Health Plans Open Community-based Clinics to Cut Costs and Physicians Call for New Medicare Pay System by 2016 or 2017

Tue May 17 09:28:50 PDT 2011

May 6, 2011
Health plans open community-based clinics to cut hospital costs

Fierce Healthcare

By Ron Shinkman

Focused on keeping hospital costs down for their low-income charges, many Medicaid and Medicare health insurers for the disabled are opening up community-based clinics to provide services to enrollees with chronic conditions, reports Kaiser Health News.
Bravo Health has opened up three clinics in the past year, two in Philadelphia and one in Baltimore. It stays open late and offers services not typically available in physician offices, such as IV therapies, which can cost $10,000 or more if provided by local hospitals. Other plans have also been hiring physicians to open clinics.
Bravo officials estimate that hospital costs for its populations that live near the clinics have shrunk by about 10 percent, although they say the quality of care has not degraded.
Hospital costs for Medicare and Medicaid enrollees grew at an annual rate of 7 percent between 2000 and 2009, challenging insurers who want to grow their profitability but are prohibited from raising their premiums by federal growth formulas.
"We don't have the revenue lever that commercial plans have" to keep up with those soaring costs, said Jason Feuerman, a senior executive for HealthSpring, Bravo's parent company. "They can just raise their premiums."
To learn more:
- read the Kaiser Health News article

May 2, 2011
Physicians Call for New Medicare Pay System by 2016 or 2017

Medscape Medical News

By Robert Lowes

Medicare would dramatically shift away from fee-for-service reimbursement in 2016 or 2017 after a period of payment stabilization and experimentation to replace its sustainable growth rate (SGR) formula, according to 5 recent proposals submitted to Congress by organized medicine.

Under 3 of the 5 plans, physicians would eventually have their pick of reimbursement models that proved themselves worthy during the testing phase.

Despite some differences around the edges, the proposals from the American Medical Association (AMA), the American Academy of Family Physicians (AAFP), the American College of Surgeons (ACS), the American College of Physicians (ACP), and the American Osteopathic Association (AOA) lay out remarkably similar paths toward eliminating fee-for-service (FFS) reimbursement or drastically reducing its role.

The medical societies submitted their plans to the House Energy and Commerce Committee, which had asked them for suggestions on Medicare reimbursement reform in late March. Physicians are hoping for long-term action that will end the annual drama of Congress postponing SGR-dictated pay cuts.

Even now, physicians face a 29.5% reduction in Medicare rates on January 1, 2012, if Congress fails to avert it. Organized medicine has warned lawmakers that if such a massive pay cut took effect, physicians would leave the Medicare program in droves. That exodus, in turn, would jeopardize access to care for not only seniors but also military families whose TRICARE coverage is based on Medicare rates.

Healthcare Reform Provides Payment Models to Test

All of the plans to transform Medicare reimbursement specify a period of payment stability to replace the chaos that physicians experienced in 2010, when Congress voted 5 times to stave off scheduled cuts. Under the ACP, AMA, and AAFP proposals, this period would last 5 years, from 2012 through the end of 2016. The AOA recommends only 4 years, through 2015, while the ACS recommends up to 5 years.

Some groups recommend repealing the SGR formula immediately, others at the end of the stabilization period. All of them, however, call on Medicare to give physicians some kind of annual raise during this time, such as a 2% increase for evaluation and management services and a smaller increase for everything else. The ACP and AOA agree that Medicare also should continue to give primary care physicians the 10% bonus stipulated by the new healthcare reform law called the Affordable Care Act (ACA). The AAFP would like the bonus increased to 20%. All 3 groups recommend that the ACA provision to raise Medicaid pay to Medicare levels for primary care and preventive services remain in force as well.

While physicians are getting a breather from SGR drama, Medicare would experiment with various reimbursement models that reward the quality as opposed to the quantity of healthcare services under the proposals from organized medicine. Many of the models put forward, such as patient-centered medical homes (PCMHs), accountable care organizations (ACOs), andbundled payments, are set to be tested as part of the ACA. Most of the physician groups stress the role of the new Center for Medicare and Medicaid Innovation — spawned by the ACA — in developing these and other payment mechanisms.

AOA Sets 2026 Deadline for Eliminating Medicare FFS

What happens after the period of payment stabilization and experimentation is where the 5 physician groups diverge the most. The AAFP envisions a medical-home model for primary care that blends 3 elements: FFS payment with a higher rate for primary care physicians, a care management fee for operating a medical home, and bonuses based on a voluntary pay-for-performance or pay-for-reporting system. Over time, the FFS element would shrink while the other 2 elements would expand, according to the AAFP.

For their part, the AMA, AOA, and ACP propose letting physicians pick from a menu of payment models that emerge as winners from the testing phase. Anticipating that some practices would need time to convert to a new payment model, the ACP and AOA recommend extending the life of FFS reimbursement on a transitional basis. However, physicians choosing to stick with FFS would receive lower fees than those who have shifted to a new payment model.

The ACP does not set a date for phasing out FFS reimbursement for Medicare and states that it may need to remain on the scene indefinitely for "specialties and types of practices that cannot transition to the new practice models through no fault of their own." In contrast, the AOA sets a deadline of January 1, 2026, for ending FFS reimbursement in Medicare.

Anna Parks &
Brian Potts MD, MBA
Managing Editors, CAL/AAEM News Service

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