr. Bruce Ferguson was able to document that intervention in the form
of education and formal CQI led to changes in physician practice that
produced rapid improvements in care. Within 18 months of receiving
feedback and education on two practices that improved outcomes in heart
surgery patients, we saw a dramatic improvement.
The recently completed second part of this study focused on how
surgeons can prevent further heart disease following bypass surgery
(CABG). Basically answering ``Can the STS influence our surgeons to use
the "teachable moment" of hospitalization to get patients on correct
medications following CABG?'' And once again, there were no incentives
other than the knowledge that it is probably the right thing to do.
This was a huge trial with 234 Control Sites, and 224 Treatment
sites across the country. They measured the rates at which four
separate medications were prescribed at discharge after coronary
surgery. Every treatment site showed a significant increase in the rate
these medicines were prescribed vs control groups in 18 months. They
even created a patient web site created with "steerage" of patients at
discharge to the Web site for additional information. This is an
example of physicians taking responsibility for managing patient care
beyond the treatment period.
This national RCT demonstrated that a professional society CQI
program could speed adoption of these prevention therapies. Patients as
well as physicians were successfully engaged in the CQI process and the
results will improve the long-term patient outcomes following
contemporary CABG.
Feedback and Profiling are two distinct concepts and will achieve
vastly different results
This distinction is one that will be critical for all to
understand. Feedback is the use of data to improve physician behavior,
while profiling is use of data to discriminate among physicians and
steer patients--without affecting the behavior of the provider.
Physicians who may have had patients steered away from them by managed
care, but have not improved their performance through feedback will
continue to treat patients in the same way, and that benefits neither
patients nor Medicare. The quality improvement driven by data
collection and feedback promotes system-wide quality improvement and is
not focused at the care of a single patient.
To take it one step further, and really achieve costs savings, we
must bring costs of care into the equation with quality, and determine
the ``value'' of care provided. In Virginia, cardiothoracic surgeons
matched their STS quality data with Medicare's cost data, and
calculated the value that each hospital and practice was delivering.
But rather than using this information for profiling and competition,
they shared the data, shared the methods for improving complication
rates, and saved millions of dollars each year by producing better
outcomes for patients statewide. This is the best way to save money in
Medicare--through higher quality results. The most recent results here
show that doctors in Virginia reduced the incidence of sternal wound
infections by 67 percent below the historically expected rates. Each
prevented infection of this type saves $73,000.00. Rates of heart
arrhythmia (each occurrence costing over $3,000) have been reduced
statewide by 5 percent. Together these two improvements save millions
of dollars each year, not to mention saving hundreds of lives.
In Michigan, all cardiothoracic surgeons in the state and all 31
hospitals (that perform cardiac surgery) voluntarily submit data to the
STS database for analysis. Blue Cross/Blue Shield of Michigan has
agreed to fund this data collection for not only their covered
patients, but for all Medicare, Medicaid, and uninsured patients. The
data are audited and fed back to the surgeons. The surgeons have shared
results, and discuss with the top performers how they achieved their
results. This Michigan QI project has reduced variation between sites
in the most critical outcomes including mortality, atrial fibrillation,
and kidney failure. Participants know that it has improved quality of
care for the patients, and are confident that it will also save money.
Moreover, focus on outcomes accelerates improvement well beyond what
you would achieve from rewarding static process measures. In fact, the
focus on measurement and improvement in outcomes has caused them to
seek out and find new innovative processes worldwide that improve
quality and reduce complications. By focusing on outcomes, they found
discrete new methods in use in Australia that they are now implementing
in Michigan. If they had focused solely on compliance with static
process measures, these innovations may not have been sought nor found.
STS believes that similar approaches in other specialties will work
in most areas of medicine and will help improve the quality and
appropriateness of care and thereby reduce costs. STS is now teaming up
with the American College of Cardiology (ACC) who have built their own
database of 5 million patients undergoing heart catheterization. By
doing so, we will measure the quality of care in patients with
cardiovascular disease over the patient's entire history of the
disease. We are beginning to work with health plans and payers,
including United, Wellpoint, Blue Cross, and Aetna to combine the
robust STS-ACC quality data with the plans' cost data including
treatments, drug costs, and hospital costs. These efforts are not for
the primary purpose of profiling, and steering patients, but to
actually improve the care provided while reducing costs. We are asking
Medicare to work with us to combine Medicare's claims data with our
clinical data. If we can do this, we will have the total picture of
what quality delivered at what cost in the treatment of heart disease--
the number one killer of Americans, and by far the major cost center
for Medicare.
All physicians believe they are giving the highest quality, most
efficient care--until they are shown otherwise. The critical issues are
high quality clinical data, a statistically valid method for risk-
adjustment, and feedback of data to the local institution or practice
level. We are all trained in science, and data doesn't just talk, it
speaks very loudly. Once professionals know the truth, behavior shifts
easily.
Bundling of payment is a critical step toward aligning incentives for
better quality and more appropriate care.
The second focus of this hearing is on how bundled payments in
Medicare might realign incentives from rewarding ``more care'' to
rewarding ``more effective care''. To align payment with quality and
efficiency, care delivery must be focused on patient need. Which is to
say, payment should be organized around the disease or condition of the
patient.
In my field of pediatric heart surgery, interdisciplinary teams of
specialists come together for the benefit of children with congenital
heart disease. This needs to be the norm in medicine, particularly in
the high intensity, high risk areas of medical care.
Care delivery teams should be organized around major conditions, as
well as around wellness and prevention. In the future, I believe we
will have teams of providers who are expert in caring for specific
conditions, as well as experts in keeping patients healthy. The
question is, when will that future be realized?
Payment for treatment of Medicare beneficiaries ultimately should
be made on the basis of a period or episode for treating each
condition. Most in medicine are far from that point today, but there
are areas of Medicare where it is working well to control spending
growth and encourage only the most appropriate care. In cardiothoracic
surgery, as well as nearly all major surgical procedures under
Medicare, physicians are paid one fixed fee (in a bundle) for the care
they provide. If I perform open heart surgery for a Medicare
beneficiary, Medicare pays me one fee for the procedure, patient
visits, intensive care, and recovery care for 90 days regardless of
what additional needs arise. If the patient requires me to spend more
time with them, if I need to speak with the family and meet with the
patient, or if the procedure requires more time in the operating room
or more time in the intensive care unit, and there are other costs
involved in the treatment of that specified condition, so be it.
Medicare only pays one fixed fee. This may well be the reason why, in
2003, office visits in Medicare accounted for 29 percent of increased
physician spending, minor procedures that are not paid in a bundle
accounted for 26 percent of growth, and imaging (also not paid in a
bundle) accounted for 18 percent of spending growth. Major procedures,
frequently paid under bundled (or global) payments, were the smallest
contributor to growth, accounting for only 3 percent of Medicare
physician spending growth.
A bundled payment for treatment of many medical conditions under
Medicare would shift the incentives from the current system that pays
``a la carte'' for each service or test, thus encouraging ever more to
be performed; to an incentive to keep the patient healthy while
performing only the most appropriate and helpful tests or procedures.
Medicare should seriously consider a bundled payment model for the care
of beneficiaries with the most costly diseases--especially chronic
conditions.
The current incentive under a la carte Medicare fee for service
payment urges professionals to perform as many services on each patient
as possible, when instead, we should have a system that enables
professionals to regulate themselves based upon what is most effective
and most appropriate for the patient.
Exercise caution however, as a bundled payment without a measure of
patient outcomes (or results), could reward underutilization. The
coupling of outcome measures with bundled payment would align
incentives, prevent underutilization, and encourage efficiency and
innovation.
Conclusion
If we are able to successfully implement a system of measurement of
results, outcome data feedback loops to physicians, and aligned
incentives through bundled payment, we will have made major strides
toward a system that will improve care continuously, and drive dramatic
costs reductions.
So, how can such a system be operationalized? What can the Congress
do now to allow and encourage the medical profession to help solve the
current healthcare problems? We recommend four steps:
1. Recognize that the medical profession must be an integral part
of any solution.
2. Provide Medicare support for the development of specialty or
condition-based electronic clinical databases focused on patient
outcomes, building on the efforts of groups such as the STS, the ACS,
and the ACC.
3. Provide bonuses for the very difficult work of measuring the
actual patient outcomes. This will become a critical check against
underprovision of services in a bundled payment environment.
4. Realign the reimbursement system to focus on integrated care
based on specific patient needs by bundling payment for treatment of
the condition.
The options you are exploring today are important pieces of
realigning incentives in Medicare. If they are implemented carefully,
they could be a major step toward improving quality for patients while
reducing costs in not only Medicare, but in our health care system
nationwide.
Thank you for the opportunity to share my views and experience with
you today.
Chairman STARK. I want to thank you. We have about 15
minutes till our rent expires on the room at one o'clock. I've
talked with Mr. Camp, and if we are not able to let you expand
in the time remaining, we might meet informally with any of you
who have some time who aren't starving to death to talk a
little more.
But I wanted to just cover a couple of points here. Dr.
Berenson, you point out that 80 percent of what we spend in
Medicare is on chronically ill, and by that I assume you mean
they've got a couple of diseases and they are much sicker than
average.
To the extent that, as Dr. Mayer said, you can quantify
some research for cost, we have a problem in that if there's
evidence--we have a problem getting the Congressional Budget
Office often to score savings for us, prospective savings, and
particularly in new programs.
To the extent that you can help us, any of you, in
providing empirical data that would help us convince the
Congressional Budget Office where we talk about plans that
save, that would be helpful to what we have to do in this pay-
as-you-go problem in planning reimbursement for physicians.
But another comment is that it seems to me, and for those
of you who are primary care docs, a primary care doc gets paid
for basically face-to-face encounters. It would seem to me that
at some point it's just simpler for the primary care doc to
refer me off to a bunch of specialists than get involved with
having to do research and get back to me and get me back again
for another $65 encounter when you've got a waiting room full
of people who've got flu and my incipient heart attacks. We're
just not set up to reimburse the family care physicians.
I was importuned recently by a group that shall remain
nameless who said they've got a business that will take care of
managing care, or individual care, disease management. They are
in an ancillary business. They said that the real reason they
wanted to be identified as somebody providing disease
management is that their stock would go from 10 times earnings
to 20 times earnings by the New York analyst because they find
that disease management is far sexier than providing home
health care, which I think was their underlying business.
I would be leery of sort of putting this idea of bundling
or management or the medical home out into the marketplace with
people with less than the training that you gentlemen have had.
But--and I get to a question--on the other hand, I wonder how
many of you, particularly those of you in primary care, have
the training in management programs and information technology,
kind of business management, if you will.
It isn't necessarily--I mean, once you've determined that
you want to check my weight and am I taking my Zocor and am I
exercising, then the question becomes more like bill
collectors. Do you call me at home during dinnertime to make
sure, just before I'm about to have that second dessert? Or do
you--once a month, do you check to make sure I've filled by
Zocor prescription? Also it seemed to me to be unique to
medical schools, that's the question, is do they train you in
medical schools today, those of you who would go into family
practice or internal medicine, to manage through the use of
nurses and other practitioners, are you guys ready to do this?
Dr. KELLERMAN. Well, I think that's part of the medical
home concept. For example, with our medical school, we have a
rotation in ambulatory care geriatrics to try to teach some of
those principles. But I think you're making a good point that
right now we're paid fee-for-service to see somebody face-to-
face, and the idea of the medical home is to look at
information and better manage the patient.
Let me give you an example of something that we could do
with health information technology. If I have an electronic
health record in my office, some people think, well, that's a
paperless office. The real value is a registry where I can see
who my hundred patients are with diabetes. I've got these fifty
over here that are under good control. I don't need to worry
about them as much. But what about these twenty-five over here
that under poor control, and maybe I do want to call them at
lunchtime and see if they're having the extra dessert? Or work
with my team, which could be my nurses, potentially a social
worker with community support organizations. So that's the
thing that we need to get to with the medical home. Right now
we don't have a reimbursement system that incentivizes me to do
that.
Chairman STARK. Bob.
Dr. BERENSON. You've asked a very good question. Dr.
Wagner, who I referred to, wrote one of the best articles I've
ever read about 10 years ago in Millbank why primary care
physicians don't do these activities now, and describes things
like the tyranny of the urgent, when you've got a waiting room
full of people who are sick, dealing with an elderly person
with chronic problems, none of which seem to be urgent today,
is pushed to the side. He does refer to the problems in medical
education which focuses on solving problems rather than
managing problems. So, there is an education element here to
physicians to want to take this on. So, that is a challenge.
The other challenge I guess I would make is if a typical
small practice, I was in a practice at the time of four
internists. We had maybe 20 or 25 percent of our patients were
Medicare patients, and let's say we picked 10 or 15 percent of
those patients were in this category of needing chronic care
management, you're now down to 2 or 3 percent of a patient
population for whom this special care management would be
needed, and are doctors going to redesign how they patient for
that subpopulation? Which is why I'm persuaded we need to maybe
consider a new payment model for that Medicare and private
payers do for medical homes, that don't just focus on the small
percentage of patients but large percentage of dollars
represented by the Medicare population.
I actually think in this area if we had new payment models,
you could--this isn't rocket science for physicians. They
understand if they were in an environment that paid for these
activities, the role of teams, I think primary care physicians
are pretty accustomed to working in teams if that becomes the
norm. So I think while there would be an education process,
it's something that has to be taken on.
Chairman STARK. Are we just in effect trying to make each
of you as primary care docs a little bit of a staff model
managed care plan? In other words, are you going to be a one
doc or a small group managed care plan with the same kinds of
resources let's say in our are, Dr. Mahal, that Kaiser has with
hundreds of thousands of people in our county, they had teams
of people to call and get people back into see whomever they
should see. But for a small office to do that takes, I would
think, some kind of a----
Dr. BERENSON. Let me--could I take the first shot at that
one?
Chairman STARK. Yeah.
Dr. BERENSON. I think it would be desirable if more
physicians did go into multi-specialty group practices, and I
think it's reasonable to try to figure out a tilt in payment
policy to encourage that. But most physicians won't be in those
practices. So, one of the interesting models in the physician
group practice demonstration that Medicare is--CMS is
sponsoring right now in it's either Middlesex or Middletown,
Connecticut. I keep for getting the name. The physicians are in
ones and twos practices, but the care coordination is done in
the local level by what used to be a physician hospital
organization that was formed for managed care contracting. It
is now the entity that provides the nurse support, the computer
support, a lot of the activities. Case finding is in the
hospital. There's a referral. In some cases, the nurse goes
with the patient to the doctor's office.
So, the infrastructure is not in the doctor's office. It's
a different model. But it's also not with some third-party
disease management company two states over. It is community-
based. I actually think that is a model that has some potential
for what's--for small practices that really don't have the
scale to take this on themselves.
Dr. MAHAL. Congressman, I'm a solo practitioner, and I have
been coordinating the care of my patients for the 30 years that
I've been in practice in our community in Freemont. It is
possible to coordinate care. It is a question of the priorities
that we set for ourselves. I totally agree with my two
colleagues who have spoken earlier that advancing information
technology for which a practicing doctor needs assistance in
would advance the care coordination.
I think a vast majority of care should be coordinated
through a primary care physician. There are some exceptions to
that. As a gastroenterologist as well, I feel that I do a lot
better at coordinating the care of the patient with active
ulcerative colitis. For example, I have developed intuitions
over the years by doing so much work with these patients that I
catch their problems, if you may, with that sixth sense, the
art form that I referred to earlier, Congressman, to keep them
out of the hospital. I can really take care of my ulcerative
colitis patients, seeing them very frequently, their emotional
needs, their medical needs, their social needs, and reduce the
hospitalization.
Another example would be a patient who is going through an
oncological treatment. They're going through a six to 8 month
chemotherapy period. Their best medical home, their best family
care source at that time, is the oncologist that they are
seeing, not me, who referred them to the oncologist.
So, there are several permutations of this process. Kaiser
does a wonderful job of coordinating care, but from time to
time, I see Kaiser patients who come over to get a second
opinion because they are not getting what they think. So, you
know, Americans will have their special needs, that--some of
them are medical, some of them are emotional. But I think a
multi-pronged approach to finding a mental home for patients is
a good idea.
Dr. KELLERMAN. I just wanted to mention that what you're
talking about also applies in the rural areas where resources
are somewhat limited, but--and we have a lot of elderly
patients in rural areas, but with the physician working with
the hospital, with the home health agency, and, again, working
as a team, we can better provide that than the current system.
Chairman STARK. With modern technology, you can really scan
images 100 miles away over the Internet. But I want to let Mr.
Camp have a chance. I want to talk to Mayer about what the
thoracic surgeons are doing, but Dave?
Mr. CAMP. Thank you, Mr. Chairman. Thank you all for your
testimony. Dr. Mayer, there was a bundled payment demonstration
in the early 'nineties, and can you tell me the reaction of
thoracic surgeons to that demonstration?
Dr. MAYER. Well, there were obviously a number of centers
that did apply and did find some advantages of being involved
in that sort of thing, in that sort of program. There were the
concerns that if you got better that you might actually be
penalized for it because the reimbursement came down. I think
if there was any complaint about the program it was probably
that.I think all of us would like to get a reward on
expenditure of intellectual capital, and I think in most of
those situations, those were surgeon-led efforts, with the help
of the hospital administration and the nursing, et cetera.
So, I think it was a reasonable notion to do that. We've
recently proposed to do something similar in Virginia, again.
It's the same group that I mentioned earlier where they
actually looked at and they were proposing what was termed
quality sharing, so that if the surgeons and everyone else
involved in the care of post-coronary bypass patients could
reduce complications and acquire savings for the institution,
some of that ought to be shared with the surgeons who were
leading that effort. That actually got hung up in CMS with
worries about problems with Stark violations and other issues
and that initiative has died.
Mr. CAMP. The Society actually has worked hard to encourage
surgeons to improve quality and health outcomes, but the
Society also has its national adult cardiac surgery database.
Are surgeons participating in that?
Dr. MAYER. Yes. There are over 800 cardiac surgical units
in the country that are participating. We estimate that that's
over 75 percent of the cardiac surgical programs in the
country. I think this has been embraced not only--primarily as
a quality improvement tool. There is nothing more powerful than
having your data fed back to you and see how you compare with
everyone else.
We're a pretty competitive lot, and we certainly work
pretty hard when we're not doing as well as our peers.
Mr. CAMP. Right. Thank you. I just have one last question.
I appreciate all of your testimony. Dr. Berenson, obviously
we're here to try to make sure that services are appropriately
compensated. Several physician services are overvalued, but
they're only reevaluated on an every 5-year period, and rarely
are they decreased in price. So, what can we do to make sure
that services are appropriately valued and reimbursed?
Dr. BERENSON. Yeah. Well, first go more than every 5 years.
But this current process still basically requires specialty
societies to survey members to estimate the time, and then the
associated sort of difficulty associated with time, to
determine the relative values. I think we've a major stake at
this point in getting objective data. There's I think plenty of
evidence that many of those prime estimates are overestimates.
I was talking to Dr. Mayer earlier. The STS actually came
forward in that process with actual objective data and
recommended some devaluation of services.
I think either the AMA's ROC or the CMS should have the
ability to actually for the top 50 or 100 procedures, that's
where I would start, to actually get objective data, to get
other sources of input from the NIH, from VA doctors, from
others, so that we actually identify overpriced procedures.
Overpricing can happen because, as I've said in some of my
articles, because CMS has some unrealistic values for how to--
for practice expenses, and I can get into those details,
because specialty societies don't come forward to identify
their overpriced--the work value in their procedures. It would
be a new approach, but I think it's one that is doable if there
were some prodding from the Congress to make it happen.
Mr. CAMP. All right. Thank you. Thank you all for your
testimony. Thank you, Mr. Chairman.
Dr. MAYER. Well, I would just say it's one of those other
spinoff things from having this 3 million patient record
database. We actually use data on operative time, how long
patients were in the hospital, how long they were in the ICU,
how long they were on the ventilator. That was the basis for
our submission. We submitted all the cardiac surgical codes to
the five-year review. As Bob described, most went up but
actually some went down. We think that's the way it ought to
work. But it's based on objective data. It's not a subjective
opinion sort of thing. I think there's a great opportunity for
trying to use that kind of approach throughout the rest of the
Codes.
Chairman STARK. Well, I want to thank all of you. I'm sorry
again that we didn't have more time, but I know we'll be seeing
a lot of you again as we wind through this and try and come,
one, to basically a short-term solution to a problem facing
physicians, and build into that a longer term program that may
be a better solution than just the 1-year fixes we've been
doing in the past.
Thank you all very much, and the Committee will adjourn.
[Whereupon, at 1:00 p.m., the hearing was adjourned.]
[Submissions for the Record follow:]
Statement of American Academy of Ophthalmology
Introduction
Recent studies by the Government Accountability Office (GAO) and
MedPAC raised valid issues about how to reform Medicare as an
alternative to the sustainable growth rate (SGR) used in fee for
service Medicare. Our statement focuses on two major recommendations
they discussed at the May 10 hearing--that Medicare should move to
profile physicians and to bundle or group services to beneficiaries.
Policy leaders say that to make these tools effective, they must be
tied to physician payment under Medicare.
Profiling
The GAO report released this month called for a link of Medicare
physician pay to efficiency--defined as providing and ordering a level
of services that meets the patient's health care needs, but is not
excessive, given the patient's health status. The document claims the
Centers for Medicare and Medicaid Services (CMS) has the tools
available today to profile physician practices for efficiency.
Profiling is the collection of data to compare doctors on their
costs of providing services and to rate them on the basis of the ratio
of their actual costs to the expected costs for delivering a specified
service or the care of a patient's condition over a defined period of
time. Private purchasers have had recent experience with profiling.
Key problems with profiling are: 1) who defines the ``expected''
costs 2) how is the patient population risk adjusted and 3) what is the
appropriate number of episodes of care required to evaluate efficiency
GAO says that if CMS had additional authority, it could pay
physicians similarly to private sector plans which use profiling. A
recent report conducted for the Massachusetts Medical Society on a
recent private sector experience, gives us concern about the real value
of linking Medicare payment to profiling. The Massachusetts study found
questions about the accuracy of the data particularly related to
patient diagnosis which is critical to determining patient risk or
severity of illness. In addition, the report found that physician
profiling at the individual level caused increased administrative
burdens for insurers and unintended consequences for both physicians
and their patients that affected quality of care.
Profiles must differentiate between sub-specialists and
patients severity of illness
While we acknowledge the increased demand by consumers and payers
for more transparency in order to enable them to value the delivered
services, the use of billing profiling by CMS is today unable to
differentiate sub-specialists from generalists and among patients with
differing co-morbidities. Grouper software often used in profiling,
which purports to be able to compare doctors on the basis of cost on
similar patient populations, makes assumptions of risk adjustment on
the basis of administrative claims data which have never been validated
because they are proprietary.
In particular, there needs to be adjustments for age, case mix and
levels of chronic or acute conditions within the practice's patient
population. Many ophthalmologists treat a high percentage of elderly
patients with diabetes and the eye conditions associated with the
disease. The number of years with the disease should be taken into
account when formulating any profile. Furthermore, within the specialty
of ophthalmology, those who are further trained within a subspecialty
will likely see more severe or chronic patients.
In December 2006, CMS provided the first confidential feedback
reports containing reporting and performance rates to the physicians
who submitted reports on measures in early 2006. CMS also intends to
give physicians who participate in its new Physicians Quality Reporting
Initiative (PQRI), a larger bonus reporting program, confidential
feedback on their performance on quality measures. This early attempt
at profiling will be received by the individual physicians in mid 2008.
At that time, the Academy and other medical groups will work with CMS
to analyze the usefulness of the data.
CMS data will need significant refinement and validation
before linking payment to profile
Strategies to measure and encourage quality services and understand
resource use must be crafted carefully to avoid serious unintended
consequences. We applaud CMS's goal of encouraging physicians to
provide the right care at the right time and in the right setting.
Demonstrations that are underway through CMS will give us much of the
analysis we need in order to proceed correctly. Congress should keep in
mind that CMS is in the very early stages of an effort to properly
measure physician resource use.
Even as a feedback mechanism, after data issues have been
addressed, impact and value should be evaluated.
Data used as part of a quality improvement program for educational
purposes or feedback on review of medical record documentation should
be presented to physicians in a user-friendly manner. The methods for
collecting and analyzing the profile data must be fully disclosed to
both the physician and the consumer. The methodology for determining
the profiles must be explained to both providers and consumers in
easily understandable language, because complex statistical analysis is
the methodology often used.
Any established norms should be based on valid data collection and
profiling methodologies, and must use a sample size that is of
sufficient statistical power. Interpreting results that are based on
insufficient sample size may lead to erroneous conclusions and
inappropriate actions.
Data sources used to develop profiles of physicians have many
limitations. This is especially true of surveys, medical records, and
claims data because of their limited ability to assess patients' health
status and wellness. These limitations must be clearly identified and
acknowledged by Medicare or any other payer and other reviewers to
itself, its patients, and its enrollees. Additionally, standards,
guidelines, or practice parameters used for any physician profiling
must be derived from the evidence-based publications that are developed
and approved by the specialty organization that is the primary
specialty of that physician.
Bundling to Reduce Overuse
MedPAC proposes payment reform that puts physicians at greater
financial risk for services--giving physicians incentives to furnish
and order services more efficiently. Medicare already bundles
preoperative and follow-up physician visits into global payments for
surgical services. Specifically, MedPAC suggests a bundled rate that
includes separately billable drugs and laboratory services under the
current payment method. In fact, MedPAC is in the process of examining
bundling the hospital and physician payments for a selected set of
diagnostic related groups (DRGs) to increase efficiency and
coordination of care. For example, they plan to examine the physician
services furnished to patients before, during and after inpatient
hospitalizations for medical DRGs to assess whether a global fee should
be applied, similar to surgical DRGs.
The Academy, as a surgical specialty, has a lot of experience with
bundling payment for surgical services and the disincentives under this
approach for over utilization of ancillary services and visits related
to a surgery. Bundling an episode of care for medical diagnoses can be
done if the tools are there--Ophthalmologists have done that for
diabetic retinopathy laser surgery with a global fee.
The Academy, however, has concerns about linking physician payments
to hospital services because of adverse experience physicians have with
the way hospitals allocate costs for the provision of services.
Furthermore, it is unclear about how such a payment would work and
whether or not it would place physicians at financial risk when it
comes to allocation of payments.
Conclusion
We do not believe Medicare should move at this time to tie payment
to physician profiles and efficiency measures. Data issues and the lack
of adequate severity of illness adjustment currently threaten the
relevance and the accuracy of a physician profile under Medicare.
Because of this, we suggest pilot testing before proceeding on linking
payment to profiles and measures. Even as a feed back mechanism, the
impact and unintended consequences need to be studied before devoting
significant resources to this endeavor.
For more information go to the Academy's Web site at www.aao.org
Statement of American College of Physicians
ACP strongly believes that Medicare and other health plans should
be reformed to advance the patient-centered medical home, a model of
health-care delivery that has been proven to result in better quality,
more efficient use of resources, reduced utilization, and higher
patient satisfaction. The College greatly appreciates Subcommittee
Chairman Stark and Ranking Member Camp convening today's hearing which
will provide an opportunity to focus on key advantages of the patient-
centered medical home.
In March, 2007, ACP, the American Academy of Family Physicians,
American Academy of Pediatrics, and the American Osteopathic
Association released a joint statement of principles that defines the
characteristics of a patient-centered medical home. These four
organizations represent 333,000 physicians and medical students. The
joint principles are attached to this statement.
As described in the joint principles, a patient-centered health
care medical home is a physician practice that has gone through a
voluntary qualification process to demonstrate that it:
Provides continuous access to a personal primary or
principal care physician who accepts responsibility for treating and
managing care for the whole patient through an a patient-centered
medical home, rather than limiting practice to a single disease
condition, organ system, or procedure,
Supports the specific characteristics of care that the
evidence shows result in the best possible outcomes for patients.
Recognizes the importance of implementing systems-based
approaches that will enable physicians and other clinicians to manage
care, in partnership with their patients, and to engage in continuous
quality improvement,
Introduces transparency in consumer decision-making and
accountability for getting better results by reporting on evidence-
based quality, cost and patient experience measures of care.
The patient-centered medical home has the support of a broad
collaborative of physician organizations, employers and other
stakeholders. The Patient-Centered Primary Care Collaborative, of which
ACP is a founding member, has submitted a statement to the record of
this hearing that endorses the patient-centered medical home. The
Collaborative includes employers that collectively employ more than 50
million Americans and primary care organizations that represent the
physicians that provide primary care to the vast majority of Americans.
Representatives of consumer organizations have been participating in
the Collaborative's ongoing discussions and are expected to endorse and
join the Collaborative in the near future. The Collaborative's joint
statement of support for the patient-centered medical home has been
submitted separately for the record of this hearing.
Evidence that a Patient-Centered Medical Home Will Improve Quality and
Lower Costs
There is substantial and growing evidence that a health care system
built upon a foundation of patient-centered medical home will improve
outcomes, result in more efficient use of resources, and accelerate
systems-based improvements in physician practices.
According to an analysis by the Center for Evaluative Clinical
Sciences at Dartmouth, States that relied more on primary care:
have lower Medicare spending (inpatient reimbursements
and Part B payments),
lower resource inputs (hospital beds, ICU beds, total
physician labor, primary care labor, and medical specialist labor)
lower utilization rates (physician visits, days in ICUs,
days in the hospital, and fewer patients seeing 10 or more physicians),
and
better quality of care (fewer ICU deaths and a higher
composite quality score).\1\
---------------------------------------------------------------------------
\1\ Dartmouth Atlas of Health Care, Variation among States in the
Management of Severe Chronic Illness, 2006
Starfield's review of dozens of studies on primary-care oriented
health systems found that primary care is consistently associated with
---------------------------------------------------------------------------
better health outcomes, lower costs, and greater equity in care.
Primary care oriented countries, such as Australia,
Canada, New Zealand, and the United Kingdom are rated higher than the
United States on many aspects of care, including the public's view of
the health care system not needing complete rebuilding, finding that
the regular physicians' advice is helpful, and coordination of care.
``The United States rates the poorest on all aspects of experienced
care, including access, person-focused care over time, unnecessary
tests, polypharmacy, adverse effects, and rating of medical care
received.'' An orientation to primary care reduces sociodemographic and
socioeconomic disparities.
Overall, primary care-oriented countries have better care
at lower cost.
Within the United States, adults with a primary care
physician rather than a specialist had 33 percent lower cost of care
and were 19 percent less likely to die, after adjusting for demographic
and health characteristics.
Primary care physician supply is consistently associated
with improved health outcomes for conditions like cancer, heart
disease, stroke, infant mortality, low birth weight, life expectancy,
and self-rated care.
In both England and the United States, each additional
primary care physician per 10,000 population is associated with a
decrease in mortality rates of 3 to 10 percent.
In the United States, an increase of one primary care
physician is associated with 1.44 fewer deaths per 10,000 population.
The association of primary care with decreased mortality
is greater in the African-American population than in the white
population.\2\
---------------------------------------------------------------------------
\2\ Starfield, presentation to The Commonwealth Fund, Primary Care
Roundtable: Strengthening Adult Primary Care: Models and Policy
Options, October 3, 2006
Another analysis found that when care is managed effectively in the
ambulatory setting by primary care physicians, patients with chronic
diseases like diabetes, congestive heart failure, and adult asthma have
fewer complications, leading to fewer avoidable hospitalizations.\3\
---------------------------------------------------------------------------
\3\ Commonwealth Fund, Chartbook on Medicare, 2006
---------------------------------------------------------------------------
Patient-centered primary care will also accelerate the
transformation of physician practices by making the business case for
physicians, including those in small practice settings, to acquire and
implement health information technologies and other systems-based
improvements that contribute to better outcomes.
``Patient-centeredness, shared decision-making, teaming, group
visits, open access, outcome responsibility, the chronic care model,
and disease management are among the proposals intended to transform
medical practice. The electronic health record's greatest promise
arguably lies in the support of these initiatives. . .'' \4\
---------------------------------------------------------------------------
\4\ Sidorov, Health Affairs, Volume 25, Number 4, 2006
---------------------------------------------------------------------------
Reform of Medicare Payment Policies to Support a Patient-Centered
Medical Home
Many physicians would like to redesign their own practices to
become a patient-centered medical home, but are discouraged by doing so
by Medicare payment policies that reward physicians for the volume of
services rendered on an episodic basis, rather than for comprehensive,
longitudinal, preventive, multi-disciplinary and coordinated care for
the whole person. The authors of a recent survey found that ``a gap
exists between knowledge and practice--between physicians' endorsement
of patient-centered care and their adoption of practices to promote it.
Physicians reported several barriers to their adoption of patient-
centered care practices, including lack of training and knowledge (63
percent) and costs (84 percent). Education, professional and technical
assistance, and financial incentives might facilitate broader adoption
of patient-centered care practices. With the right knowledge, tools,
and practice environment, and in partnership with their patients,
physicians should be well positioned to provide the services and care
that their patients want and have the right to expect.'' \5\
---------------------------------------------------------------------------
\5\ Commonwealth Fund study, ``Adoption of Patient-Centered Care
Practices by Physicians: Results from a National Survey'' (Archives of
Internal Medicine, Apr. 10, 2006)
---------------------------------------------------------------------------
Congress should enact legislation that leads to a fundamental
redesign of Medicare payment policies to support a patient-centered
medical home. Such redesign should include the following five key
elements:
1. Eliminate the SGR and provide stable, positive and predictable
updates combined with performance-based additional payments for
reporting on quality measures relating to care coordination and
patient-centered care.
The sustainable growth rate (SGR) formula must be eliminated.
Unless Congress acts, the SGR will cause a cut of almost 10 percent in
physician services in 2008, and a cut of almost 40 percent over the
next several years. Cuts of this magnitude will make it impossible for
physicians to invest in the systems and technologies needed to become a
patient-centered medical home, will accelerate the trend of physicians
turning away from primary care medicine, and create access problems as
primary care physicians leave medicine in increasing numbers and fewer
young physicians go into primary care.
Specifically, Congress should enact legislation that would lead to
elimination of the SGR and replace it with an alternative update
framework that will:
Assure stable, positive and predictable baseline updates
for all physicians.
Set aside funds for a separate physicians' quality
improvement pool that would allocate dollars to support voluntary,
physician-initiated programs that have the greatest potential impact on
improving quality and reducing costs, and allow for a portion of
savings in other parts of Medicare (such as reduced hospital expenses
under Part A) that are attributable to programs funded out of this pool
to be allocated back to the physicians' quality improvement pool.
Congress should direct that priority be given to those applications for
funding under the quality pool that are most likely to improve care
quality and efficiency by accelerating and supporting the ability of
physicians to organize care processes to deliver patient-centered
services through a medical home. Priority would also be given to
programs that address regional variations in quality and cost of care.
Our specific recommendations for revamping Medicare's Physician Quality
Reporting Initiative are presented below. Revamp the Physicians Quality
Reporting Initiative to focus on clinical and structural measures
related to coordination of chronic diseases and other ``high impact''
interventions.
2. Revamp the Physicians Quality Reporting Initiative to focus on
clinical and structural measures related to coordination of chronic
diseases and other ``high impact'' interventions.
The PQRI pays physicians a ``performance bonus'' of up to 1.5
percent for reporting on measures of care that are applicable to their
specialty and practice. Physicians will receive the same reporting
bonus without regard to the impact of the measures on quality or cost
of care, the costs to the practice associated with reporting on the
measures, or the number of measures that apply to their specialty or
practice. ACP believes that Congress should redesign the PQRI to:
Assure that funding for the program is sufficient to
offset the costs to physicians for reporting on the measures.
Focus on structural (health information technologies)
measures associated with patient-centered care through a medical home.
Place priority on clinical measures for chronic diseases.
Pay physicians on a ``weighted basis'' for reporting on
structural and clinical measures that will have the greatest potential
impact on quality and cost, so that physicians who are reporting on
measure that will have a greater impact, or that require a greater
investment in health information technologies, will receive a
proportionately higher payment than physicians who report on lower
impact measures that do not require a substantial investment in HIT.
3. Create incentives for physicians to acquire the health
information technologies and systems to support patient-centered care
in a medical home.
Medicare should create payment incentives to encourage physicians
to acquire specific structural enhancements and tools that are directly
related to care management in the ambulatory setting, such as patient
registry systems, secure email, and evidence based clinical decision
support, which can be measured and reported on. (That is, paying
doctors for acquiring the systems needed to become medical homes). This
recommendation would be implemented by the National Health Information
Incentive Act of 2007, H.R. 1952, introduced on April 19, 2007 by
Representatives Charles Gonzalez and Phil Gingrey. The bill has been
referred to the Ways and Means Committee. ACP urges the Health
Subcommittee and full Committee to report the bill favorably. This
legislation is based on the Bridges to Excellence program, which uses a
scoring system that provides higher payments for having a fully
functional EMR system than having a very basic registry system, and a
similar scoring model, with tiered payments, could be used for
Medicare:
Tier 1--the reporting on evidence-based standards of
care; the maintenance of patient registries for the purpose of
identifying and following up with at-risk patients and provision of
educational resources to patients;
Tier 2--the use of electronic systems to maintain patient
records (EHRs); the use of clinical-decision support tools; the use of
electronic orders for prescriptions and lab tests (e-prescribing), the
use of patient reminders; use of e-consults (communication between
patient/physician or other provider) when an identifiable medical
service is provided; and managing patients with multiple chronic
illnesses; [Practices can qualify that utilize three or more
incentives].
Tier 3--whether a practice's electronic systems
interconnect and whether they are ``interoperable'' with other systems;
whether it uses nationally accepted medical code sets and whether it
can automatically send, receive and integrate data such as lab results
and medical histories from other organizations' systems.
Such tiered payments for systems improvements could either be in
the form of a tiered ``add on'' to the Medicare office visit payment
that would increase as the practice achieves a higher tier, or in the
form of a la carte coding and payment mechanisms to allow physicians to
report when they use individual elements inherent to patient-centered
care, such as use of a registry and use of clinical decision support.
Congress should allocate funding to pay physicians when they
appropriately use and report these tools and/or direct HHS to exempt
the expenditures associated with these tools from the budget neutrality
requirement pertaining to payments for Medicare Part B services.
4. Provide oversight of the Medicare Demonstration Project on
Patient Centered Medical Homes
The Tax Relief and Health Care Act of 2006 mandates that CMS
implement a demonstration project of a Medicare medical home in up to
eight states nationwide. ACP supports and appreciates Congress's
support for the Medicare Medical Home demonstration project but urges
this Subcommittee to exercise oversight to assure that CMS implements
it in a timely manner and provides sufficient funding for physician
practices that choose to participate.
5. Require that CMS develop and implement additional changes in
Medicare payment methodologies to support patient-centered primary and
principal care for (a) practices that qualify as patient-centered
medical homes and (b) practices that are not fully qualified as PC-MHs
but are able to provide defined services, supported by systems
improvements, associated with patient-centered care.
Physicians in practices that qualify as a patient-centered medical
home should be given the option (based on standards to be established
in statute) of being paid under an alternative to traditional Medicare
fee-for-service. This alternative model would consist of the following:
Bundled, severity-adjusted care coordination fee paid on
a monthly basis for the physician and non-physician clinical staff work
required to manage care outside a face-to-face visit and the health
information technology and system redesign incurred by the practice.
This bundled payment would be combined with per visit FFS
payment for office visits and performance based bonus payments based on
evidence based measures of care
Yesterday, Representative Gene Green and Senator Blanche Lincoln
introduced the Geriatric Care Improvement Act of 2007, which will
create a new Medicare benefit for geriatric assessments of patients
with multiple chronic disease and/or dementia and monthly care
management fees to physicians who enter into an agreement with HHS to
provide ongoing care coordination services to such patients. ACP
strongly supports this bill and urges that it be reported out favorably
by the Subcommittee.
For physicians who are not practicing in a qualified patient-
centered medical home, Medicare should be directed to pay separately
for the following CPT/HCPCS codes that involve coordinating patient
care for which Medicare currently does not make separate payment.
Physician supervision of nurse-provided patient self-
management education
Physician review of data stored and transmitted
electronically, e.g. data from remote monitoring devices
Care plan oversight of patient outside the home health,
hospice, and nursing facility setting--this is reported through CPT
99340, which is described in item #3, ``Create a specific, new
alternative and optional patient centered medical home benefit. . .''
Anticoagulant therapy management
New physician team conference codes
New telephone service codes (scheduled to appear in CPT
in 2008)
Conclusion
The 110th Congress has an historic opportunity to join with ACP,
other physician organizations, employers, and health plans to redesign
the American health care system to deliver the care that patients need
and want, to recognize the value of care that is managed by a patient's
personal physician, to support the value of primary care medicine in
improving outcomes, and to create the systems needed to help physicians
deliver the best possible care to patients. The College's policy
recommendations and implementation road map are offered today as a
comprehensive plan for Medicare to realign payment policies to support
comprehensive, coordinated, and longitudinal care for beneficiaries
through a physician-directed, patient-centered medical home.
American Academy of Family Physicians (AAFP)
American Academy of Pediatrics (AAP)
American College of Physicians (ACP)
American Osteopathic Association (AOA)
Joint Principles of the Patient-Centered Medical Home
March 2007
Introduction
The Patient-Centered Medical Home (PC-MH) is an approach to
providing comprehensive primary care for children, youth and adults.
The PC-MH is a health care setting that facilitates partnerships
between individual patients, and their personal physicians, and when
appropriate, the patient's family.The AAP, AFFP, ACCP, and AOA,
representing approximately 333,000 physicians, have developed the
following joint principles to describew the characteristics of the PC-
MH.
Principles
Personal physician--each patient has an ongoing relationship with a
personal physician trained to provide first contact, continuous
and comprehensive care.
Physician directed medical practice --the personal physician leads a
team of individuals at the practice level who collectively take
responsibility for the ongoing care of patients.
Whole person orientation--the personal physician is responsible for
providing for all the patient's health care needs or taking
responsibility for appropriately arranging care with other
qualified professionals. This includes care for all stages of
life; acute care; chronic care; preventive services; and end of
life care.
Care is coordinated and/or integrated across all elements of the
complex health care system (e.g., subspecialty care, hospitals,
home health agencies, nursing homes) and the patient's
community (e.g., family, public and private community-based
services). Care is facilitated by registries, information
technology, health information exchange and other means to
assure that patients get the indicated care when and where they
need and want it in a culturally and linguistically appropriate
manner.
Quality and safety are hallmarks of the medical home:
Practices advocate for their patients to support the
attainment of optimal, patient-centered outcomes that are defined by a
care planning process driven by a compassionate, robust partnership
between physicians, patients, and the patient's family.
Evidence-based medicine and clinical decision-support
tools guide decision making
Physicians in the practice accept accountability for
continuous quality improvement through voluntary engagement in
performance measurement and improvement.
Patients actively participate in decision-making and
feedback is sought to ensure patients' expectations are being met
Information technology is utilized appropriately to
support optimal patient care, performance measurement, patient
education, and enhanced communication
Practices go through a voluntary recognition process by
an appropriate non-governmental entity to demonstrate that they have
the capabilities to provide patient centered services consistent with
the medical home model.
Patients and families participate in quality improvement
activities at the practice level.
Enhanced access to care is available through systems such as open
scheduling, expanded hours and new options for communication
between patients, their personal physician, and practice staff.
Payment appropriately recognizes the added value provided to patients
who have a patient-centered medical home. The payment structure
should be based on the following framework:
It should reflect the value of physician and non-
physician staff patient-centered care management work that falls
outside of the face-to-face visit.
It should pay for services associated with coordination
of care both within a given practice and between consultants, ancillary
providers, and community resources.
It should support adoption and use of health information
technology for quality improvement;
It should support provision of enhanced communication
access such as secure e-mail and telephone consultation;
It should recognize the value of physician work
associated with remote monitoring of clinical data using technology.
It should allow for separate fee-for-service payments for
face-to-face visits. (Payments for care management services that fall
outside of the face-to-face visit, as described above, should not
result in a reduction in the payments for face-to-face visits).
It should recognize case mix differences in the patient
population being treated within the practice.It should allow physicians
to share in savings from reduced hospitalizations associated with
physician-guided care management in the office setting.
It should allow for additional payments for achieving
measurable and continuous quality improvements.
Background of the Medical Home Concept
The American Academy of Pediatrics (AAP) introduced the medical
home concept in 1967, initially referring to a central location for
archiving a child's medical record. In its 2002 policy statement, the
AAP expanded the medical home concept to include these operational
characteristics: accessible, continuous, comprehensive, family-
centered, coordinated, compassionate, and culturally effective care.
The American Academy of Family Physicians (AAFP) and the American
College of Physicians (ACP) have since developed their own models for
improving patient care called the ``medical home'' (AAFP, 2004) or
``advanced medical home'' (ACP, 2006).
For More Information:
American Academy of Family Physicians
http://www.futurefamilymed.org
American Academy of Pediatrics: http://
aappolicy.aappublications.org/policy_statement/index.dtl#M
American College of Physicians
http://www.acponline.org/advocacy/?hp
American Osteopathic Association
Statement of American College of Radiology
The American College of Radiology (ACR) representing more than
32,000 radiologists, radiation oncologists, and medical physicist
members is pleased to submit this statement for the record regarding
the hearing on options to improve quality and efficiency among Medicare
physicians.
Fundamental First Steps
There are fundamental steps that need to be taken as Medicare
strives to achieve the level of efficiency needed in order to maintain
solvency into the future. First, the Federal Government must encourage
and provide incentives for physicians to acquire the necessary health
information technology systems in order to deliver integrated care
across multiple provider settings. The upfront expense for many
physician practices to purchase, integrate, and operate these systems
is often too great an undertaking, resulting in little or no financial
benefit for the physician compared to the benefit realized by Medicare
and other insurers. In addition, while Medicare takes steps toward
greater efficiency in the delivery of physician services, it must move
away from the current methodology for reimbursing physicians under the
Sustainable Growth Rate (SGR) formula. However, we caution Congress not
make major changes to the payment system without solid evidence-based
solutions that have been proven to resolve the existing problems. Only
with stable and predictable payments can doctors begin to invest
resources in the technology and processes that lead to greater
efficiency.
Growth in Volume of Imaging Services
The ACR believes that as the stewards of the Medicare program,
Congress must ensure that beneficiaries continue to have access to the
highest quality physician care and that this care is delivered in an
efficient and safe manner. In the case of diagnostic imaging and image-
guided therapy, increased volume and intensity has been shown, in
specific clinical circumstances, to lower overall cost by reducing
unnecessary hospital admission and surgery. Overall growth in volume
and intensity of imaging in the 21st century is appropriate, and may be
appropriate at a higher level as compared to the average growth of all
medical services, because that growth represents a natural evolution of
health care delivery in which diagnosis and treatment is made more
rapidly and more accurately. (See Attachment A)
Accreditation Requirement and Standards for Physicians Performing
Imaging
There is no doubt that inappropriate growth of imaging exists and
we share Congress's desire to make certain that the Medicare dollar is
spent wisely. The Medicare Payment Advisory Commission (MedPAC) has put
forth numerous recommendations over the years on ways to improve
quality and efficiency in the delivery of medical imaging services. In
2005 the Commission recommended that standards be implemented for
physicians who perform and interpret imaging studies. MedPAC mentions
how much of the recent growth in imaging has taken place in physician
offices where there is less quality oversight than in the hospital or
Independent Diagnostic Testing Facility (IDTF) setting. The ACR
believes that in order to ensure that imaging services provided outside
the hospital are appropriate, safe and cost effective, Medicare should
require that complex procedures such as those in nuclear cardiology,
MRI, CT, and PET are performed by experienced and qualified physician
specialists working with well trained technical staff in an accredited
facility or physician office. Private insurers requiring accreditation
for facilities providing advanced diagnostic imaging have witnessed an
increase in quality of care and patient safety, as well as a reduction
in repeat tests that have led to cost savings for their programs. In
fact, UnitedHealthcare has recently announced that beginning in March
of 2008 all beneficiaries receiving advanced medical imaging (MRI, CT,
PET, nuclear medicine, and nuclear cardiology) must go to an accredited
facility for those services.
Use of Appropriateness Criteria and Feedback for Physicians Ordering
Imaging
Beyond patient safety and quality measures such as accreditation,
Medicare should implement programs to ensure that seniors are receiving
appropriate imaging--the right test, at the right time, for the right
reason. Private insurers have found that a disproportionate number of
imaging studies are being ordered by a relatively small number of
physicians. To that end, the ACR encourages the consultation of
Appropriateness Criteria when determining if and when a patient should
receive an imaging study. Over the years, the ACR has developed
Appropriateness Criteria for use by primary care physicians as well as
specialists consisting of evidence-based, expert criteria for selecting
the most appropriate imaging for patients depending on the symptoms
they present and their medical history. Programs developed by Medicare
should include a reporting and feedback component where referring
physicians can see how their ordering patterns compare to their
colleagues. When using Appropriateness Criteria within a program such
as a Radiology Order Entry system (ROE), the ordering patterns of
referring physicians can be successfully shifted through educational
feedback reports, with the potential to result in savings for the
payer. In the end, timely and appropriate imaging can produce better
patient outcomes, through more precise treatment and lowered morbidity
and mortality.
Bundled Payments
In its mandated report to Congress on alternatives to the SGR,
MedPAC presented the option of bundling physician payments in order to
reduce overuse of services. The Commission's logic is that a larger
unit of payment puts physicians at a greater financial risk and
provides the incentive to order services judiciously. However, the ACR
believes the strategy of bundling payments to physicians has the
potential to lead to more problems than it would solve as was witnessed
when the private sector experimented with capitation in the 1990s.
Questions remain as to how services rendered by a physician in a
consulting role, such as is the case with diagnostic radiology, would
fit into the concept of bundling. It is not clear that the incentive
for a physician to judiciously order images is provided under this
option, and in fact it may have the opposite effect. Furthermore, to
extend the concept of bundled payments beyond a single episode of care
and fully integrate it into the general population of outpatients, in
the multitude of complex patient care situations occurring over
variable time courses, at multiple locations and involving multiple and
often independent provider decision makers would require a system
design so complex that it would likely be administratively
unmanageable. The ACR asks that the Health Subcommittee explore this
alternative only after careful evidence-based deliberation and in
consultation with all provider stakeholders. It is our belief that
improving health care efficiencies must be approached from the
standpoint of quality with a focus on utilization controls based on
appropriateness of care and physician collaboration, with the ultimate
goal of improving outcomes, rather than having the primary focus on
achieving savings.
The ACR looks forward to working with Congress this year towards
the shared goals of improving quality and efficiency through ensuring
that Medicare pays for the safest, highest quality, appropriate imaging
services for beneficiaries.
Attachment A
1. Rao PM, Rhea JT, Novelline RA, Mostafavi AA, McCabe CJ.
Effect of computed tomography of the appendix on treatment of
patients and use of hospital resources. NEJM. 1998;338(3):141-
146.
The authors evaluated 100 patients who had CT for suspected
appendicitis. Fifty-three had appendicitis; 47 did not. After the cost
of CT, overall savings was $447 per patient ($44,731).
2. Jordan JE, Donaldson SS, Enzmann DR. Cost effectiveness and
outcome assessment of magnetic resonance imaging in diagnosing
cord compression. Cancer. 1998;75(10):2579-2586.
This article is both a retrospective review and literature review.
The authors found that with the use of MR in imaging patients with
diagnosed cord compression, costs were reduced by 65 percent. Imaging
studies utilized prior to MRI for diagnosis included myelography, CT,
plain film and nuclear medicine. The average cost for diagnosis in
these groups dropped from $3664/patient to $2283/patient. The lack of
hospitalization costs with myelography contributed significantly to the
reduced cost with MRI diagnosis.
3. Garcia Pena BM, Taylor GA, Lund DP, Mandl KD. Effect of
computed tomography on patient management and costs in children
with suspected appendicitis. Pediatrics. 1999:104:440-446.
CT was obtained with three strategies: 1) obtain on all patients
and discharge if nl, 2) obtain on all pts and admit all, 3) selectively
obtain CT if wbc>10,000.
All strategies decreased the number of hospital days, negative
laparotomies and the per patient cost. Savings for strategy 1 was
$2018/patient, for strategy 2 $554/patient, and for strategy 3 $691/
patient.
4. Rhea JT, Rao PM, Novelline RA, McCabe CJ. A focused
appendiceal CT technique to reduce the cost of caring for
patients with clinically suspected appendicitis. AJR.
1997;169:113-118.
Use of focused CT reduced both variable and total cost by $23,030
and $ 45,556 respectively per 100 patients. Costs were reduced through
decreased number of negative laparotomies and decreased number of
hospital days (cost of one negative appendectomy equals the cost of 18
appendiceal CT scans).
5. Rosen MP, Sands DZ, Longmaid HE 3rd, Reynolds KF, Wagner M,
Raptopoulos V. Impact of abdominal CT on the management of
patients presenting to the emergency department with acute
abdominal pain. AJR. 2000;174:1391-1396.
This is a review of fifty-seven patients who presented to the
emergency room with acute abdominal pain of a nontraumatic origin. CT
added significantly to the confidence level of the emergency room
physician's diagnosis evaluated subjectively. The use of CT averted the
admission of ten of 42 of these patients, approximately 24 percent.
Furthermore, patient management was altered in 60 percent of patients.
6. Rosen MP, Siewert B, Sands DZ, Bromberg R, Edlow J,
Raptopoulos V. Value of abdominal CT in the emergency
department for patients with abdominal pain. Eur Radiol.
2003;13:418-424.
Patients with abdominal pain who presented to a teaching facility
were evaluated with CT when appropriate. This article demonstrated that
17 percent of hospitals admissions and 62 percent of surgeries were
avoided based on the CT findings. There was also a significant benefit
derived by the treating physician markedly improving their confidence
level with their diagnoses.
Statement of American Health Information Management Association
Chairman Stark and Members of the Ways and Means Subcommittee on
Health, thank you for holding a hearing on ``Options to Improve Quality
and Efficiency Among Medicare Physicians.'' This is a critical issue
and the American Health Information Management Association (AHIMA) is
honored to provide the subcommittee with information that we believe
directly impacts the questions noted in your hearing announcement.
As you know, the emergence of health information technology as a
key policy issue has helped move the healthcare quality issue to the
forefront of healthcare policy discussions. To obtain more information
for quality monitoring, healthcare claims forms have been changed to
collect more information on the care provided to individuals. This has
been done to improve the delivery of quality healthcare and to insure
fair and equitable reimbursement for services provided.
As the Subcommittee considers the hearing testimony, we urge you to
consider how upgrading the ICD-9-CM classification system to ICD-10-CM
and ICD-10-PCS could improve the information and knowledge contained in
the Medicare system, improve the efficiency of data collection and
therefore reduce the cost of obtaining the information needed for
Medicare processes. This will also reduce the costs incurred by the
providers who must supply data to various contractors of the Centers
for Medicare and Medicaid Services (CMS) for healthcare claims and
other healthcare reporting requirements.
In 2005, AHIMA testified before the Ways and Means Health
Subcommittee on the need for and advantages of U.S. adoption and
implementation of the ICD-10-CM (diagnoses) and ICD-10-PCS (inpatient
procedures) classification systems. These systems were designed and
produced by the Department of Health and Human Services (HHS) in the
mid 1990's and are still awaiting formal adoption and implementation.
To date, neither the Congress nor the Secretary has taken action that
would result in the actual implementation and use of these
classification systems. Yet, in the case of physicians and in contrast
to ICD-9-CM, ICD-10-CM adoption would provide the government with more
accurate information to determine quality, severity, and payment. In
addition, if quickly adopted, ICD-10-CM would allow physicians to
implement new health information technology without the threat of
having to make retroactive changes (much more expensive) to their HIT
systems at some undetermined time in the future.
Briefly, adoption of ICD-10-CM now would improve the situation for
Medicare and its physicians by:
Providing the detail related to diagnoses that would
allow CMS to judge the severity of the patient, which in turn would
better identify the proper Evaluation/Management (E/M) level of care
reported on the Medicare claim.
Providing the detail related to diagnoses that would
point to the necessary medical services not easily identified in the
very vague and incomplete descriptions provided by ICD-9-CM, due to the
rationing of ICD-9-CM codes that has had to occur in recent years
because of the limited number of codes remaining. If CMS accepted all
diagnoses codes that can be submitted electronically, then in many
complicated situations--generally higher cost encounters and
admissions--complications and co-morbidities could be identified
without the need to request additional information from the provider
(usually in paper form)This would also alleviate the need to review
such data manually.
Providing the detail necessary to identify not only
complications, co-morbidities, or present on admission diagnoses, but
also enough detail to permit more automated processing. The additional
detail provided in ICD-10-CM will actually make it easier to identify
fraud and abuse than currently because coders will not have to guess on
what codes to enter and the additional detail will more clearly support
or not support other codes and items on the claim form.
Providing more detail in the claim so that physicians
will incur less costs by not having to provide additional information,
either with the claim or in response for more information from the
Medicare contractor.
As members of the Health Subcommittee recognize, the detail behind
the ICD-9-CM upgrade and the need to implement the ICD-10-CM and ICD-
10-PCS, is significant. Had ICD-10-CM and ICD-10-PCS been implemented,
the changes now being made to the Medicare inpatient prospective
payment system would have been significantly easier for Medicare and
the provider community to adopt. Costs will continue to increase for
the Medicare program each year the implementation of ICD-10-CM and ICD-
10-PCS is delayed. In 2002, CMS testified to the National Committee on
Vital and Health Statistics (NCVHS) that it desired to move to ICD-10
as soon as possible. The NCVHS in turn recommended adoption at the end
of its hearing review of the Rand study on the issue in 2003. The
subcommittee needs to consider that our nation has dedicated funding to
maintain ICD-10-PCS and ICD-10-CM since the mid 1990's--CMS maintains
ICD-10-PCS while the CDC has responsibility for ICD-10-CM--and yet we
have received no benefit from the detail because of the implementation
delays.
The ICD-10 codes possess many additional and beneficial uses beyond
the subcommittee's current discussion. AHIMA would be happy to respond
to questions on these uses as well as address any questions or concerns
the subcommittee members might have with our comments. We urge the
subcommittee to consider recommending the adoption and implementation
of the ICD-10 classifications either as a stand alone legislation, or
as a part of any health information technology or Medicare legislation
Congress may consider. It is also important that the subcommittee
ensure the adoption and implementation of the upgraded versions of the
HIPAA transactions necessary to insure that such data can be carried in
the claims system. Again, additional detail can be provided if the
committee needs it.
Action by the subcommittee and the Congress before the fall recess
will allow the U.S. to make the conversion to ICD-10 classifications by
October 1, 2011. Moving to ICD-10-CM and ICD-10-PCS is already long
overdue. Please take the necessary steps to ensure this date is not
delayed any further.
Statement of American Occupational Therapy Association
The American Occupational Therapy Association (AOTA) submits this
statement for the record of the May 9, 2007 hearing. While the hearing
is focused on potential methods to improve efficiency among physicians
in Medicare, AOTA appreciates the opportunity to provide comment on
what AOTA is doing in order to improve efficiency among occupational
therapists in Medicare. As the Committee looks at alternatives within
the physician fee schedule, AOTA would also like to highlight some
areas in Medicare where the Committee should focus, particularly in
regard to AOTA's efforts relating to the physician quality reporting
initiative (PQRI) and the Medicare Part B outpatient therapy caps.
The Balanced Budget Act of 1997 [Public Law 105-33] moved
outpatient rehabilitation services, including occupational therapy, to
the physician fee schedule. Occupational therapists and occupational
therapy assistants are subject to yearly proposed cuts to the physician
fee schedule. AOTA applauds past congressional action to avoid the
proposed cuts to the physician fee schedule and is committed to working
with Congress to avoid the proposed 10 percent cut for 2008.
Simultaneously, therapists must also confront the uncertainty of the
arbitrary therapy cap which literally prohibits care for high cost
patients.
Physician Quality Reporting Initiative (PQRI)
The Tax Relief and Health Care Act (TRHCA) of 2006 included a
provision that directed the Secretary of Health and Human Services to
implement a system for the reporting by ?eligible professionals' of
data on quality measures. CMS has recognized occupational therapists as
professionals eligible to participate in the system, and AOTA is
working diligently to address new quality and payment options for
Medicare Part B outpatient therapy, which take effect July 1, 2007.
AOTA is positioned to begin participation in the deliberations of
the Ambulatory Care Quality Alliance (AQA), the National Quality Forum
(NQF), and the Physician Consortium. These three consensus
organizations recognized by Congress in the TRHCA inform the physician
quality reporting initiative at CMS.
AOTA is also developing outcomes measures for occupational therapy
as part of its Centennial Vision and Strategic Plan. A committee of
distinguished occupational therapy practitioners with experience in
outcomes measures has been formed and is in the process of examining
existing outcomes measurement tools and determining the most
appropriate measures for occupational therapy.
AOTA continues to rely on the work done as part of its Evidence-
Based Literature Review Project. AOTA offers a series of Evidence
Briefs to inform the practice of occupational therapy. These summaries
of articles selected from scientific literature cover a wide variety of
areas of occupational therapy practice including: attention deficit/
hyperactivity disorder, brain injury, cerebral palsy, children with
behavioral and psychosocial needs, chronic pain, developmental delay in
young children, multiple sclerosis, older adults, Parkinson's disease,
school-based interventions, stroke, and substance use disorders.
These documents offer a bridge between scientific research and
clinical practice to aide occupational therapy practitioners in
providing therapy that is based on evidence in order to provide
efficient and effective care and to improve patient outcomes.
Therapy Caps
The annual cap on outpatient rehabilitation, commonly referred to
as the ``$1,500'' cap, imposed by the Balanced Budget Act of 1997 and
currently under an exceptions process through Congressional action,
would, if implemented, limit access to occupational therapy that would
enable an individual to fully recover from a stroke, to overcome
limitations resulting from severe burns, or to achieve independence in
self-care to enable living at home among other illnesses or injuries.
AOTA has worked for many years to repeal this cap and appreciates
Congress' willingness to stop implementation. Most recently, a 1-year
extension of the exceptions process was included in the Tax Relief and
Health Care Act of 2006 [P.L. 109-432], however, that will expire on
December 31, 2007 unless Congress takes action this year.
MedPAC has expressed concerns with the therapy caps because they do
not discriminate between necessary care and unnecessary utilization.
AOTA remains committed to working with Congress and CMS to deter
unnecessary care or overutilization. AOTA has held discussions with
Congress, CMS, and other provider and consumer groups to determine ways
to refine the exceptions process to ensure that patients continue to
receive appropriate care. Efficient and effective delivery of therapy
services is also about ensuring access to services that have a proven
impact on lifestyle choices, healthy living, and avoiding illness and
injury (such as those resulting from falling, poor driving, or limits
in self-care).
AOTA strongly supports the Medicare Access to Rehabilitation
Services Act of 2007 (S. 450/H.R. 748). AOTA supports passage of
legislation that would repeal the caps, and is dedicated to working
with CMS, Congress, and other provider and consumer groups to find an
appropriate long-term solution. Financial limitations to proper therapy
services impede the therapists' ability to care for their patients
appropriately and use professional judgment effectively, and ultimately
hinder the ability of a therapist to provide high-quality, efficient
care to Medicare beneficiaries.
AOTA is the nationally recognized professional association of
36,000 occupational therapists, occupational therapy assistants, and
students of occupational therapy. Occupational therapy is a health,
wellness, and rehabilitation profession working with people
experiencing stroke, spinal cord injuries, cancer, congenital
conditions, developmental delay, mental illness, and other conditions.
It helps people regain, develop, and build skills that are essential
for independent functioning, health, and well-being. Occupational
therapy is provided in a wide range of settings including day care,
schools, hospitals, skilled nursing facilities, home health, outpatient
rehabilitation clinics, psychiatric facilities, and community programs.
Occupational therapy professionals assist those with traumatic
injuries--young and old alike--to return to active, satisfying lives by
showing survivors new ways to perform activities of daily living,
including how to dress, eat, bathe, cook, do laundry, drive, and work.
It helps older people with common problems like stroke, arthritis, hip
fractures and replacements, and cognitive problems like dementia. In
addition, occupational therapists work with individuals with chronic
disabilities including mental retardation, cerebral palsy, and mental
illness to assist them to live productive lives. Occupational therapy
practitioners also provide care to Veterans who suffer from traumatic
brain injuries, post-traumatic stress disorder, spinal cord injuries,
and other conditions. By providing strategies for doing work and home
tasks, maintaining mobility, and continuing self-care, occupational
therapy professionals can improve quality of life, speed healing,
reduce the chance of further injury, and promote productivity and
community participation for Veterans.
Statement of the Renal Physicians Association
The Renal Physicians Association (RPA) is the professional
organization of nephrologists whose goals are to ensure optimal care
under the highest standards of medical practice for patients with renal
disease and related disorders. RPA acts as the national representative
for physicians engaged in the study and management of patients with
renal disease. RPA greatly appreciates the interest of Ways and Means
Health Subcommittee Chair Pete Stark and Ranking Minority Member Dave
Camp in exploring new methodological options for enhancing the quality
and efficiency of care delivered by Medicare physicians. Further, we
appreciate the Subcommittee's efforts to exercise its oversight
authority as the Centers for Medicare and Medicaid Services carries out
its fiduciary responsibility to maximize the effectiveness of Medicare
program spending.
RPA believes it has a unique perspective to offer on the issues
being considered by the Subcommittee, as nephrologists have been
reimbursed through the use of a monthly capitated payment (MCP) system
for the bundle of physicians' services associated with the care
provided to patients with end stage renal disease (ESRD) for over
thirty years. Further, nephrologists have been involved in the
gathering and reporting of clinical performance measure (CPM) data
since 1994 through the CMS Core Indicators Project. As a result,
provision of care to chronically ill patients under bundling and
quality measurement structures that are just now being proposed broadly
across all specialties has been a way of life for nephrologists for
many years, and thus RPA believes our insights would be of use to the
Subcommittee.
In this collaborative spirit, we offer the following
recommendations for consideration in the development of new
methodologies to improve the quality and efficiency of the care
provided by Medicare physicians. These recommendations are organized
into two sections, the first addressing quality related issues and the
second relating to the reimbursement structure issues involved in the
development of bundled payment systems and similar models.
Quality Issues
RPA believes that in order to develop an effective and
workable payment methodology linking reimbursement to quality,
Congress, CMS, MedPAC and other policymakers must actively involve and
draw on the intellectual resources and experience of the physician
community throughout the process. This will help to ensure that the
development and final products emphasize the expected benefits of a
modified payment methodology and minimize negative unintended
consequences.
RPA supports the development of performance-based payment
system that considers and separately rewards both high quality patient
care and measurable improved performance.
RPA believes that for such a revised payment methodology
to be effective longitudinally, the system must not disrupt the
resource-based relative value scale (RBRVS) system, and must for the
purposes of the incentive payments have budget neutrality waived.
Incentive payments should not be derived by decreasing usual payments
or establishing a withhold from the usual payments.
RPA believes that to effectively implement a payment
methodology linking reimbursement to quality, Congress must consider
fundamental change to the policy structure underlying the Medicare
program, specifically assessing the desegregation of the Medicare Part
A and Part B funding pools. RPA believes that the artificial separation
of inpatient and outpatient reimbursement does not allow for enhanced
Medicare program cost efficiency through the investment of Part A
savings in outpatient care services.. Physician activities that improve
quality and produce savings by decreasing hospitalizations ought to be
accounted for in the adjudication of the funds available for physician
incentive reimbursement.
RPA believes that Congress must support substantial
research in both the pertinent basic science and health services
arenas, especially related to outcomes research, in order to strengthen
the essential and necessary scientific evidence supporting a transition
to a performance-based payment system.
Reimbursement Structure Issues
RPA supports the use of bundled payment systems to
provide medically appropriate care to specific patient sub-populations,
and to promote efficient use of Medicare program resources. RPA
believes that the reimbursement for bundled payment systems must not
only cover the services included in the bundle but also be sufficient
to promote the use of electronic medical records, integration of
emerging technologies, and other innovations in medical practice.
Further, RPA believes that a mechanism for periodic review of the
bundle must be included when the bundle is developed, with review of
the reimbursement for the bundle being required if and when services
are added to or removed from the bundle.
RPA believes that physician reimbursement system
revisions should include assurance of reasonable payment that
encourages the medically appropriate site of care to be utilized,
including payment at all sites of care where services are provided.
Such a policy revision would address situations where the patient is
admitted to the hospital for services that are medically appropriate to
be provided in the outpatient setting but are often provided in the
inpatient setting due to the absence of a payment mechanism in the
outpatient setting. For example, in renal care, patients with acute
kidney failure who are expected to regain their renal function often
cannot be dialyzed in the outpatient setting because of the difficulty
that dialysis facilities and outpatient hospital departments experience
in being reimbursed for the facility services related to dialysis.
Review and revision of such seemingly arbitrary reimbursement
guidelines would facilitate more efficient use of Medicare program
resources.
RPA believes that expanded coverage for medically
appropriate utilization of services to maintain and improve quality of
care should be provided. While the expansion of covered preventive
services in the Medicare program in areas such as diabetes treatment
represents a significant step forward, the potential for achieving
greater cost-efficiency in this area is profound. For example, in
kidney care there are a variety of interventions and treatment
modalities specific to the ESRD patient population that would enhance
the quality of care provided but for which there currently is either no
Medicare reimbursement or such reimbursement is extremely difficult to
obtain. Examples of these services include certain procedures related
to monitoring and maintaining the patient's vascular access, use of
essential oral medications including phosphate binders and
multivitamins, and provision of nutritional supplements. Coverage of
these services over time will likely lead to decreased per-patient
costs over time.
RPA believes that reimbursement for effort and practice
costs associated with required quality improvement and patient safety
services should be accounted for as payment system revisions are
developed. Recognizing that programs such as the Physicians Quality
Reporting Initiative (PQRI) and other CMS managed demonstration
projects are currently only voluntary, before these programs are made
mandatory, there should be corresponding consideration of the expenses
to the physician's practice of providing these services. In renal care,
while it is appropriate that nephrologists should be expected to lead
continuous quality improvement (CQI) processes in dialysis facilities
and their own practices, assuming responsibility for the full cost of
these services should not be part of that expectation.
Conclusion
RPA supports Congress' efforts to seek improvement in the quality
and efficiency of the care provided by Medicare physicians to program
beneficiaries. We urge Congress to approach these issues thoughtfully
and deliberately in order to minimize the impact of any unforeseen
negative consequences. In the area of quality improvement, we urge
Congress to (1) continue its efforts to include physicians in the
development of such a system; (2) direct CMS to develop a performance-
based system that rewards both high performance and measurable improved
performance; (3) ensure that such a system does not disrupt the RBRVS
system and identifies separate funding for incentive payments; (4)
assess desegregation of the Medicare Part A and Part B funding pools;
and (5) support the basic research and health services research
necessary to make such change evidence-based. With regard to
reimbursement structures, Congress should (1) require periodic review
of any bundled payment, and the bundle of services itself; (2) provide
reasonable payment that encourages the medically appropriate site of
care to be utilized; (3) expand coverage for medically appropriate
preventive services, especially in the treatment of chronic diseases;
and (4) account for the effort and practice costs associated with
enhanced quality improvement and patient safety services. Once again,
RPA appreciates the opportunity to provide our perspective on these
issues to the Committee, and we make ourselves available as a resource
to the Committee in its future efforts to ensure the best possible
health outcomes and quality of life for all Medicare beneficiaries, and
especially those with kidney disease.
Statement of University of North Carolina at Chapel Hill
In 1999, the state of North Carolina enacted landmark legislation,
which licensed Clinical Pharmacist Practitioners as mid-level
pharmacist practitioners with the North Carolina Medical Board. The
Medical Practice Act (G.S. 90-18.4) states (a) any pharmacist who is
approved under the provision of G.S. 90-18(c) 3a to perform medical
acts, tasks, and functions may use the title ``Clinical Pharmacist
Practitioner.'' It further states that a CPP may implement drug therapy
and order laboratory tests pursuant to a drug therapy agreement. The NC
Pharmacy Practice Act 90-85.3 defines CPP's as having the authority to
collaborate with physicians in determining the appropriate health care
for a patient.
In order to qualify as a CPP, a pharmacist is required to complete
advanced training and certification and be approved by both the NC
Board of Pharmacy and Board of Medicine. This expands the scope of
practice of a clinical pharmacist to allow for prescriptive authority
and complex medical decision-making. This legislative action in the
North Carolina General Assembly, allowed CPP's to establish their own
practices, often within a physician's office or clinic, focusing only
on the provision of clinical services in collaboration with physicians.
CPP's deliver care and function as mid-level providers in a manner
equivalent to nurse practitioners and physician assistants. In all
cases, CPP's provide very detailed evaluation and management of
extremely high risk patients with multiple co-morbidities who are at
risk for bad outcomes (i.e. hospitalization, ER visits, etc.) unless
their clinical status for diabetes, CHF, COPD, anticoagulation, etc. is
closely monitored. The attending physician provides direct oversight as
required by the incident-to guidelines.
Clinical Pharmacist Practitioners (CPPs) are North Carolina
registered pharmacists who have an advanced scope of practice, similar
to Nurse Practitioners, who via collaborative practice agreements with
supervising physicians, provide direct patient care under the
supervision of a physician. Accordingly, CPPs are considered mid-level
providers, however, pharmacists, at any practice level, are the only
health care practitioners who are not recognized under Part B of the
Social Security Act. Why is that the case? Consequently, CPPs are not
allowed to bill for seeing Medicare-eligible patients for provision of
clinical care. Thousands of high-risk patients (i.e., hypertension,
diabetes, CHF, anticoagulation, chronic pain) in North Carolina (and
beyond) risk a critical interruption in care when they are not allowed
access to the entire spectrum of health care providers.
In 2004, HR 4724, which was intended to cover a higher level of a
collaborating pharmacy practitioner which largely exists only in North
Carolina and New Mexico at present. This piece of legislation,
submitted in 2004 by then-Representative Richard Burr as a stand-alone
bill, went nowhere, even though it was supported by all of the national
pharmacy organizations and the American Medical Association. Such
legislation, had it passed, would not have enabled all pharmacists,
such as dispensing pharmacists, to receive reimbursement for Part D-
related activities, but only for those advanced practice pharmacists
who provide patient care activities under Part B, such as through a
collaborative agreement with a physician. At present, there are at
least 41 states that have state legislation approved for expanded
clinical roles for pharmacists, such as noted above. The only barrier
is our Federal government.
In reading your e-mail message, we noticed that Rep. Stark
suggested that a review of the payment systems for fee-for-service
providers, and that the majority of Medicare beneficiaries and payments
are under the fee-for-service system. If you are looking for efficient
and appropriate health care provision, then we would submit that you
also take a look at the use of advanced practice pharmacists, to
provide health care, decrease medication costs through application of
pharmacotherapy, and monitor for and reduce the risk of adverse drug
events. The attached document outlines the benefits of clinical
pharmacists in managing care and it attendant costs, and while it is
several years old, it delineates the value, both in patient outcomes,
and in cost savings (e.g., $14 to $17 saved for each dollar spent) in
the Medicare population.
We have also noticed that the Chair of the Medicare Payment
Advisory Commission testified at your hearing. We would respectfully
suggest that you review the MedPAC report on Clinical Pharmacists,
produced in 2002.
We would love to talk to anyone who is interested in improving
health care for our nation's seniors, with a potential cost savings to
the system. The Medicare recipients in our state, and all others for
that matter, depend upon your support of this request to consider
including advanced practice pharmacists as approved health care
providers under Medicare Part B. Just ask yourself one question: If the
Federal government will not let pharmacists take care of America's
prescription drug use problem, then who will? Physicians are too
overloaded to work on this issue, and there is a national shortage of
nurses. Imagine how you could start to fix the Medicare Part D problems
if you truly let pharmacists come to the table and do it. Most often,
your best solutions are not related to more technology or regulations,
but actually are right in front of you, in the communities across the
country, where problems can be dealt with face-to-face. Please support
advanced practice pharmacists, the most accessible health care provider
in the community.
Please enter these comments into the record, but more importantly,
please call upon us to continue the conversation.
Sincerely,
Timothy J. Ives, Pharm.D., M.P.H., BCPS, FCCP, CPP
Robb Malone, Pharm.D., CDE, CPP
Betsy Bryant Shilliday, Pharm.D., CDE, CPP