Robin Ferger‐Hill

Expected Consequences on Expected Consequences on the Health Delivery System the Health Delivery System

in Regards to Proposed in Regards to Proposed LegislationLegislation

A Physician’s PerspectiveA Physician’s Perspective

Robin Ferger-Hill, MBA, CMPERobin Ferger-Hill, MBA, CMPE

CEO, Peninsula Cardiology AssociatesCEO, Peninsula Cardiology Associates

Sustainable Growth RateSustainable Growth Rate

• Resource Based Relative Value Scale Resource Based Relative Value Scale (RBRVS)(RBRVS)– The cost of providing each service is divided The cost of providing each service is divided

into three components:into three components:• Physician Work (time, skill, judgment and risk)Physician Work (time, skill, judgment and risk)• Practice Expense – intent is to reflect the practice Practice Expense – intent is to reflect the practice

overhead required to support the service.overhead required to support the service.• Professional Liability – average proportion of a Professional Liability – average proportion of a

specialty’s overall revenues devoted to specialty’s overall revenues devoted to professional liabilityprofessional liability

GPCI – Geographical GPCI – Geographical Practice Cost IndexPractice Cost Index

• GPCI takes into account GPCI takes into account geographical differences in wages, geographical differences in wages, malpractice and overhead malpractice and overhead expenses. Each RVU has a GPCI.expenses. Each RVU has a GPCI.

Conversion FactorsConversion Factors

• Updates to the conversion factor are made annually and Updates to the conversion factor are made annually and are stipulated in a formula established by Congress. are stipulated in a formula established by Congress. Congress is the only body able to authorize changes to Congress is the only body able to authorize changes to the conversion factor or the underlying calculation. The the conversion factor or the underlying calculation. The update formula looks at estimates of the percentage update formula looks at estimates of the percentage change in physician’s fees, the average number of change in physician’s fees, the average number of Medicare beneficiaries, growth in the real per capital Medicare beneficiaries, growth in the real per capital GDP and the cost of the Medicare program due to GDP and the cost of the Medicare program due to changes in law or regulation. These four estimates are changes in law or regulation. These four estimates are used to create a percentage by which the previous used to create a percentage by which the previous year’s conversion factor is modified.year’s conversion factor is modified.

Conversion FactorsConversion Factors

The SGR, however, simply establishes a The SGR, however, simply establishes a target rate for growth. The target does target rate for growth. The target does not bind actual expenditures. However, not bind actual expenditures. However, if spending exceeds the target, the if spending exceeds the target, the conversion factor for the following year conversion factor for the following year is reduced. Conversely, if spending falls is reduced. Conversely, if spending falls below the target, the next year will see below the target, the next year will see an increased conversion factor.an increased conversion factor.

How it’s CalculatedHow it’s Calculated

– 99214 – office visit99214 – office visit•1.10 work rvu * (0.886)*1.2 work 1.10 work rvu * (0.886)*1.2 work

GPCI= 1.16GPCI= 1.16•1.04 pe ruv * 1.09 pe GPCI = 1.141.04 pe ruv * 1.09 pe GPCI = 1.14• .04 mp rvu * .500 mp GPCI = .02.04 mp rvu * .500 mp GPCI = .02• 1.16 + 1.14 + .02 = 2.32 * $36.0846 = 1.16 + 1.14 + .02 = 2.32 * $36.0846 =

• $83.72$83.72

The Importance of The Importance of Repealing the SGRRepealing the SGR

• Does not realistically and Does not realistically and economically review the cost of economically review the cost of providing services.providing services.

• Flawed – rewarding the cycle of Flawed – rewarding the cycle of over utilizationover utilization

Medicare Payment/SGRMedicare Payment/SGR

• The House passed H.R. 3961 repealing the sustainable growth rate (SGR) formula. In 2011 and beyond, Medicare physician payments would be based on the gross domestic product (GDP) plus 2 percent for evaluation and management and preventive services, and the GDP plus 1 percent for all other services. These service categories would apply without regard to the specialty of the physician providing the service

• The Senate failed to pass S. 1776, which would have repealed the SGR formula and set the foundation for creating a new Medicare payment update system.

Congressional ActionCongressional Action

• On Dec. 21, the president signed the FY 2010 Defense Appropriations bill that includes a legislative change to the CY 2010 conversion factor, essentially freezing the Medicare conversion factor for 60 days at $36.0846. The bill addresses only the conversion factor; all other 2010 policy changes in the 2010 final

• Medicare physician fee schedule became effective on Jan. 1. Due to ongoing healthcare reform negotiations, the Centers for Medicare &Medicaid Services (CMS) announced that it would hold all Part B claims until Jan. 15, and that the Physician Annual

Participation Enrollment Program would be extended from Jan. 31 to March 17.

Primary Care Bonus & Primary Care Bonus & Medicaid ParityMedicaid Parity

• The House bill contains a 5 The House bill contains a 5 percent bonus for primary percent bonus for primary care practitioners if 50 care practitioners if 50 percent of billings are for percent of billings are for primary care services (E&M primary care services (E&M and preventive). The bonus and preventive). The bonus is 10 percent for primary is 10 percent for primary care health professional care health professional shortage areas.shortage areas.

• The House bill also increases The House bill also increases Medicaid payments to Medicaid payments to providers toproviders to

• Medicare levels by 2012.Medicare levels by 2012.

• The Senate bill contains a The Senate bill contains a 10 percent bonus for 10 percent bonus for 2011-2015 if at least 60 2011-2015 if at least 60 percent of services percent of services performed are primary performed are primary care-oriented.care-oriented.

• The Senate bill does not The Senate bill does not contain provisions that contain provisions that increase Medicaid increase Medicaid payments to providers at payments to providers at Medicare levelsMedicare levels

Geographical Payment Geographical Payment AdjustmentAdjustment

• The House bill requires the The House bill requires the Institute of Medicine (IOM) to Institute of Medicine (IOM) to study and make study and make recommendations regarding recommendations regarding the accuracy of Medicare the accuracy of Medicare geographic practice cost geographic practice cost indexes (GPCIs). The IOM’sindexes (GPCIs). The IOM’s

• recommendations would recommendations would become law unless Congress become law unless Congress rejects therejects the

• recommendation within a recommendation within a specific timeframe.specific timeframe.

• Provides new funding to revise Provides new funding to revise the GPCI floor for 2010 and the GPCI floor for 2010 and 2011.2011.

• The Senate bill begins to The Senate bill begins to change physician payments change physician payments to adjust for quality and to adjust for quality and cost beginning in 2015, and cost beginning in 2015, and by 2017 all physician by 2017 all physician payments are affected by payments are affected by quality and cost quality and cost modifications.modifications.

• Provides new funding to Provides new funding to revise the GPCI floor for revise the GPCI floor for 2010 and 2011.2010 and 2011.

Payment for Imaging Payment for Imaging ServicesServices

• The House bill increases the The House bill increases the equipment utilization equipment utilization assumption (used to calculate assumption (used to calculate practice expense relative value practice expense relative value units [RVUs]) for advanced units [RVUs]) for advanced diagnostic imaging (diagnostic diagnostic imaging (diagnostic (MRI), (CT), and nuclear (MRI), (CT), and nuclear medicinemedicine

• [including positron emission [including positron emission tomography (PET)], and other tomography (PET)], and other services specified by HHS) from services specified by HHS) from 50 percent to 75 percent 50 percent to 75 percent beginning on Jan.beginning on Jan.

• 1, 20111, 2011

• The Senate bill increases the The Senate bill increases the equipment utilizationequipment utilization

• assumption for the same assumption for the same services to 65 percent in 2010 services to 65 percent in 2010 , to 75 % in 2013 and to 80 % , to 75 % in 2013 and to 80 % in 2014. (Note that both bills in 2014. (Note that both bills assume a current 50 % assume a current 50 % assumption, even though CMS assumption, even though CMS increased the utilization increased the utilization assumption for MRI and CT to assumption for MRI and CT to 90 percent90 percent

• effective Jan. 1, 2010.effective Jan. 1, 2010.

Payment for Imaging Payment for Imaging ServicesServices

• Both bills also increase the Both bills also increase the reduction of the technical reduction of the technical component of multiple imaging component of multiple imaging services performed on contiguous services performed on contiguous body parts during the same session body parts during the same session from 25 % to 50 %.from 25 % to 50 %.

Self Referral Exception for Self Referral Exception for In-Office ImagingIn-Office Imaging

• The House bill requires a The House bill requires a study of practice patterns in study of practice patterns in advanced diagnostic advanced diagnostic imaging and radiation imaging and radiation oncology services to oncology services to evaluate physician self-evaluate physician self-referral and the impact it referral and the impact it has on the cost of providing has on the cost of providing services. The study must be services. The study must be completed by July 1, 2011.completed by July 1, 2011.

• The Senate bill requires The Senate bill requires physicians referring patients for physicians referring patients for MRI, CT, PET and otherMRI, CT, PET and other

• services specified by HHS services specified by HHS relying on the “in-office ancillary relying on the “in-office ancillary services”services”

• exception to the Stark law to exception to the Stark law to inform the patient in writing at inform the patient in writing at the time of the referral that the time of the referral that such services may be obtained such services may be obtained from persons otherfrom persons other

• than the referring physician. than the referring physician. The physician must also provide The physician must also provide a written list of alternative a written list of alternative suppliers in the area where the suppliers in the area where the patientpatient

• Resides.Resides.

Medicare CommissionMedicare Commission

• The House has no The House has no such provisionssuch provisions

• The Senate bill establishes an The Senate bill establishes an Independent Payment Independent Payment Advisory Board (IPAB) to Advisory Board (IPAB) to make regulatory and make regulatory and legislative recommendations legislative recommendations to slowto slow

• the growth in national health the growth in national health spending. This entity is spending. This entity is forbidden fromforbidden from

• making recommendations making recommendations that ration healthcare. that ration healthcare. Hospitals andHospitals and

• hospices are exempt from hospices are exempt from the Board’s the Board’s recommendations until 2019.recommendations until 2019.

CMS Innovation CenterCMS Innovation Center

• The House and Senate proposals establish a The House and Senate proposals establish a CMS Center for Medicare & Medicaid Payment CMS Center for Medicare & Medicaid Payment Innovation (CMI) no later than 2011 to test Innovation (CMI) no later than 2011 to test payment and service delivery models to payment and service delivery models to improve quality and lower costs. HHS is given improve quality and lower costs. HHS is given the authority to expand the duration and scope the authority to expand the duration and scope of these models if certain legislative criteria are of these models if certain legislative criteria are met, as well as the authority to publicly report met, as well as the authority to publicly report provider performance informationprovider performance information

• online.online.

Medicare AdvantageMedicare Advantage

• Both the House and Senate bills phase Both the House and Senate bills phase in fiscal neutrality betweenin fiscal neutrality between

• Medicare Advantage (MA) plans and Medicare Advantage (MA) plans and Medicare fee-for-service, as well as Medicare fee-for-service, as well as establish performance bonus payments establish performance bonus payments for MA plans for carefor MA plans for care

• coordination and care management.coordination and care management.

Health InsuranceHealth InsuranceMarket ReformsMarket Reforms

• The House and Senate bills both establish The House and Senate bills both establish extensive new insurance standards, such as extensive new insurance standards, such as banning pre-existing coverage exclusions banning pre-existing coverage exclusions based on gender or health status, and based on gender or health status, and requiring minimum medical lossrequiring minimum medical loss

• ratios. Effective immediately upon passage are ratios. Effective immediately upon passage are provisions in both bills that ban lifetime or provisions in both bills that ban lifetime or annual limits and enhance additional patientannual limits and enhance additional patient

• protections.protections.

Physician Quality Reporting Physician Quality Reporting Initiative (PQRI)Initiative (PQRI)

• The House bill extends a The House bill extends a 2 percent financial 2 percent financial incentive for successfulincentive for successful

• PQRI participation PQRI participation through 2012 and through 2012 and requires HHS to issue requires HHS to issue timely feedback reports timely feedback reports and provide an appeals and provide an appeals process.process.

• The Senate bill provides for The Senate bill provides for a 1 % incentive for 2011, 0.5 a 1 % incentive for 2011, 0.5 % incentive for 2012-2014, % incentive for 2012-2014, then penalties for not then penalties for not successfully participating successfully participating begin in 2015. If a practice begin in 2015. If a practice successfully participates successfully participates through a Maintenance of through a Maintenance of Certification program in Certification program in reporting years 2011-2013, reporting years 2011-2013, they receive an additional they receive an additional 0.5 0.5 %.%.

Meaningful Use In EHRMeaningful Use In EHR

• The American Recovery and Reinvestment Act of 2009 The American Recovery and Reinvestment Act of 2009 (ARRA) included what the Congress and the (ARRA) included what the Congress and the administration consider a critical component of administration consider a critical component of healthcare reform – a nationwide, interoperable,healthcare reform – a nationwide, interoperable,

• secure and private electronic health information system. secure and private electronic health information system. ARRA contains billions of dollars of incentives to ARRA contains billions of dollars of incentives to encourage individual clinicians and hospitals to be encourage individual clinicians and hospitals to be “meaningful users” of electronic health records (EHR). In “meaningful users” of electronic health records (EHR). In late 2009, CMS released a proposed rule and the Office late 2009, CMS released a proposed rule and the Office of the National Coordinator released a companion of the National Coordinator released a companion interim finalinterim final

• rule regarding the EHR incentive program mandated in rule regarding the EHR incentive program mandated in ARRA. ARRA.

Meaningful Use In EHRMeaningful Use In EHR

• The proposed regulation defines the requirements The proposed regulation defines the requirements eligible professionals must meet to be considered eligible professionals must meet to be considered "meaningful users" of an EHR system. Eligible "meaningful users" of an EHR system. Eligible professionals who are “meaningful users” of an EHR can professionals who are “meaningful users” of an EHR can be reimbursed for up to $44,000 for adopting a be reimbursed for up to $44,000 for adopting a “certified” system under the Medicare incentive program “certified” system under the Medicare incentive program and up to $63,750 under the Medicaid program. and up to $63,750 under the Medicaid program. Medicare penalties begin in 2015 for those who are not Medicare penalties begin in 2015 for those who are not meaningful EHR users. Since the first incentive meaningful EHR users. Since the first incentive payments will be available in 2011, a large number of payments will be available in 2011, a large number of medical groups are expected to begin the transition to medical groups are expected to begin the transition to EHRs in 2010.EHRs in 2010.

Definition of Meaningful Definition of Meaningful UseUse

• The proposed Stage 1 criteria for meaningful use focus on The proposed Stage 1 criteria for meaningful use focus on electronically capturing health information in a coded electronically capturing health information in a coded format, using that information to track key clinical format, using that information to track key clinical conditions, communicating that information for care conditions, communicating that information for care coordination purposes, and initiating the reporting of clinical coordination purposes, and initiating the reporting of clinical quality measures and public health information.quality measures and public health information.

• The proposed criteria for meaningful use are based on a The proposed criteria for meaningful use are based on a series of specific objectives, each of which is tied to a series of specific objectives, each of which is tied to a proposed measure that all EPs and hospitals must meet in proposed measure that all EPs and hospitals must meet in order to demonstrate that they are meaningful users of order to demonstrate that they are meaningful users of certified EHR technologycertified EHR technology

• CMS proposes 25 objectives/measures for EPs and 23 CMS proposes 25 objectives/measures for EPs and 23 objectives/measures for eligible hospitals that must be met objectives/measures for eligible hospitals that must be met to be deemed a meaningful EHR user. to be deemed a meaningful EHR user. 

Stage 1 Meaningful Use• In 2011, all of the results for all objectives/measures, including

clinical quality measures would be reported by EPs and hospitals to CMS, or for Medicaid EPs and hospitals to the states, through attestation.

• In 2012, CMS proposes requiring the direct submission of clinical quality measures to CMS (or to the states for Medicaid EPs and hospitals) through certified EHR technology.  CMS recognizes that for clinical quality reporting to become routine, the administrative burden of reporting must be reduced. By using certified EHR technology to report information on clinical quality measures electronically to a health information network, a state, CMS, or a registry, the burden on providers that are gathering the data and transmitting them will be greatly reduced.  The burden of generating the necessary information for the provider to then use the information to improve health care quality, efficiency, and patient safety will also be reduced.

Stage 1 Meaningful Use

• The policy goals of meaningful use will be most fully realized by building on findings from Stage 1 and by making full use of the greater proliferation of certified EHR technology and supporting HIT infrastructure that will take place under Stage 1.  CMS intends to propose through future rulemaking two additional stages of the criteria for meaningful use.

• Stage 2 would expand upon the Stage 1 criteria in the areas of disease management, clinical decision support, medication management, support for patient access to their health information, transitions in care, quality measurement and research, and bi-directional communication with public health agencies.