By: Bill Cockrell, President - Cockrell, Egeland and Associates, LLC
Anyone who has been in healthcare management for any length of time knows the issues caused by the constant battle over the Sustainable Growth Rate (SGR). For those of us who have been around for a while, we are so used to the annual battle over fixes / patches / cuts related to the SGR I wonder what we’ll worry about at next year-end. With few exceptions (primarily those asking how this gets paid for), the repeal of the SGR is viewed as a major, positive development. It’s also significant that the primary parts of this legislation were proposed last year so the fact that they survived for a year in Washington is somewhat remarkable. Now, though, we have to figure out what this three part permanent fix really means.
Part one is relatively straight forward, at least in the short run. We now know that Medicare payments will increase by 0.5% for the next few years. However small and below the inflation rate this is, it’s still better than fretting over a cut. Then,we see a freeze for the next six years and .0.25% increases after that. Of course, if any of use believe this won’t change, probably before the first four year phase is over, it’s time for a visit to our friendly neighborhood, at least in Colorado and Washington, dispensary of calming medication.
Part two is a little more challenging. It is difficult to project our ability to participate and be rewarded. In this section, a two tiered payment is established where there is the base model and a second model that provides incentives for doctors to participate more in Alternative Payment Models (APM) which will include accountable care organizations, bundled payment arrangements and, probably more achievable than the first two, medical homes. To qualify for the 5% bonuses tied to these incentives, things have to be in place before 2020 as these bonuses will occur each year from 2020 to 2024.. That sounds like a long way away but there is a lot of work to be done to allow physicians to meet the 25% participation level by 2019 and the 75% level in 2023. Again, there will undoubtedly be some changes but the road map is there.
Finally, part three of the bill creates the Merit-based Incentive Payment System (MIPS), which, in addition to giving us a new acronym, gives incentives to move into a value-based system. Incorporating existing quality reporting programs and meaningful use requirements, this part includes elements of the value-based system that was part of the Affordable Care Act (ACA). Under this section, penalties and rewards range from -4% to +4% in 2018 to -9% to +9% by 2012. A significant date is 2018, 2 ½ years from now. This is also tied to the stated Medicare goal of having 50% of Medicare spending tied to value based payment models by 2018.
Now, for those holding out hope that the ACA will be repealed returning us to the “good old days”, note that this legislation has nothing to do with the ACA and had broad bi-partisan support ( for example, a 92 – 8 vote to pass it in the Senate). Then there’s that point that some of the ACA value based programs were included in this bill. The bottom line here is that the ACA is here to stay. We need to work to fix the many problems with it but planning on its repeal to fix all issues is probably not a good approach to prepare for the future.
So, in summary, we need to find something else to think about each year in December, need to not spend the big annual increase too quickly, be getting our data tracking aligned while we establish our Patient Centered Medical Homes (PCMH), and be sure we are able to track the data required by the value based elements. Yes, the physician contact with the patient will remain very important but these other elements have to be factored in to any plan for the future. The dates sound far away, but waiting until 2018 to get ready is not a good idea for doctors who see Medicare patients and wish to practice for several more years.