A Proposed New Alternative Payment Model for Physicians Under Medicare: Cost of Living Increases
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DOCTORS, NURSES, AND OTHER HEALTH PROFESSIONALS
American medicine, at least through its professional groups, is coalescing behind a new model for payment for professional services: a regular cost-of-living increase. Says the AMA (here), “Months of high-level discussions regarding reforming Medicare physician payment has culminated in physician lawmakers introducing bipartisan legislation advancing the first leg of the AMA’s three-part strategy for fixing the broken system.”
“The Strengthening Medicare for Patients and Providers Act, H.R. 2474, would provide automatic updates to physician Medicare payment rates and link them to inflation. The bill was introduced by California Democratic Reps. Raul Ruiz, MD, [emergency medicine] and Ami Bera, MD, [general practitioner] along with Republicans Larry Bucshon, MD, [cardiothoracic surgeon] of Indiana, and Mariannette Miller-Meeks, MD, [ophthalmologist] of Iowa.”
Equally important, the AMA sees private equity, corporate and corporate-like non-profit health system acquisition of physician practices as the only practical alternative to stability in fees, given the “facility fees” and add-on services which characterize corporate medicine. “When adjusted for inflation, physician payments have dropped 26% from 2001 to 2023, capped off most recently by a 2% pay cut for 2023. Increasingly thin operating margins disproportionately affect small, independent and rural physician practices.” Nearly 120 physician associations and health care-related organizations joined the AMA (here) in a letter to the physicians in Congress supporting their legislation.
The “back-to-the-future” feel of the campaign is not without irony. Medicine signed on to enhancement of the “E&M” (evaluation and management) codes in 1990-1991 as a means of attempting to bolster “cognitive” (as opposed to “procedure”-heavy) reimbursement. By 1997—after the Clinton plan, the Gingrich “Contract” and the denouement of both—the Balanced Budget Act that year sought to introduce a “Sustainable Growth Rate.”
The meaning of the phrase was that the rate of increase would be “sustainable” for the federal treasury, in that, as total spending increased, per service spending would decrease. Calculation of the SGR was based on changes in the gross domestic product, the number of Medicare beneficiaries and changes in the fees for physician services. The formula almost invariably led to proposed reduction in individual service payments, galvanizing physician action regularly, leading to Congressional action to block CMS-proposed cuts to make the total “sustainable,” so that only in one year between 1997 and 2015, namely 2002, was the SGR actually implemented, the unrealized reductions becoming the “can kicked down the road.”
By 2015 (here) the amount of reduction which would have been necessary to bring individual physician payments in line with the overall SGR goal was 31%, a number judged impossible to meet while still keeping the requisite number of physicians enrolled in the program to accept assignment from Medicare. The Medicare Access and CHIP Reauthorization Act (MACRA) was hurriedly signed in a White House rose garden ceremony on a Sunday, the day before those reductions would have taken place. MACRA proposed to establish “Quality Payment Programs” with two payment pathways, the Merit-based Incentive Payment System (MIPS), and Advanced Alternative Payment Models (APMs).
The move to downplay or even discard all such alternative models, in favor of a “cost of living” increase, is not surprising, given the history of MIPS, APMs, and the SGR, and the extent to which all of them have disappointed the government (not saving enough) and the doctors (not paying enough). The AMA’s top lobbyist described MIPS and the APM program as “confusing, not well aligned with each other, and having quality measures that are not clinically relevant.”
HOSPITALS, NURSING HOMES, AND OTHER HEALTH CARE FACILITIES
Skilled Nursing Facilities Used with Skill in the Pandemic
Another loss with the end of the Public Health Emergency: a paper in JAMA Internal Medicine (here) reports that, in waiving the CMS requirement that a SNF admission for a Medicare patient must be preceded by a hospital stay of at least three days, SNF costs did not increase, and effective care was given. “The PHE waiver for SNF care was associated with a marked increase in the prevalence of SNF episodes without a preceding hospitalization . . . overall SNF care costs did not increase substantially . . . suggesting the waiver’s successful implementation.”
A separate commentary in the same edition (here) explores the history and changing rationale for the 3-day rule.
MEDICARE, MEDICAID, AND COMMERCIAL HEALTH INSURANCE
Judge O’Connor Pursues Insurance Companies Over Preventive Services
InsideHealthPolicy reports (here) that “Six insurance trade groups told congressional Democrats that most of their members would maintain coverage of preventive services cost-free while the case over the Affordable Care Act’s preventive services mandate winds through the courts.”
But the Department of Justice maintained before Judge Reed O’Connor in Braidwood v. HHS that preventive health services for 150 million Americans would be endangered if he failed to stay his decision. Now the Judge has gone further, also as reported by IHP (here): “Texas district court Judge Reed O’Connor asked the Department of Justice Thursday to address, and show evidence of, its claim that 150 million Americans’ preventive coverage would be disrupted unless he stays his recent decision to shoot down the ACA’s cost-free preventive care mandate, after six insurance trade groups told congressional Democrats that most of their members would maintain coverage of preventive services cost-free while the high-profile case winds through the courts.”
DRUGS & DEVICES
Mark Cuban to Sell Brand Name Drugs at a Discount
STAT+ reports (here) that “For the first time, Mark Cuban’s Cost Plus Drug Company is selling medicines made by a large drug manufacturer directly to consumers at a greatly reduced price.”
“Until now, the company has focused on selling generic versions of brand-name medicines. But in a tweet yesterday, the upstart announced that it is selling the Invokana and Invokamet diabetes drugs from Janssen, a unit at Johnson & Johnson. A month’s supply will cost patients $243.90, a significant cut from the lowest price on GoodRx’s website, which is $582.89. The average retail price is $676.14.”
The article notes the manner in which discounts and rebates inure to the benefit of middlemen in pharma, but not to patients. “In a 2020 report, the J&J unit claimed that, during the previous four years, the wholesale price for Invokana was $519. But a $313 rebate was offered to health plans for favorable placement on formularies, the list of covered medicines. So a health plan paid a net price of $206, yet health plans base patient cost sharing on wholesale prices. So even when net prices fall, patients may not directly benefit. In industry parlance, this pricing differential is called the gross-to-net bubble, which Cuban is effectively popping in this instance.”
Weight Loss Drugs and Medicare
The Wall Street Journal reports (here) that “Weight-Loss Drugmakers Lobby for Medicare Coverage. Adding Ozempic, Mounjaro to federal plans could stoke sales.”
“Novo Nordisk’s Wegovy, the only of the new drugs approved by the Food and Drug Administration to treat obesity, costs more than $10,000 a year without insurance. Covering treatment for a 10th of Medicare patients who could qualify for the medications would cost about a fifth of the federal insurer’s annual drug spending.”
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Notes to Fred Hyde, MD, JD, MBA, news@dcmedicalnews.org
© 2023 Fred Hyde & Associates, All rights reserved.
Editor: Jane Guillette; Systems and Distribution: Colby Miers, Los Angeles