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(UPDATE) What does all of the talk in the media about the “SGR” mean for physicians?

By Mary Holloway Richard.

(Updated 4/14/15)

What does all of the talk in the media about the “SGR” mean for physicians?

One of the important issues identified in the health care industry “crisis” and reform is the cost of providing services.  Focus has been on shifting payment from charges for visits and procedures to reimbursement according to certain metrics such as outcome and quality.  In addition, a ceiling on physician reimbursement has been much debated.  The Affordable Care Act (“ACA”) included the Medicare sustainable growth rate (“SGR”) formula for doing just that, although the SGR was actually created as part of the 1997 deficit reduction law designed to contain federal spending  by tying physician payments to an economic metric or growth target.

On Tuesday, March 24, 2015, Democrats and Republicans revealed the result of their negotiation and cooperation to offer an alternative to Medicare’s SGR formula.  The proposal calls for repeal of the SGR formula.  House Speaker John Boehner (R-OH) and Minority Leader Nancy Pelosi (D-CA) have arrived at this compromise to strengthen the financial picture for Medicare and to end the continuing threat of payment cuts to physicians.  According to the Association of American Medical Colleges, although medical school applications are up slightly since 2011, the United States faces a physician shortage of between 46,000 and 90,000 by 2015.  www.aamc.org/newsroom/aamcstat/,a=427828.  The economic incentives to the professional are an integral component in stabilizing the health care system in this country.  The House overwhelmingly approved the proposal on Thursday, March 26, 2015.

What does the SGR mean to physicians?  There is still great divergence between the Boehner (repeal Washington’s most famous gimmick) and Pelosi (Medicare payments for doctor services to seniors facilitating continuation of physician-patient relationship) perspectives.

What does the bipartisan proposal mean to physicians?  This will halt the cut that was to be implemented on April 1, 2015.  When the ACA was signed five years ago, that seemed like a long time away but was nonetheless worrisome.  It puts in place a 21.2% reduction in Medicare payments making it virtually impossible for many providers to support the operations of their practices or clinics.

This proposal is very similar to the one proposed in 2014 , and it includes a system of rewarding physicians based upon quality standards rather than output or number of services provided and fosters a focus on coordination of care, prevention and quality and key cost containment strategies.  All of these elements are part of a new accountability that is the cornerstone for allowing payment increases for doctors for the next five years during this period of transition.  In addition, if approved by the Senate, the bipartisan proposal would extend the Children’s Health Insurance Program (“CHIP”) with full funding through September 30, 2017.  It also provides for $7.2 billion funding for community health centers.  The cost of the House package is $200 billion

On Friday, March 27, 2015, the Senate adjourned without approving the Doc fix.  It apparently will take up the issue upon its return in mid-April.  In the meantime, CMS is poised to delay processing provider claims as of April 1, 2015, when the 21.2% cut was to go into effect.  However, CMS is warning that the cut will go into effect if the Senate fails to pass an SGR fix by April 15.  One complication may exist in the form of legislation introduced by a bipartisan Senate team, Senators Cardin (D-MD) and Collins (R-ME), to permanently repeal the caps on how much the program spends on rehabilitation therapy.  This unresolved issue may arise as an amendment to the legislation to be considered after the break and provides a reminder of how single issues or senators can ultimately frustrate the passage of legislation that has support from both parties.  Others in the Senate are critical that spending cuts will offset only a portion of the costs.  Conservatives have characterized this element of the plan as irresponsible.  The AARP is focused on increased costs to Medicare beneficiaries and will continue to lobby for changes to lower these costs.

Democrats may want amendments to extend the CHIP program four years, to remove the Hyde Amendment (abortion-related language), and to repeal the Medicare therapy cap.  Any amendments would, of course, send the legislation back through the House, and this appears to be an unattractive alternative to all concerned because of the remarkable support for this resolution from both parties.  A perhaps more significant complication is presented by the report issued last week by the Office of the Actuary of the Centers for Medicare and Medicaid Services (CMS) indicating that physician payments in which the 0.5% increases in Medicare payments over the next four years would come to a halt in 2020.  In that year a two-tiered system is phased in which is designed to encourage physicians to shift greater numbers of patients into risk-based models.  For physicians continuing to work within the traditional payment system, but who are scoring well on the quality metrics, remuneration will be awarded from a separate appropriation.  After 2024, the alternative payment track would increase annually by 0.75% which will be three times greater than the rates of other physicians. CMS is predicting that 2024 is the time when there will be a shortfall and payments will lag behind inflation.

On the one hand, Congress is fed up with required annual intervention for the past seventeen years to avoid scheduled cuts to physicians.  On the other hand, Congress is forced to rely on estimates to predict costs which places the federal government at risk of future payments not keeping up with the either the chosen formulae or with inflation.

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(UPDATE) A look at the controversial Affordable Care Act on its fifth anniversary

By Mary Holloway Richard.

(Updated 4/7/15)
President Obama has taken the occasion of the fifth anniversary of the signing of the Affordable Care Act (“ACA”) to characterize continued activities on the Hill to repeal it as renegade special interest activities. The ACA continues to be a subject of debate both in terms of its accomplishments—how many are newly covered and how much will be saved—and in terms of its public support.

While the Associated Press reported on March 23, 2015, that public support was down 5% since its passage, as one who daily writes and advises health care clients on matters related to the ACA, I can say with certainty that the depth and breadth of increased regulation spawned by the ACA are changing the nature of the system.

Those changes include responsive movement toward integrated health systems, mergers and affiliations; transition from quantity- to quality-based reimbursement; the relaxation of HIPAA standards in some respects and its tightening in others in the context of EHR transformation; and increased direct and indirect costs to employers as a result of new responsibilities.

Nearly fifty changes have been made to the ACA as of March 2, 2015, and this suggests a continuing need for providers, employers and business owners to remain informed and responsive to the moving regulatory compliance target.

On Monday, March 30 the Supreme Court rejected a new challenge to the Affordable Care Act (“ACA”)  that targeted the Independent Payment Advisory Board (“IPAB”), a 15-member government panel which has been characterized as a “death panel” because of its intended role in cutting Medicare costs.   The IPAB was to convene when the target growth rate for Medicare (3.03%) is exceeded.  However, the growth rate is 1.15% according to CMS, and so the administration has not nominated any panel members.  In declining to take up the case, the Supreme Court left undisturbed the 9th US Circuit Court of Appeals in San Francisco dismissal of the lawsuit. The proponents of the ACA are calling this a win.  Coons v. Lew, No. 14-525.   Certiorari was denied by the United States Supreme Court on March 30, 2015.

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Healthcare cost-cutting trend ties money to results

By Mary Holloway Richard

healthcare-shutterstock-02The trend toward decreasing costs in healthcare has seized upon value-based care – tying physician compensation to performance and outcome measures. These measures are also being used in contract negotiations with third party payors and healthcare plans.

Counsel for institutional and non-institutional providers are at the table providing advice about a number of important contractual terms and their ramifications including appropriate and measurable metrics for calculating bonuses and penalties and, if shared savings are at issue, how they should be split. For those who have been involved in negotiations of traditional fee-for-service contracts, this will seem like a fundamental change. It may also seem like a change that narrows the potential for disputes.

However, numerous issues will continue to be important to providers. For example:

  • Are the metrics used as incentives or penalties?
  • Are the selected benchmarks easily measurable and attainable?
  • Do they raise regulatory issues such as potentially impacting volume in an unacceptable way or spawn any other results that could be construed to be anticompetitive?

While these questions have yet to be answered by Oklahoma courts, we can look to decisions from other states and consider ourselves forewarned as to the nuances and potential pitfalls in negotiating and drafting these terms.

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Responding to Ebola

By Mary Holloway Richard

Guest Column in The Journal Record, Published Oct. 15, 2014

shutterstock_210544051-1Incidence of Ebola on American soil allows for review of legal underpinnings of the public health response to “catastrophic health emergencies.” This term means, for our purposes, occurrence of imminent threat of an illness or health condition that is believed to be caused by the appearance of an infectious agent that poses a high probability of a large number of deaths in the affected population or widespread exposure to the infectious or toxic agent that poses a significant risk of substantial future harm to a large number of people in the affected population (63 O.S. §6104).

The federal government’s rapid response derives its power from the Commerce Clause of the U.S. Constitution (42 U.S.C.A. §264, Section 361 of the Public Health Service Act). The secretary of the Department of Health and Human Services is authorized to take measures to prevent the spread of threat of disease from other countries to the U.S. and between states. Borders are being monitored more stringently. States and tribes have the political power to detail those within their borders in an effort to contain such a threat. Police power functions include isolation-quarantine, access to and use of private health information, closure, lockdown, curfews, and appropriation and destruction of property, including pets and other animals. Those powers are derived from the state’s right to take action against individuals for the good of the people at large.

Oklahoma State Health Department regulations provide for isolation and quarantine including proper due process for affected people (OAC 310:521-7-6). On Oct. 10, the Centers for Medicare and Medicaid Services issued a memorandum to state survey agency directors (the state Department of Health in Oklahoma) to strongly urge hospitals to fully implement recent Centers for Disease Control policies for Ebola, including hospital evaluation and preparedness checklists and algorithms to evaluate patients returning from countries affected by the disease.

Emerging legal issues include privacy rights, provider and volunteer liability, due process and Fourth Amendment protections for mandatory testing and screening of citizens, licensure and scope of practice issues for noninstitutional health services providers giving aid, myriad informed consent, right to refuse treatment, and social distancing and remote handling of citizens including the effect of Americans with Disabilities Act protections.

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The Role of Telemedicine in Meeting the Behavioral Health Needs of Oklahomans and Attendant Legal Issues

Click here to view the publication in full: “The Role of Telemedicine in Meeting the Behavioral Health Needs of Oklahomans and Attendant Legal Issues” (Oct 4, 2014)

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