WASHINGTON – Members of the Medicare Payment Advisory Commission, which advises Congress, are weighing whether to recommend a 10% increase in payments for evaluation and management services.
The boost would be offset by a 4.5% decrease in all other payments on the Medicare physician fee schedule.
“The fee schedule underprices ambulatory [evaluation and management] services relative to other services,” MedPAC staff member Ariel Winter said during a Jan. 12 presentation of a draft proposal.
Payments in the physician fee schedule are based on the relative amount of time and intensity required for each service, she noted. “E&M services are labor intensive,” she said. “A clinician takes the patient’s history, examines the patient, engages in medical decision-making and so forth. These activities do not lend themselves to reductions in the time it takes to provide the visit.”
In contrast, “the time needed for other services, such as procedures, often declines over time due to productivity gains in clinical practice and technology,” Ms. Winter continued. “Ideally, the prices for these services would also be reduced to reflect these efficiency gains.”
Ms. Winter pointed out that the payment reduction that captures the efficiency gains rarely happens, and because of budget neutral requirements, it means that “payment rates for ambulatory E&M services are too low relative to other services.”
MedPAC looked at the fee schedule time estimates across four specialties (cardiology, family medicine, orthopedics, and urology) and found that across the board, the fee schedule assumed it took the specialist more time than what was actually needed.
“However, the discrepancy was much greater for the practices that focus on procedures, which suggests that the services they provide may be based on inflated time estimates,” Ms. Winter said. “For example, the hours assumed in the fee schedule were 24% higher than actual hours worked for family medicine, but 64% higher in cardiology and 92% higher in orthopedics.”
To account for this, and psychiatric services, regardless of specialty, resulting in an increase of $2.7 billion in spending on these codes. That would force a reduction of 4.5% in payments for everything else in the fee schedule under budget neutrality requirements.
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Based on this change, licensed clinical social workers would see the full 10% increase to their physician fee schedule payments and clinical psychologists would see an 8% increase, based on 2016 Medicare claims. Endocrinology would see a 6.5% increase, family practice a 5.7% increase, and rheumatology a 5.4% increase.
Of the specialties displayed on a presentation slide that showed an increase, internal medicine fared the worst, with a 2% increase. “That is because this specialty performs a lot of services other than ambulatory E&M” and the 4.5% reduction in those other services would have an offsetting effect, Ms. Winter said.
Ms. Winter noted that a number of specialties would see a reduction in their physician fee schedule payments greater than 4% “because they provide very few E&M or psychiatric services, and these include radiology, pathology, physical therapy, and occupational therapy.”
Another option presented to the MedPAC commissioners was offering a special incentive payment equal to a 10% increase to clinicians who bill 60% of their claims for E&M services. That idea, which is similar to the now-expired primary care incentive payment program, would require a 1.7% reduction in other services to maintain budget neutrality.
But MedPAC commissioners questioned the overall aim of this type of payment rebalancing.
“Are we hoping that enhancing payments for primary care will actually improve coordination of care and management of patients?” asked Commissioner Kathy Buto, former vice president of global health policy at Johnson & Johnson. “I don’t think either of these options really does that. So that leads me to ask the question, ‘should we be thinking more about that issue?’”
Commissioner David Nerenz, PhD, director of the Center for Health Policy and Health Services Research at the Henry Ford Health System in Detroit, pointed out that a 10% uptick is not going to solve the problem of payment disparities. “And that doesn’t mean it should not be done. It just means that other things have to be considered and addressed at the same time if ultimately we are talking about people’s choice, for example, to go under primary care.”
Dr. Nerenz also noted that providers such as physical therapists and occupational therapists have to spend their time in face-to-face settings in the same way E&M visits are structured, but because it is billed as a procedure, they would get penalized under the draft proposal.
“I have the same concern about a procedure like colonoscopy,” he added. “You know, for the appropriate people, it’s a lifesaving procedure. Should that payment go down 4.5%? I don’t know.”
Commissioner Rita Redberg, MD, of the University of California San Francisco, suggested that some of these issues would go away on their own as physicians move into advanced alternative payment models in the Quality Payment Program, something MedPAC hopes will happen if their repeal and replacement of the Merit-based Incentive Payment System portion of the Quality Payment Program is adopted.
Commissioner Dana Gelb Safran, ScD, of Blue Cross Blue Shield of Massachusetts, looked at payment adequacy from three perspectives: better equity, better access, and better alignment with value. “I guess on all three counts, I am finding both of these approaches coming up short,” Dr. Safran said. “It maybe helps the most with equity, but then there’s the challenge about how payment actually gets shaped by the organizations providers are a part of,” she said, referring to whether employed physicians would see any benefit trickle down to them in the form of increased salary and benefits. “So I struggle with whether it even accomplished that, but maybe it’s not a bad idea for that.”
MedPAC is in the early stages of developing a recommendation on this subject and more discussions are expected at upcoming meetings. The next scheduled meeting is in March 2018.