Blog Home


A ‘Doc Fix’ That Still Needs Fixing

December 5th, 2013
by Rahul Rekhi

Recently, bipartisan leaders of two Congressional committees—Finance in the Senate and Means and Ways in the House—released a proposed solution for the longstanding “doc fix” dilemma. Thus far, this debate has seen lawmakers annually defer the deep Medicare physician pay cuts mandated by the (ironically named) “Sustainable Growth Rate” (SGR) mechanism—postponed cuts that have today ballooned to nearly 25 percent. As such, in the aggregate, this draft proposal should be lauded for what it is: a wonky, bipartisan triumph against a thorny policy challenge amidst record-high Congressional gridlock. Because the current SGR system not only fails to provide incentives for physicians to rein in the volume of services they provide, but also cannot differentiate between increases in the volume of physicians’ services that are desirable (e.g. preventive care) and those that are not, the proposal’s call for replacing the SGR entirely is, well, entirely logical.

However, this appraisal comes with great caveat, for many of the solutions proffered by lawmakers in the draft document are also acutely incomplete. In capitalizing on the window of opportunity afforded by the historically low CBO-scored cost of an SGR repeal, the drafters of the proposal have rushed in stitching together the reform, and it shows. With visible seams, the proposal at times merely feels like a fix for the sake of nominally having one. How does this doc fix still need fixing? Let me count the ways.

1) Largely retains fee-for-service care. A cornerstone of the SGR repeal proposal lies in supplanting fee-for-service (FFS) Medicare payments with value-based reimbursement schemes, and rightly so—the broken incentives of FFS in increasing overall care utilization are well-documented. To this end, the document charts out a plan for consolidating the quality-based payments outlined within the Affordable Care Act (ACA) into a single, metric-driven value-based performance (VBP) system.

However, by leveraging the largely toothless value-based modifier system set by CMS under ACA guidelines, in which payment modifications lie on the order of 1 percent or less, the proposal fundamentally leaves intact the incentives for service providers to continue administering high-volume care. For example, a 2012 Health Affairs study by Werner and Dudley found that VBP would likely have little to no influence on overall hospital care. Even at the higher percentages set by the proposal, the payment modifications are arguably too trivial to realign incentives for providers. This stands in stark contrast to an analogous—albeit far more effective—policy set under the National Health Service in the United Kingdom, which ties as much as 30 percent of payments to quality metrics.

2) Leans heavily on yet-nascent pilot efforts. Recognizing the value in alternative payment models (APMs) in addition to VBP reform in realigning provider incentives toward improved quality, the proposal puts forth financial incentives for physicians to join these models. Specifically, it outlines 5 percent annual payment bonuses through 2021 for those that receive a substantial share of revenues from APMs. Furthermore, physicians joining APMs are stated to be exempt entirely from VBP assessments.

On paper, this is all good and well: as stated above, marginal VBP adjustments alone are not enough to mend Medicare’s broken incentives; only through wholesale reforms in APMs can such a paradigm shift in physician payments take place. The problem, however, is one of timing—APMs are by most measures simply not yet ready for the spotlight. For one, countless APM pilot studies spurred on by the ACA remain ongoing, and there is unlikely to be consensus in the literature around successful successors to traditional FFS systems before 2016, when the SGR repeal is phased in. Moreover, a litany of recent evidence on the cost-curbing potential of existing APMs (including a 2012 Congressional Budget Office report) has proven, in a word, underwhelming. Heavy-handed incentives to flood additional clinicians onto these pilots put further strain on the experimentation while arguably doing little to improve care.

3) Glosses over clinical realities. In addition to the above measures, the draft proposal establishes a variety of carrots and sticks to promote improvements in clinical practice activities, ranging from implementation of coordinated care to health IT systems. However, the proposal glosses over the fact that clinical practice improvements are not merely binary in nature; the level of efficacy matters immensely. For instance, defining truly meaningful use of electronic health records (EHR) has turned out to be deceptively challenging; recent evidence on the reform potential of EHR indicates that how a health system implements EHR is at least as important as whether it does so at all.

In parallel, the penalties imposed on “poor performing” professionals that lack the wherewithal to institute clinical activity changes leaves these providers even less equipped to improve their services. This has the potential to create a “Matthew Effect” for health care where less effective providers continue to slide in quality. Though the proposal does set aside $10 million each year from 2014 to 2018 to provide such technical assistance, this is a relatively paltry sum against the costs required to implement such systemic transformations as care coordination.

All in all, though the bicameral, bipartisan proposal presents a significant advance in the doc fix debate, it yet lacks the substance necessary for a truly fundamental shift in the incentive scaffolding established by Medicare. Rather than nominally leaping to wholesale reform, Congress should instead take measured steps that align with policy research and clinical realities.

First, APMs should be formally introduced into Medicare only upon the completion of the ACA’s pilot payment reform projects in 2018. At this time, APMs can be phased in with a fuller, evidence-based understanding of strengths, limitations, and best practices. Moreover, rather than sequestering APMs from the VBP system entirely, these payments should continue being adjusted by the value-based modifiers to ensure a smooth transition.

In the meantime, to wean providers off of volume-incentivizing FFS payments, higher value-based modifiers should be employed to bring the adjustments in line with the effective UK precedent. Expanding, in parallel, the pool of funding available for technical assistance with improvements in clinical practice activities will help under-resourced providers keep pace with rising quality standards. Ultimately, tying these improvements to performance-based outcomes (e.g., reduction in coding errors), as opposed to merely binary process measures (e.g., EHR implementation), can ensure a more guided implementation process.

Rectifying these issues will require patience—a “wait and see” mentality that may not score immediate political points. However, the result may just be a Medicare fix that is truly sustainable.

Email This Post Email This Post Print This Post Print This Post

Don't miss the insightful policy recommendations and thought-provoking research findings published in Health Affairs.

No Trackbacks for “A ‘Doc Fix’ That Still Needs Fixing”

4 Responses to “A ‘Doc Fix’ That Still Needs Fixing”

  1. Leslie Greene Says:

    I meant to complement Dr Gimlett on the simplicity and correctness of his post but realized it was also from his perspective as a Doctor in a Doctor’s Office or Hospital. Consequently, my long diatribe on what I perceive as possibly the same coding and payment problems from the patients perspective. Believe it or not, after my recent hospital stay, I am not an ungrateful or unappreciative patient. I am happy with my surgeons, doctors and healthcare professionals. BUT as a manager and patient and hopefully life time problem solver, I have identified one root problem for all, as the coding and computer networks or non-networks in just one city (Albuquerque, NM) is probably affecting everyone across the nation, with no sunshine on the frustration and loss of rational thinking in the law change that preceded even Obamacare, not to mention the ignorance of past law changes that affected Medicaid, Medicare, and Health Insurance throughout the 1980s and 90s. The “time, energy and documentation” problems Dr.Gimlett describes is the exact same problem the average working Family Head has, in trying to judge and adjudicate their own Insurance and Healthcare Bills and care.

    The only one who understands and is not concerned with Healthcare now, is the healthy low-income reporting person, who knows to just go to the E.R. and they will take care of you and you will never see a bill. I know and the average citizen knows of several “antidotal” examples of the game players who depend on Federal Committee’s and Parties to come up with more taxpayer games and code books that do nothing to “help” the median income or middle income Health Insured, but who never let the “poor” or “low income unemployed, i.e. under reported” game player down. Just check the statistics.

  2. Leslie Greene Says:

    Dr. Gimlett probably has hit part of the problem right on the head: CODES i.e. computers.

    I had my first hospital stay in over 30 years in April of this year. Of course it coincided with me turning 65 and being forced to sign up for Medicare last year and Thank God for that, in a way. But if coding is the method by which doctors and hospitals are now paid and the consumer/patient is expected to in any way review or care about how much is paid for, what is and is not done, then the system itself needs to be taken back to a system that thinks everyone is an intelligent human being who CARES about honesty and integrity and a system of communication for needs to be set up that clearly uses the English Language as opposed to numbers and code books that forces the average taxpayer/patient who pays for both expensive insurance/medicare/state Medicaid partnership, etc. programs in triplicate, what is being billed and what is going to be paid to their doctor.

    Before being released from the hospital for DVT and then subsequent Hemorrhagic Brain Stroke I asked how to get a copy of my records. Three Different doctors and Staff assured me that the records were in a citywide computer that my Doctor would have access to. That was the start of six months and continuing falsehoods and unknown information by hospitals and doctors who only know the systems of their companies and the incompatibility and incomprehensible various computer networks, policies, billing procedures and government/private insurance contract billing procedures across the city, state or country. I have paid for one of those so called “Union gold Plated Plans” all my life as a single parent, low-income state worker. As a manager and Masters Degree citizen, with lots of experience with budgets and systems, I can now tell you from a patient’s point of view that there is no way the average Doctor or Patient can understand, match up, figure out or correct, any problem, mistake or billing error with the actual healthcare that was provided. Whether it is the Medicare statement that comes in the mail months later listing by codes a simple needle prick to a two week hospital stay where the room and meals were billed as one code, regardless that one was only fed three meals in two weeks, the price was the same for nothing but the bed, it seems. But then with Medigap policy paying a portion that Medicare did or did not pay, the nightmare gets worse. Mistakes in coding or false billing for a simple bed or procedure, are again automatically paid or not paid, based upon a code or Medicare or now the Federal Sequester, with nether the patient (me) nor the Doctor, nor the Medicare or Insurance specialist able to figure out from just a date, or code, if it’s a legitimate bill or how to correct an error in billing/payment.

    At least Doctors still wear white coats! In the hospitals, washing hands or washing the patient daily even though they may be going into surgery every day or every other day, makes the patient totally dependent upon antibiotics for germ fighting, rather than trying to keep the germs from the bed pan, visitors, street traffic from the surgery room. For communication, the daily staff doesn’t know half the verbal communications from the Doctors or Surgeons to the patient, like “get up and exercise and walk”, and between the nurses, aids and monitors if it isn’t written on the computer, and everyone reads the computer (can they all read and do they have time?) most don’t have the authority to disconnect one from the tubes, etc., without the head nurse or authority immediately there to give you permission to do what the Doctor told you to do in the A.M.

    Most can’t or won’t even answer questions, order you food, give you water for your own bath, or let you disconnect yourself to walk the halls, without a order from some Doctor hours and Days after your own Surgeon told you to eat and walk. Yet like the HMO’s of old, that lost all their doctors and patients due to long wait times and lack of specialists, the new Medicare and new so called “Healthcare” Hospitals send out questions from teams or certain Doctors asking questions that have nothing to do with the actual Healthcare and system, or condition of communication within the very Hospital the patient and private or public policy is going to pay for. The Doctor has a very good suggestion for his office or for Doctors in private practice, probably. But, for patients after the fact, one finds out how it is the computers and codes that are both frustrating and limited and unintelligible, and time consumingly filled with ” garbage in and garbage out” codes with little correlation to patient care or procedure.

    As to accounts payable, it is no wonder the lawyers in the nation don’t want liability reform for Doctors or for Healthcare, for they will soon be making lots more money from patients who experience the frustration of needing accountants and lawyers to figure out their medical bills, no matter how much they earn or pay for private public partnership plans. A review of one this sites recent Washington conferences on “Whether Doctors should know the costs of procedures” is almost laughable, in that with all their titles and pictures, not one single average patient or “Doctors customer” was shown as a speaker or contributor to the Discussion. Communication is a two way street. Boots on the ground and all that! It is not lectures and speakers talking down to the troops and experts agreeing and discussing with new and modern theorem language their area of expertise and idea’s of problems in their single area. The big picture is to have those at the bottom who have experience with the whole system and the individual city, State or even Hospitals and Doctors Offices, how the root of the problems are all most all with the incomprehensible CODES and the inability of the numerous Computers programs to talk to each other. Next, the education and English reading level of the nurses, aids and technicians working and trying to read even the smallest, daily directive and bill accordingly. If for example the room rate and meals are all computed as one code, how does a nurse, doctor, aid or billing clerk subtract for the patient that is never fed or only fed 3 times in two weeks. Legitimately or due to non-communication, room and board should not be just one code!

    I am a patient who actually feels sorry for my Doctors and all prospective patients, who are used to being responsible and conscientious professionals and citizens but who have not been hospitalized or seriously ill since the 70′s, because Healthcare is not Insurance, nor is it about coding and billing. The government and AMA may have taken the “stima” out of Medicaid, by changing the terminology and names of government welfare programs, but for the taxpayer and future patient and Doctors, the whole U.S. is now computer and HEPA deprived of the ability to problem solve and honestly correct problems without the Lawyers and accountants even if your just a low income or middle class citizen. Computers don’t think! People can’t solve problems if they don’t have the code book and time to tell the drone worker or telephone internet operator, how to correct the problem or to tell the controller of the whole system, what is wrong. People with experience can think but what they don’t know can harm them and us as a nation.

    Something as simple as my primary care doctor not having admitting privileges to local hospitals, means that he/she has to refer me to emergency room for any number of symptoms that could be simple dehydration or possible stroke or heat problem. A call to every health hot line with a gas pain in the chest or numbness in the arm, is advice now to call a ambulance, and has been like that for over 20 years since the old HMO’s and newer Health Hotlines started up. Is that Liability fear or good advice? But, I could list four people in my area of knowledge of all ages, who have $10,000 emergency room bills because their visit to primary care doctors sent them to El.R.’s because the primary care doesn’t have the saline drips, CT scanner, Blood Lab needed to due further tests on site. Yes, Virginia we are all on Medicaid now, but “WE” are the Doctors and Patients who work and try to think and gather information, in a information age where every taxpayer should have a 10,000 page code book by the computer and another $700 cash to pay for their own Hospital record, just to decipher their post Op, post visit Billing statement, in other words ” learn a new language” just to figure out the bills a month or four later, after the fact. That’s Not the Doctors Job, nor is it good systems management. Good solutions are based upon identifying the problem, not all the symptoms and trying to fix all the symptoms. We nor you have identified the computer-coding problem with a nation who for forty years, can’t read beyond a 7th grade level, yet we depend on reading computers for all healthcare now and even the doctors are having trouble with time that computer reading of patient files is causing.But education, the 3 R’s, so to speak is just another problem for another day. Think about it from the bottom up and tell the next person who sends out a questionnaire, to ask the right questions.. The original goal of Medicare and Social Security wasn’t to put everyone on low income Medicaid HMO’s with few doctors and high priced Insurance for years of good but limited P.A and Medical Assistant referrals. Define middle Income and Poor and the disparity between all the States in Medicaid exceptions and Medicare/Private subsidies to the States and I will show you the next multi-State lawsuit against Government for Discrimination and Civil Rights abuse.

    Starting with mandatory Law that proscribes codes and computers as mandatory for Doctors and patients, didn’t cut down on work load nor make billing clearer, easier or cheaper. It did not cut down on Medical costs nor further communication in a Hospital or Healthcare setting. It created a market, made money for investors, and business for some Doctors it made retrieval of records faster, but records were lost when systems were changed and updated. Numerous tests were repeated or lab work repeated or replicated when patients were moved to different Doctors or Doctors changed to different labs and couldn’t read older or different lab codes. Patients paid more, were x-rayed more, lost more blood just because of different codes and computers. But did the Doctor’s office save money? Hire fewer people? Give better service to the Patients? Has Obamacare or Medicaid fixed the computer and code problem before attempting to conjoin thousands of individual, company and government health plans? Even the Federal government can’t get all the computer systems to talk or check on each other. But now they expect all the computers and Doctors and Hospitals to conjoin and work for the patient and doctor like the single control (Social Security/Medicare/IRS) system? HA!

  3. David M. Gimlett, M.D> Says:

    Good analysis as far as it goes but assumes too much. “Value” can’t be defined. Rules can be made up but they just define the landscape of gaming. Most “evidence” in medicine is skewed by poor science and conflicts of interest of individuals and organizations. Primary physicians across the country do not have the time, energy, or money to play the documentation games. Paying higher amounts for “value” will just reward the better game players.

    For a quick fix let’s just split the conversion factor into 2 parts, increase the one for E/M codes and decrease the one for procedures. Come out budget neutral.

    Then sit down and think about how all of this is just patchwork on an unsustainable medical system.

  4. leetocchi Says:

    I can hardly wait until 10 yrs from now after medicine in america has been transformed into the DMV or the English NHS and we “discover” a new payment model which will fix all our newly acquired inefficiencies, that even IPAB “physician payment death panels” have created…the new Pay for Procedures where doctors and hospitals are paid for the actual work they do.

Leave a Reply

Comment moderation is in use. Please do not submit your comment twice -- it will appear shortly.

Authors: Click here to submit a post.