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Primum Non Nocere: Congress’s Inadequate Medicare Physician Payment Fix

January 24th, 2014

Editor’s note: You can read other perspectives on the Medicare physician payment reform pending in Congress in Health Affairs and Health Affairs Blog (here, here  and here).

Partisan gridlock in Washington regarding health policy has been so pervasive and bitter that any bipartisan co-operation on any important health issue should be applauded by a frustrated public.  That is why the emerging bipartisan compromise regarding the fifteen-year long policy embarrassment known as the Sustainable Growth Rate (SGR) problem needs to be taken seriously. Remarkably similar solutions — a new hybrid physician “value-based” payment methodology — have emerged from three of the four key committees in Congress, and seemingly the only stumbling block is finding the $115-120 billion to pay for it. Moreover, key physician interest groups, including the American Medical Association, appear to have signed off on this approach.

This makes it all the more troubling that the approach taken is unsound health policy that will damage practicing physicians in diverse settings: private practice, medical school practice plans, and hospital employment.  This is because the proposed legislation casts in concrete an almost laughably complex and expensive clinical record-keeping regime, while preserving the very volume-enhancing features of fee-for-service payment that caused the SGR problem in the first place.   The cure is actually worse, and potentially more expensive, that the disease we have now.

The SGR fix would basically freeze or severely limit future physician fee updates for Medicare Part B (a serious problem for primary care), while permitting physicians to earn modest “value-based” bonuses if they can document quality measure attainment, cost reductions, participation in alternative payment schemes, practice enhancement activities, or meaningful use of EHRs.

Physicians who meet all these standards could expect to supplement their existing Part B fee by about 4 percent in 2016, going to 10 percent in 2020, with the aggregate bonuses subtracted from the pool of total Part B physician payments to preserve budget neutrality.  Non-compliant physicians would see corresponding reductions in their updates.  There are sensible opt-outs for physicians who can report in groups, virtual or real, as well as for physicians who participate in as yet unspecified “advanced payment models” (APMs).

Slogans Over Evidence

Building on failed models. With this legislation, Congress is preparing yet again to enshrine in statute another payment strategy that is both unproven and highly controversial. A prototype of the controversial Medicare Shared Savings program was failing a CMS demonstration test — the Physician Group Practice demonstration — at the very time the ACA wrote it into law.

The SGR reform legislation is yet another triumph of slogans over evidence.  It builds upon a modified version of the current Physician Quality Reporting System (PQRS) system.  Critics have commented on the heavy reliance of the current PQRS and other federal value-based initiatives on process measures that are poor surrogates for actual patient risk reduction.  The Congressional plan actually ups the ante over the current PQRS and value-based modifier (VBM) programs by basing as much as 10 percent of an individual physician’s compensation on it. The legislation mandates that GAO evaluate the new Value Based Payment System in 2018, two years after it is implemented.  Is it too much to ask that we actually validate that a payment approach actually delivers claimed societal benefits before we enshrine it in legislation?

The value-based approach may work as a slogan (“fee for value’, etc.) but falls apart quickly when applied to individual physician practices. The pillar on which this approach rests — that we can meaningfully differentiate physician performance and quality at the individual physician level based upon claims data and self-reported clinical indicators — is not load bearing.

Usurping consumer and provider autonomy. For people who believe the purpose of transparency is to help consumers make better choices, an individually determined physician payment level is objectionable policy, because it relies upon a federally mandated variable unit payment to determine which physicians make more. Why should a paternal, all-knowing federal government decide that cardiologist A is worth more than cardiologist B?   Why shouldn’t consumers decide who earns more by using relevant criteria to select their own physicians, leaving increased physician income to come from increased patient panels, not a variable unit price?

But it’s the core modus operandi of “fee for value” — the idea that it is appropriate policy to use micro-incentives to manage physician behavior to foster quality improvement — that is most offensive. The emerging legislation imposes an elaborate, multivariate Skinnerian “operant conditioning schedule” on physicians. There’s a big difference between requiring, say, an airline’s pilots to USE a preflight checklist vs. giving them the federally approved checklist and paying them $10 a box for each box they check off, which is essentially what the SGR legislation does.

There also has been in the emerging regime of micro-accountability a heedlessness of the cost in professional time of providing all this “quality” information.  Talk to practicing physicians about how they spend their days, and they will tell you that they spend almost as much time coding and documenting their encounters with patients as they do actually practicing medicine.

We are actually helping creating a clinician shortage by commandeering scarce professional time, not merely that of physicians, but advanced practice nurses and the entire clinical support team, to comply with record keeping requirements.  As we’ve seen with the “meaningful use” incentives, the 10 percent upside for compliant physicians is probably going to be outweighed by the clinician time and support cost of compliance.  We need clinicians to do more caring and less typing.

A Better Approach

Measure quality at more aggregated levels. What is a viable alternative to the approach taken in the SGR legislation?   If you want to differentiate physician payment based on quality measurement, as Pronovost, Krumholz and Berenson suggested, do it at the level of larger aggregations of practices.  This should not be an “opt-out” but the core approach. Why not aggregate physician quality measures at the level of hospitals (which must privilege them), a group practice (which must decide to employ them) or an IPA (which must credential them to accept them as members)?

Gather and publish specialty-specific clinical outcomes (severity-adjusted mortality and complication rates, infection rates, etc.) for these diverse organizations, as well as financial information (case-mix adjusted cost) for key procedures and services, and pay all the specialists (including independent practitioners) in the highest performing collectivities at a higher rate. Then give Medicare beneficiaries incentives in the form of forgiven deductibles or Part B premium rebates for selecting the highest value providers.  This will foster competition both to reduce avoidable errors and attract the highest performing specialists.

Clinical excellence is most reliably found in physician-directed enterprises large and small; that it is leadership, strong professional values, and an excellent supporting cast, that produces higher quality.    If we really want to improve healthcare in the US, we need more Johns Hopkins and Penn Medicines, more Geisinger and Virginia Mason Clinics, more Kaisers and Hill Physicians and Atrius Healths, more HealthCare Partners and CareMores and a lot more high-quality smaller physician groups.

Replace fee for service, don’t build on it. And if we’re really committed to getting rid of fee-for-service, then let’s actually get rid of it. The new advanced payment models being tested by the CMS Innovation Center layer complex shadow systems on top of the current fee-for-service system.  This approach creates yet more costs and record-keeping challenges, while preserving fee-for-service’s underlying volume-based incentives.  What is needed is to replace fee-based models with simpler and more consolidated payment schemes — medical homes paid for by a monthly subscription payment; bundled payments with a single, severity-adjusted lump sum, accountable care as a fixed capitation payment — shifting the burden of process and quality control to the accountable entity.

If we’re not sure new advanced payment schemes actually work, if we haven’t actually gotten them right, then we have no business compelling or incenting 680 thousand practicing physicians to use them. We’re not going to get clinical practice where we want it to go with an elaborate, individualized operant conditioning schedule with four domains and sixty eight “core measures”, and billions more spent on the IT systems and clerical support to document them.   We need to reward teamwork, not box-checking.

A Legislative Hippocratic Oath

Senators and Representatives, before you vote on an SGR fix that could actually make things worse, visit your own physicians in person and ask them three questions:

1)      How Much of Your Practice Week Do You Actually Spend Seeing Patients?

2)      What Are You Doing the Rest of the Time?

3)      Will You Please Show Me My Electronic Health Record?

Then, try to explain to them in English what you intend to vote for — how you want to pay them — and ask them what you should do.   Base your vote on that conversation. It isn’t just physicians that should be guided by Hippocrates’ maxim, “First Do No Harm,” but our policymakers as well.

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7 Responses to “Primum Non Nocere: Congress’s Inadequate Medicare Physician Payment Fix”

  1. Jeff Goldsmith Says:

    Brad, I’m with you on registries. I’m with you on not flying blind. As a Medicare patient, I’m with you on measures that help me tell if I ought to be using your services, that help me understand and limit my clinical risks.

    Here, however, is the measures list for PQRS: It’s 54 pages long. 54 pages. . .

    Here is the Hospital Compare data listing: There are, I think, 87 “core measures”, most of which are frankly useless in helping me decide where to have my hip done. The stuff I need- procedure specific re-do rates, complication rates, post-op infection rates- is nowhere in evidence. Wouldn’t want anyone to look bad, I guess.

    Somewhere between your and my plaintive cry for useful evidence and the current data regime is a fair balance between my need to know and the government’s infinite capacity to demand information that is of interest to somebody. There needs to be a societal cost/benefit calculation here, and it is not in evidence.

    Evidence that society is getting back quantifiable benefits in cost/risk reduction and the costs of CURRENT physician reporting requirements- where is it? We ought to have some assurance that the ROI for society is positive before imposing this data regime on you and your colleagues in perpetuity. Once it’s in place, it’s there to stay.

  2. Brad F Says:

    I am a practicing physician.

    I want registries. I want databases. I want outcomes. I want to know how my organization and peers, as well as my community and regional equals perform. We cant fly blind.

    We can have the same ingredient list–one makes a bad cake, the other good. I would argue our system lives mostly in the former camp. We should not discount EMRs or what we can do with information because of past transgressions.

    To argue ivory tower or robbery misses the point and perhaps we agree more than we disagree. However, when it comes to measurement, res ipsa loquitur.

    Rather than having me cite evidence–and many victories exist (more so overseas), I want to know how we improve in a world without data. ICD10 not the ideal, and klunky goes beyond words, but what do you suggest as next steps beyond continuing to prune, modify, and improve?


  3. Jeff Goldsmith Says:


    Can you cite the evidence that all the administrative reporting and data base development is saving anyone money- Medicare or commercial payers? The people being robbed here are the patients, whose doctors are now communicating with them over their right shoulders while they are typing into their EMRs. Again, talk to some practicing physicians about how this record-keeping regime is affecting their practices and look for the evidence of societal benefits. This isn’t an ivory tower; it’s the real world we’re talking about.

  4. Brad F Says:

    A salutary effect of FFS and administrative accounting of services is the ability to build databases and study utilization.

    A laudable goal of taking on financial risk might be more ownership of outcomes; however, by jettisoning the administrative costs to track and measure those outcomes, will we be robbing Peter to pay Paul?

    We might move to a more capitated world–perhaps good, but I dont foresee reducing the burden and attendant expense of measurement. Our European friends possibly succeeded here because they have more compact systems, more than we will achieve given our multi-owner, fragmented one.


  5. Ted Okon Says:

    This article offers nothing that is meaningfully constructive. It tears down the SGR legislation being shaped by the three congressional committees but offers only non-specific concepts as a solution.

    The Community Oncology Alliance has spent over the past three years developing the Oncology Medical Home in concert with provider, payer, and patient representatives. In conjunction with this we have developed a payment reform model, sharing our progress with committee staffs. They have listened and we believe the current bills being merged provide oncology practices the opportunity to implement our alternative payment model based on specific measures of quality and value.

    Yes, oncologists like all physicians spend far too much time on administrative-type tasks and hurdling payer barriers. However, they also spend far too much time dealing with a broken Medicare payment system based on the SGR. The legislation being crafted is not perfect but it’s a step in the right direction. Not passing it before the current SGR patch expires in March is simply not an option. The SGR needs to be eliminated and we need to move forward in implementing and refining meaningful Medicare reform.

    We don’t need ivory tower pontificating. We need action. That starts with Congress passing SGR legislation and not kicking the can down the road once again.

  6. American Medical Association Says:

    The failed sustainable growth rate (SGR) formula must be eliminated now and replaced with policies that promote both better quality and lower costs in Medicare. Bills approved by Senate and House committees to repeal the flawed SGR formula also include important financial and administrative proposals that represent short-term improvements over current law governing quality reporting and pay for performance programs, which include value-based payment methodologies.

    The AMA has repeatedly argued that the value-based modifier is a flawed concept that cannot be equitably applied across the board to all physicians. The AMA will continue efforts to repeal the value-based modifier initiative, while also seeking to move toward a positive incentive structure and eliminate the two-year lag time between quality assessments and payment adjustments.

    As the AMA President has previously noted, nothing is set in stone in the current legislative process. While the recent advance of bipartisan bills out of three congressional committees is a huge step in the right direction, much work remains. The AMA is working with lawmakers to move past the annual SGR crisis and toward a Medicare program that ensures access to high-quality and efficient health care for patients and a stable and professionally rewarding practice environment for physicians.

  7. Ron Hammerle Says:

    A very thorough and thoughtful analysis with conclusions not widely heard.

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