Friday, September 11, 2015

Doctors and Hospitals Agree: Medicare is Changing Payments the Wrong Way

Doctors and hospitals both agree that there are serious problems with the way the Centers for Medicare and Medicaid Services (CMS) is designing new healthcare payment models.  The American Medical Association (AMA) and the American Hospital Association both submitted detailed criticisms of the Comprehensive Care for Joint Replacement Payment Model that CMS proposed in July.  (The comments submitted by the AMA can be downloaded here and the comments submitted by the AHA can be downloaded here.)  Both groups provide a long list of problems with the CMS proposal, many of which are similar to those in CHQPR’s report Bundling Better.  The AMA and AHA criticisms include:
  • The lack of risk adjustment in episode budgets.  The AHA provides data showing the large differences in the types and cost of rehabilitation services needed by joint replacement patients depending on their age and health status, yet CMS is proposing to make the same payments for everyone.
  • The lack of flexibility to change the way individual providers are paid.  The AMA describes the problems with the severe restrictions CMS places on how payments can be divided among participating providers.  The AHA gives an example of how, because Inpatient Rehabilitation Facilities (IRF) could only be paid using the current fixed case rates defined by CMS, a hospital might be forced to send a patient to a skilled nursing facility instead of an IRF because of the different way the two facilities are paid, rather than what is best for the patient.
  • The excessive amount of risk shifted to hospitals.  The AHA estimates that the payments hospitals currently receive for joint surgery could be cut by over one-third through this program in order to pay for the costs of post-acute care if the CMS payment rates turn out to be too low.
What is really significant is that neither the AMA nor the AHA is asking CMS to preserve the status quo.  Indeed, rather than merely criticizing problems with the CMS proposal, the AHA provides a lengthy list of recommended improvements, and the AMA provides a detailed blueprint for a completely different approach to paying for comprehensive care for joint replacement.  Key elements of the approach recommended by the AMA, which could be a model for episode payments in other areas, are:
  • Patients who need surgery should have the opportunity to choose physician-led teams of providers (hospitals, post-acute care providers, etc.) who have organized themselves to coordinate services and take accountability for cost and outcomes for the entire episode of care, including preparation for surgery, the surgery itself, the rehabilitation after surgery, and any complications that arise.
  • The provider teams should receive a bundled payment that gives them both sufficient resources to achieve good outcomes for their patients and the flexibility to design services in a way that achieves the best outcome at the lowest cost.  The provider teams should also have the flexibility to create new organizational arrangements or use existing organizations to receive bundled payments and the flexibility to allocate those payments among the participating providers.
  • Payment amounts should be risk-adjusted so that patients with greater needs can receive adequate services, and outlier payments and risk corridors should be established that protect providers from excessive risk.  Payment amounts should be higher for providers with better outcomes, and payments should be stable and predictable over time.
In addition to its detailed recommendations for a better way to pay for joint replacement, the AMA recommended seven goals for how CMS should approach the development of alternative payment models.  These goals could serve as guiding principles for all payment reform efforts by both Medicare and private payers:
  1. Remove the barriers to better care that are created by current payment systems.  A major reason why payment reform is needed is that current payment systems create barriers to delivering the kind of care that will improve quality and reduce costs.  The AMA states that many physicians have identified ways of improving quality and cost, but they cannot implement those changes unless the barriers in the current payment system are removed.  CMS and other payers won’t fix these problems by merely adding small “incentives” on top of a broken payment system.
  2. Provide adequate, predictable resources to support delivery of high-value care.  The AMA emphasizes that if savings are achieved by setting payment rates below achievable costs, physicians, hospitals, and other providers could be forced out of business and Medicare patients would face reduced access to care.  Instead of requiring across-the-board “discounts” for all providers, CMS should give providers the ability to eliminate avoidable spending and then set bundled payment rates based on what they show can be achieved.
  3. Hold physicians and other providers accountable only for aspects of cost and quality they can influence or control.  The AMA clearly states that physicians are willing to accept accountability for the aspects of quality and cost they can control or influence.  However, all of the payment models CMS has been developing put physicians at risk for spending over which they have no control.  This prevents many physicians from participating in these payment models and slows national progress in controlling costs and improving quality.
  4. Allow voluntary participation by providers in all parts of the country.  Hundreds of physician groups, hospitals, and other providers are already participating in the various payment programs CMS has created, and hundreds more would have participated if various flaws in those programs had been corrected.  The way to get broader participation and make faster progress in payment reform is not to mandate problematic payment models, but to provide the support innovators say they need.
  5. Support physician leadership in redesigning care delivery.  As the AMA points out, payment models don’t create higher quality care at lower cost, physicians and other health professionals do.  The determination as to what types of care could effectively improve a patient’s needs must be made by physicians and patients, not by payers.  If physicians have indicated that they can and will improve care and reduce costs, then payment models should be designed to provide the flexibility they need and the accountability they are able and willing to accept.
  6. Allow flexibility for different organizational arrangements among providers.  There are enormous differences in the ways healthcare services are organized and delivered in different parts of the country.  No one-size-fits-all approach to payment reform will work well in all parts of the country, no matter how efficient it would be for a federal agency or other national payer to have a single approach.  CMS deserves considerable praise for the way it designed its Bundled Payments for Care Improvement initiative because it offered four different payment models, not just one, it gave providers the flexibility to choose which of 48 different types of patient conditions they wanted to focus on, and it provided multiple choices for organizational structures and risk arrangements.  That one federal program has provided more different payment reform models than any private payer in the country.  CMS needs to design future payment reform programs with similar or greater flexibility, not less.
  7. Design payment reforms through a collaborative approach.  The fact that doctors and hospitals have so many serious concerns about the CMS proposal clearly indicates that CMS needs a more effective process for engaging healthcare providers in the development of good payment models.  The enormous amount of time and effort that CMS obviously invested in developing the CCJR proposal would have produced a much better result if CMS had involved physicians, hospitals, and other healthcare providers in the process from the very early stages, rather than seeking input only through comments on a several hundred page regulation that many people will perceive as a fait accompli.  Instead of viewing providers as adversaries in a regulatory process, CMS needs to develop new payment models through a more collaborative approach.  In many parts of the country, providers and payers are working together through multi-stakeholder Regional Health Improvement Collaboratives to redesign payment and delivery systems in a “win-win-win” way, and CMS should support that same kind of multi-stakeholder collaboration in its work.



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Wednesday, September 09, 2015

Bundling Better – How Medicare Should Pay for Joint Replacement and Many Other Types of Care

The Center for Healthcare Quality and Payment Reform has issued a detailed alternative to the problematic payment changes for hip and knee replacement surgeries that were proposed in July by the Centers for Medicare and Medicaid Services (CMS).  CHQPR’s report Bundling Better: How Medicare Should Pay for Comprehensive Care (for Hip and Knee Surgery and Other Healthcare Needs) describes in detail how a properly designed payment system for hip and knee replacement could enable physicians, hospitals, and other providers to improve care for patients and reduce costs for the Medicare program without the need for those providers to accept excessive or inappropriate financial risk, and without requiring or encouraging greater consolidation of providers.  A copy of the report can be downloaded here.
Making sure CMS implements the right kinds of changes in Medicare payment for hip and knee surgery is not just important for orthopedic surgeons and the hospitals and post-acute care providers that care for hip and knee surgery patients.  The way CMS pays for this procedure will likely be the template for the alternative payment models Medicare uses to pay for many other procedures and conditions, so getting it right should be everyone’s concern.  The same payment approach described in Bundling Better could be used to support better care for a broad range of patients and health conditions, not just hip and knee problems.  Moreover, the same payment model could also be used by private employers, state Medicaid agencies, Medicare Advantage plans, and commercial health insurance plans to enable providers to improve care and reduce costs for their employees and members.  The payment changes proposed in Bundling Better would also improve the ability of Accountable Care Organizations to successfully manage the overall costs and quality for a population of patients.
The problems with the way CMS has proposed to change payment for joint surgery were described in detail in CHQPR’s report Bundling Badly: The Problems With Medicare’s Proposal for Comprehensive Care for Joint Replacement.  For example:
  • The CMS proposal does not change any of the underlying fee for service payment structures that create the current problems.  Instead, it tries to impose an overall budget on the total cost of care after the care has already been delivered.
  • The CMS proposal would set the same budget for an episode of care regardless of differences in patient need, which could lead higher-need patients to be underserved or be denied access to surgery.
  • The CMS proposal would put hospitals at risk for all of the costs of post-acute care services, even though hospitals do not have direct control over those services today and would not be given any greater control under the proposal.  Hospitals would also be held accountable for the management of patients’ chronic conditions after discharge, regardless of whether the physicians who had been managing those conditions prior to the hospital admission were even affiliated with the hospital.
  • The CMS proposal would reduce the overall budget for services if fewer services eligible for current payments were delivered, with no consideration for the costs providers had incurred in delivering new or improved services that are not reimbursed under current payment systems.
  • Under the CMS proposal, providers who deliver better outcomes would not be rewarded for doing so unless they were able to reduce spending.  Conversely, providers who deliver poor outcomes would not be penalized as long as spending remained within target levels.
  • The CMS proposal would mandate participation by providers in randomly-selected regions while precluding participation by providers in other regions, which would limit the choices of Medicare beneficiaries in every community.
  • The CMS proposal would preclude the ability to implement better approaches to payment for joint replacements in any region for a five year period.
The revised approach to Comprehensive Care for Joint Replacement (CCJR) developed by CHQPR and described in Bundling Better would have the following significant advantages over both the current payment system and the proposal that CMS issued in July:
  • All of the care associated with hip or knee replacements would be delivered by a physician-led team of providers chosen in advance by the patient receiving surgery.
  • This CCJR Team would have the ability to deliver the most appropriate services to meet patients’ needs, and the providers on the Team would not be restricted to delivering only those services for which payments are made under current Medicare payment systems.
  • The CCJR Team would receive an episode payment designed to cover the costs of all of the services their patients need related to the hip or knee surgery, including all post-acute care services and any complications experienced for a 90-day period.  This payment would be established based on what providers agreed that evidence and experience indicated was necessary to support good care for patients.  The amount of the payment would be known long before care was delivered and it would be stable over time, so that providers could establish and sustain high-quality patient care services.
  • CCJR Teams who treat patients with greater needs would receive larger episode payments to adequately support the larger amount of care those patients need.
  • CCJR Teams who deliver better outcomes for their patients would receive higher episode payments.
  • Payments to CCJR Teams would flow through provider-owned CCJR Management Organizations, and limits on financial risk would be established to enable physician practices and provider organizations of all sizes to participate in the program.
  • Participation in the CCJR program would be voluntary and open to interested providers in all parts of the country, so that all Medicare beneficiaries would have the opportunity to benefit from better care under the program, and also so that no beneficiary would be forced to receive care paid through the program if their physicians did not believe it would enable them to deliver improved care.
  • The CCJR program would not preclude providers or CMS from implementing other payment models if better options became available.
Although there is an urgent need to reform payment systems and to control health care costs, it is simply not feasible to implement a well-designed CCJR payment model by January 1, 2016 as CMS has proposed.  Moreover, rushing to implement a problematic payment model and then requiring that it be used for five years in some communities while precluding any other changes in order to “test” that model will create a major barrier to true innovations in care and payment for joint replacement and it will likely have a chilling effect on innovations in other areas.
Instead, CHQPR has proposed that CCJR should be redesigned and implemented through a collaborative effort of CMS and the physicians, hospitals, and post-acute care providers who want to create a truly well-designed payment model.  Bundling Better includes a detailed timetable for implementation that could enable improved care for Medicare beneficiaries and savings for the Medicare program beginning in 2017.

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