Expectations are high this year that Congress will finally reach an agreement to overhaul the way Medicare pays doctors for services, scrapping a method that’s been the target of criticism for more than a decade.
If that happens, experts say, Medicare beneficiaries will see changes in how health care is provided, with an increased emphasis on coordinated care and preventive services.
“We’re optimistic that there are a lot of opportunities in this to help make people healthier, more satisfied with their care and bring down costs,” said Dr. Joseph Craft III, a cardiologist at Mercy Clinic Heart and Vascular and president of the St. Louis Metropolitan Medical Society.
The current Medicare payment formula, enacted in 1997 as part of a budget deficit reduction measure, was designed to curb federal health spending by linking physician payments to an economic growth target.
Known as the sustainable growth rate, or SGR, the formula initially meant modest Medicare payment increases to doctors. That abruptly changed in 2002, when Medicare cut reimbursements by nearly 5 percent. Doctors protested, and Congress responded by delaying the cuts, over and over, ever since. The postponements, however, have just increased the size, and price, of the needed fix.
Under the current system, the majority of Medicare beneficiaries receive fee-for-service care. This means physicians are reimbursed a set amount for each service they provide. This method, critics say, provides financial incentives for doctors to offer more services than necessary.
The fixes working their way through three key congressional committees, while they differ, are designed to provide doctors with incentives to model their services based on value instead of volume, said Dr. Stanley Birge, an associate professor of medicine at Washington University in St. Louis.
“By value we mean the quality of the service, plus the cost efficiency of providing that service,” he said. “That represents, of course, a huge change.”
Instead of each doctor billing for each service, health care providers would be encouraged to form medical groups that coordinate their services and offer bundled bills. For example, it’s cheaper to pay a single fee to a hospital for surgery than to pay the surgeon, anesthesiologist and overhead costs separately.
The advantage to this approach is that physicians will be encouraged to communicate better about their shared patients’ care, which will likely decrease duplicated services and misdiagnoses.
The Patient Protection and Affordable Care Act, signed into law in 2010, pushes heavily for bundled payments instead of fee-for-service. The ACA cannot take full credit, though, for the proposed changes. St. Louis doctors say they’ve been moving in this direction all along.
“It’s already happened, and it’s continuing to happen,” Craft said.
Many physicians already noticed, and were concerned by, the industry’s focus on quantity over quality — and its contribution to rising health care costs.
In response, doctors groups began moving toward better coordination of services, trying to better manage patient care, Craft said. Accountable care organizations, made up of doctors, hospitals and other providers, follow a patient’s medical life, instead of just a few appointments.
And many physicians — often without reimbursement — lined up medications, physical therapy appointments and more for their patients. They invested in electronic health records for data sharing.
“There was no reimbursement,” Birge said, “so therefore, no way to compensate a physician for spending an hour or two on the phone coordinating the care of the patient that was just discharged from the hospital.”
One retired couple, Herbert and Maria Damron, have continued to visit their St. Louis doctors since they moved to the Lake of the Ozarks more than 15 years ago. Like most Medicare beneficiaries, they are fee-for-service patients.
Both agreed their doctors at Mercy Hospital St. Louis have provided excellent coordinated care.
Maria Damron, 70, said when she had a surgery coming up, her cardiologist was notified and requested to perform a stress test first. Afterward, he called her at home “and was so thrilled — on a Friday, late in the day — and said, ‘You did better than last year.’ That’s coordinating patients to the max. And when a doctor calls you back, you have a good relationship.”
Not all physicians have made efforts to participate in coordinated care. Some profit handsomely on a fee-for-service model. A Jan. 18 article in The New York Times, for example, spotlighted how dermatologists on average make almost half a million a year by billing separately for tests, labs, and each and every mole removed.
Others, Craft said, are afraid of investing in expensive equipment, such as electronic health records, without knowing for sure whether they will save costs in the long-term.
But doctors groups, including many specialists, are supportive of the SGR repeal.
If it isn’t replaced, many medical providers would endure a huge cut to their pay and staff budgets if Congress failed to avert the scheduled cut due later this year. Because of the repeated deferrals by Congress, cuts in Medicare reimbursements could exceed 20 percent if no action is taken, according to the House Committee on Energy and Commerce and Committee on Ways and Means.
“We’re gonna see a cut in our Medicare reimbursement. It keeps climbing every year, and this really would be a disaster,” Birge said.
Access To Care
Some Medicare physicians have threatened to quit the program if there’s no repeal of SGR.
But Birge said that issue is overblown. The reason doctors stop accepting Medicare, he said, is because they stop accepting insurance altogether.
Each insurance provider has a different set of rules for paperwork, and in an area like St. Louis with several providers, “you need an army of accountants and secretaries to fill out all these forms, and it’s extremely costly,” he said.
Birge pointed to an analysis by the Kaiser Family Foundation that found 96 percent of Medicare beneficiaries say they have good access to doctors.
But Craft, the medical society president, said that’s not what he’s observed in his organization. While most doctors won’t leave the Medicare program, he said, many will cap the number of Medicare patients they’re willing to see.
Once the SGR is replaced, changes will be gradual.
Cristina Boccuti, a Medicare policy analyst at the Kaiser Family Foundation, said after an SGR replacement program is agreed on, alternative payment models need to be tested in different areas of the country.
Socioeconomically disadvantaged patients should be included in the testing, she said, because “these are the patients where it’s crucial that they have access to the care that they need.”
Birge, who specializes in geriatric medicine, said that patients could expect better quality care under the new program.
“The physician really takes ownership of the patient, not just while they’re in the office, but they assume ownership of that patient before the hospital, during the hospital and after the hospital.”
How the standards of quality are set has yet to be determined.
While physicians groups such as the American Medical Association have been working for more than a decade to help define quality care metrics, the systems for analyzing and reporting quality care remain relatively untested, Craft said.
Two committees in the House and one in the Senate are discussing a final bill to present to Congress. The legislators have until the end of March to reach a consensus before Medicare cuts would kick in.