CMS Issues Proposed 2012 Medicare Physician Fee Schedule --- Dramatic Cut to Physician Reimbursement if Congress does not act

Unless Congress intervenes (yet again), physicians will incur a 27.4 percent reduction in Medicare payment rates Jan. 1 2012, according to the Center for Medicare & Medicaid Services (CMS) final rule released yesterday. This cut is actually a bit smaller than the the 29.5 percent CMS estimated in March due to reduced physician visits but is clearly a threat of a massive, unsustainable cut.

"This payment rate cut would have dire consequences that should not be allowed to happen," CMS Administrator Dr. Donald M. Berwick said in a press release. "We need a permanent SGR fix to solve this problem once and for all." The American Medical Association (AMA) released a similar statement decrying the cuts and repeating its call for a solution. "Payments for Medicare physician services have fallen so far below increases in medical practice costs that there is a 20 percent gap between Medicare payment updates and the cost of caring for seniors," AMA President Dr. Peter W. Carmel said. He continued, "The Joint Select Committee on Deficit Reduction must include repeal of the formula in their recommendation to Congress to protect access to care for seniors and stabilize the Medicare program."

Other changes were announced in the rule but most none as significant as this issue including:

• Increases in payments for Medicare beneficiaries' Annual Wellness Visits to reflect the additional office staff time required to administer a health risk assessment in conjunction with the visit


• Continuation of CMS's "misvalued code initiative," focusing on codes billed by physicians in each specialty that result in the highest Medicare expenditures under the fee schedule


• Changes to the way CMS adjusts payment for geographic variation in the cost of practice


• Reduction in payment for a second advanced imaging service provided by the same physician on the same day


• Expansion of covered telehealth services, including smoking cessation

The final rule will appear in the Federal Register Nov. 28 but the real action will be to see when and if Congress will address the SGR issue in at least another temporary way.

Accountable Care Organizations (ACOs) -- A model that is emerging for the long-term but hard to implement in the short-run

CMS Announces New Options for ACOs
Last week, CMS announced several new options for implementing accountable care organizations (ACOs). These new options provide incentives for providers to develop or join ACOs earlier than the original start date (January 1, 2012) and to receive upfront bonus payments. ACOs were established as part of health care reform to incentivize the development of networks of providers to collaborate and coordinate services to deliver higher-quality care to Medicare beneficiaries. By delivering care that meets certain quality measurements, ACO-affiliated providers can receive CMS-issued bonus payments.

The new options to facilitate ACO development that were proposed are:
1. Pioneer ACO Model -- CMMI is now accepting applications for this new ACO model, which will provide a faster path for existing ACOs and integrated-care organizations than under the Medicare Shared Savings Program start date of January 1, 2012. Pioneer ACOs will be able to collaborate with private payers and achieve greater savings by transferring to a population-based model in the third performance year (given satisfactory performance during the first 2 years of operation). CMS will hold these organizations financially liable for delivered care and will publicly report their performance.
2. Advance Payment ACO Initiative -- CMMI proposes to allow ACOs to receive a portion of shared savings (ie, bonus payments) upfront before CMS begins contracting with ACOs in 2012. These upfront payments will help providers make necessary infrastructure and staffing investments that are the backbone of successful ACOs. CMS plans to recoup these advanced payments through ACOs' shared savings once they become operational. Comments for this initiative should be submitted to advpayACO@cms.hhs.gov by June 17, 2011.
3. Accelerated Development Learning Sessions -- CMS will offer educational sessions to inform providers about the necessary steps to becoming a successful ACO. These free sessions will provide information about actions providers can undertake to improve delivery of care and to achieve better-coordinated care. CMS will offer 4 sessions in 2011, each with a focused curriculum on ACO development. To attend the June Accelerated Development Learning Session in person, individuals may register at https://acoregister.rti.org.

Many healthcare stakeholders believe CMS released these new options in response to the strong criticism facing the ACO proposed rule. Provider reaction to these new options is still unclear and many providers remained fundamentally concerned about the ability of these models to positively impact the quality and outcome of care.

So what does an ACO mean to a physician, nurse or pharmacist in your community? At this point its not clear but many analysts are projecting these new care models will develop more locally through the expansion of existing integrated delivery systems. There is hope that eventually these models will allow very different models for care including expanded roles of physician assistants, nurse practitioners and pharmacists.

So as a patient, will I know if I am in an ACO? The answer is a "maybe". In fact we know that in Massachusetts, the ACO model has grown but patients often do not know they are part of an ACO. Its often "not obvious" that you are being served by an ACO which in many ways is a positive sign that care is not being inappropriately restricted -- but questions remain on how ACOs impact care for disease states like cancer.

Like many parts of health care reform implementation -- we are just beginning to see how this might work and what it might mean for patients.

CMS Announces a Delay to Implementation of Short-Cycle Dispense Component of HCR

CMS issued an important delay and change to much anticipated short-cycle dispensing rules today. Specifically CMS has delayed this part of health reform implementation until 2013 (a one-year delay) and also expanded the maximum increment for dispensing Medicare Part D covered solid oral brand drugs to beneficiaries residing in long-term care facilities (LTCFs) from 7 days to 14 days.

This is an important change and delay that industry advocates have requested given concerns about new costs related to dispensing. However at this time CMS has not opted conduct a pilot study to assess the impact and effectiveness of short-cycle dispensing. CMS did however go forward with eliminating the requirement for returning unused drugs back to the pharmacy for ultimate disposition. CMS cited conflicts with existing state and federal regulations for hazardous waste and controlled drug disposal.

Will this Congress Correct ASP Reimbursement?

Good news this week in the ongoing struggle to clarify reimbursement of drugs administered in the physician office and outpatient setting. Specifically, Congressmen Whitfield (R-Ky.) and Green (D-Texas) introduced H.R. 905 a bill to amend part B of title XVIII of the Social Security Act to exclude customary prompt pay discounts from manufacturers to wholesalers from the Average Sales Price (ASP) for drugs and biologicals under Medicare.

If passed, this legislation would be one important step to improving the consistency, accuracy and adequacy of reimbursement for infused and injected drugs administered in the physician office and clinic settings. The change is particularly important since ASP is now used as a basis for reimbursement by most payers, not just Medicare. This is one of several key changes Congress can make to correct and improve reimbursement for outpatient treatments and support patient access to care.

What can we do to expand patient access to primary care?

The lack of investment in primary care physicians and mid-level professionals is expected to be a challenge moving forward. Its clearly a challenge to managing the costs of health care in the future. In reality we already have a primary care shortage in many parts of the country including rural and low-income urban areas.

Today, at a 340B related conference in San Diego, Dr Mary Wakefield, Administrator, Health Resources & Services Administration emphasized the investment of the Health Reform (Affordable Care Act) in ensuring primary care physicians are encouraged and funded to work in under served communities, also investments in pharmacy care services in these communities are being funded to help patients have access to care. Programs and changes are rolling out now to help those who previously did not have access in rural and remote communities to have more choices.

The hope is these investments will address the projected gaps in access to primary care resources. Suggestions we have heard include:

• Expanding the role and reimbursement of pharmacy care services to support patient education and adherence. Medication Therapy Management (MTM) is a beginning but it needs to be expanded and modest reimbursement to pharmacists could create dramatic savings. Many of the Pharmacy Associations (like APhA) are leading the way with such models.
• Expand the role of community pharmacy to include a wide range of injections. This year we have seen a dramatic increase in the role of pharmacists as the leading site for patient flu shots but clearly many other types of injections could easily and conveniently be provided in the community pharmacy setting with appropriate coverage and reimbursement (including Medicare and Medicaid).
• Expanding the role and appropriate reimbursement for mid-level providers such as nurse practitioners and physician assistants could dramatically expand access to primary care.

House and Senate both Pass a 1-year "Doc Fix" to Avoid Reimbursement Cuts

Breaking news today. The House has just passed the 1-year correction to the Sustainable Growth Rate (SGR) issues that threaten to reduce Medicare reimbursement to physicians by 25% starting on January 1st. The President is expected to sign the measure into law by tomorrow. This is welcome news as it will avoid the type of drama we experienced in 2010 with fee cuts being threatened several times during the year which created a messy patchwork of temporary corrections.

This provision would reverse that reduction and extend current Medicare payment rates through December 31, 2011. The estimated cost of the provision is $14.9 billion over ten years. Please note this is a 12-month fix so this issue has not yet been permanently addressed and given the high price tag to "avoid a pay cut" it remains an issue that is very difficult to explain to Mainstreet USA but has gone on for far too many years (and now across two different administrations). We can only hope that Congress will do what's right and create a permanent fix next year well in advance of the December 31st 2011 deadline.

President signs 1-month SGR Fix -- Congress must work to avoid a Jan 1 Medicare Reimbursement Cut

Some good news and some work to be done. This week, President Obama signed a 31-day Medicare physician payment extension that will temporarily postpone a 23% reduction in the payment rate. The Senate passed the one-month payment extension on November 18, and the House passed the measure on November 29. The temporary patch extends the current Medicare payment rate until December 30, and, as such, postpones the 23% reduction called for by the sustainable growth rate (SGR) formula that was scheduled to take effect December 1st.

However more work remains for this Congress before they can recess. Without further congressional intervention, the payment cut will grow to more than 25% on January 1.
Senate Finance Committee leaders this week continued the effort they started prior to the Thanksgiving recess to pursue legislation to affect a year-long patch to prevent the Medicare payment cut scheduled to go into effect January 1. The current projected cost of a 12-month fix that many expect to be included in a Medicare “extenders package” favored by Senate Finance Committee Chair Max Baucus (D-MT) is nearly $20 billion. As yet, funding offsets to pay for a 12-month patch and any extenders that many be included in future legislation have not been revealed. Both parties appear to be working to try to address this issue for 2011 during this lame duck Congress rather than returning home to their districts with a reimbursement reduction starting on January 1st.

It is important that Congress act on this issue now and avoid a potential issue or gap in reimbursement in January that could impact Medicare beneficiary access to care and would certainly jeopardize the financial stability of some physician clinics.