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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