This Quarter in Health Reform: Summer 2015 Roundup

Greetings, Palliative in Practice readers, from what has been a sweltering week in New York. Last night, as I was perusing the “Normal Sounds” chapter of my air conditioner’s manual, wondering whether or not that screeching sound was something I needed to pay attention to, I was suddenly reminded: I need to figure out the SGR repeal law.

Therefore we’re kicking off this quarter’s review with a somewhat lengthier-than-normal #1, wherein we discuss the passing of the SGR, the PQRS, MU, and the VBPM, and discuss several new acronyms with which to glaze friends’ eyes.

1) Undoing the past is always a major accomplishment. And thus it was when Congress passed the Medicare Access and CHIP Reauthorization Act (MACRA) this spring, repealing the Sustainable Growth Rate (SGR) and putting to rest a policy that has haunted Congress for years.

As I noted last time, each year, sometimes several times a year, in order to ensure that precipitous cuts to physicians’ Medicare payments didn’t occur, Congress had to act. Such compulsory action is unbecoming of a governing body, and in any case, wildly inefficient, so a repeal of the SGR had been long-sought. However, because the original SGR policy was a cost-saving measure, repealing it would technically increase costs, even though actual cuts to physicians’ pay never came to pass. Thus to repeal the law, policymakers needed to find a way to pay for it. This was a point of contention.

But after 12 years of struggle, and with some help from a little friend called debt, Congress was able to strike a deal. The new law repeals the SGR and sets up a new regimen for payment increases, one that continues the aggressive movement away from FFS. Sure, 2/3 of the law isn’t paid for, but 1/3 is, largely by increasing Medicare costs for wealthier beneficiaries—an extremely difficult entitlement reform to pass. MACRA makes big changes to provider incentives, and it is our hope that the law’s emphasis on quality measurement and alternative payment models will create an environment where providers can focus on patients’ quality of life, and more assiduously practice goal-directed care.

Will one day the MACRA of 2015 be a past that itself needs undoing? Only time will tell. But in the meantime, let me summarize:

• Starting July 1, 2015, providers will receive a .5% rate increase each year, for 5 years—until 2019. During this period, $15M annually is allocated to CMS’s Program Management Account for quality measure development. CMS must publish a draft “Measure Development Plan” by Jan 1, 2016, and finalize the plan by May 1, 2016.
• From 2020—2025, there will be no rate increases. During this time, providers have one of two choices: participate in the new Merit-Based Payment Incentive System (MIPS), or operate a practice in which a significant portion of revenue comes from alternative payment models (APMs).
  • For those choosing MIPS:
    • The MIPS will subsume 3 currently-existing quality programs: the PQRS, Meaningful Use, and the value-based payment modifier. These programs will be gone by 2019. Providers will receive either bonuses or penalties based on performance on the MIPS, and providers who perform poorly will see cuts up to 9% by 2022. This program is budget-neutral, so one provider’s financial gain will be another’s loss.
    • The MIPS will assess on four categories: quality, resource use, meaningful use of electronic health records, and clinical practice improvement activities.
    • With regards to the measures to be included in the MIPS, in lieu of the existing mandate that quality measures be endorsed by the National Quality Forum (NQF) or consensus-based entity, the Centers for Medicare and Medicaid Services (CMS) itself must pursue publication of “evidence-based” measures in a peer-reviewed journal.
  • For those in APMs
    • Providers will be exempt from MIPS, and instead receive a 5% bonus each year. The specifics of the APMs have not yet been described, but they must involve downside risk and have a quality reporting element, and they must include use of a certified EHR.

• Starting in 2026, rate increases will once again automatically be raised, by .25% for those providers participating in the MIPS, and by .75% for those providers in APMs.

2) So, provider payment is changing, but it certainly isn’t getting simpler. Which is one of the reasons I suppose it’s helpful to be part of a large corporation. This quarter, in what appears to be an arms race with the provider market, we’ve seen two major payer mergers take shape. Regulators willing, Anthem will acquire Cigna and Aetna will acquire Humana. If the deals go through, Anthem will cover approx 53 million lives and Aetna would cover 33 million. Rounding out the four top payers would be traditional Medicare at roughly 40 million beneficiaries and the diminutive UnitedHealthcare with just 70 million. Proponents of a single-payer system can rejoice that we are well on our way.

3) Speaking of payers, Marilynn Tavenner has recently been named the new CEO of the health insurer trade organization, AHIP. Tavenner is replacing the inimitable Karen Ignani, who stepped down to join NYC-based EmblemHealth this spring. Marilynn Tavenner, you’ll recall, served as Administrator of the CMS from 2011 to 2015, and has stated that her top priority in her new role is to protect Medicare Advantage. The news of this recently-acting CMS administrator joining AHIP isn’t surprising, but it is disconcerting: it greatly affects the release of my forthcoming memoir, Letters to Tavenner: Comments on the Inpatient Prospective Payment System Proposed Rule, 2012—2014.

4) Two CMMI updates: The results from the Independence at Home demonstration—a demo testing comprehensive home-based primary care for high-risk individuals—were released last month, and the results were excellent. In addition to providing more comprehensive services to a vulnerable population, cost savings averaged more than $3,000 per beneficiary. CMS also announced the hospices that were selected to participate in the Care Choices Model. Though initially CMS intended to choose 30 sites for a 3-year demo, because of “robust interest,” it extended the project to 140 sites and 5 years. There’s been a lot of discussion in the community about this demo. The rates supplied to hospices are substantially lower than the typical per diem at only $400/ mo, but the expectation is that the service intensity will be lower, and because beneficiaries will not have to give up their traditional Medicare coverage, hospices will not be financially responsible for non-hospice related services.

5) Staying with hospice, CMS published the final rule for the 2016 Medicare payment rates and wage index last week. It includes two different payment rates for routine home care. Hospices will receive a higher base payment rate for the first 60 days of stay, and a reduced payment rate thereafter. The rule also provides for a Service Intensity Add-On (SIA) Payment for the last seven days of life under certain conditions. Hospice advocacy organizations seemed to favor the changes, but urge, and have asked members of Congress to urge, CMS to proceed with caution, and to test and monitor any payment changes closely.

6) And forcing my hand at a top 6 is the Senate Finance Committee’s Working Group to address care for chronic conditions. This group was convened by Senators Hatch and Wyden to solicit and examine policy options for improving the care of people with chronic illness. With 10,000 beneficiaries enrolling in Medicare every day, and 2/3 of Medicare beneficiaries having multiple chronic conditions, it certainly feels like we’re running out of runway, so dedicating a working group to the issue is apropos and a step in the right direction.

And honorable mention this quarter goes to Supreme Court Justice and aspiring humor writer Antonin Scalia, who penned the well-publicized dissent in King v. Burwell. The majority opinion held that, notwithstanding the phrase “exchange established by the state,” the Affordable Care Act provides for tax subsidies on health plans bought on both state and federal exchanges, thus saving the ACA from a complicated and messy evisceration. Scalia respectfully disagreed with the Court’s analysis, calling it a “bit of interpretive jiggery-pokery.” This was one of Scalia’s most lauded works, generating several listicles and, perhaps most significantly, The Antonin Scalia “Sick Burn” Generator. Certainly the mark of a noble and well-reasoned opinion.

And that’s it for this quarter, folks. Enjoy the rest of your summer and we’ll see you back here this fall. In the meantime, stock up on earplugs. With all this heat, the quarter is likely to get pretty noisy.

Posted by Emily Warner