As Medicare celebrates its 50th anniversary, federal officials are beginning one of the most significant shifts in the program’s history – paying physicians based on quality and efficiency rather than for the volume of services they provide. The shift to so-called value-based payment will be phased in, but it is coming soon.
Earlier this year, federal officials announced their goal to tie 85% of all Medicare fee-for-service payments to quality or value by 2016 and 90% by 2018, relying heavily on the use of alternative payment models such as Accountable Care Organizations (ACOs) and bundled payments. The shift also is being driven by the recent repeal of Medicare’s Sustainable Growth Rate formula. The law that removed the SGR from physicians’ lives also created alternative payment pathways that tie payments to performance on certain quality metrics or successful participation as part of an ACO.
How will these changes affect how physicians deliver care in the future? We invited physicians in various practice settings to offer their perspectives on how the new payment paradigm will drive practice changes.
‘Value’ payment system is arbitrary
BY JOSEPH S. EASTERN, M.D.
While much has been written about the Centers for Medicare & Medicaid Services’ plan to shift its payment system away from fee-for-service and toward a “value-based” structure, most physicians in small and solo private settings have given little if any thought to its potential impact on their practices. That is about to change.
The principal vehicle for the CMS’s plan is something called the value-based payment modifier (VBPM), a component of the Affordable Care Act. The VBPM has not been on the radar of smaller private practices because up until now it has only applied to groups with more than 10 providers. Beginning this year, it applies to everyone. If you accept Medicare patients, regardless of the size of your practice, VBPM will become part of your life – because your 2017 Medicare payments will be adjusted based on your 2015 VBPM “score.”
Dr. Joseph S. Eastern
It will adjust your reimbursements based on quality of care as defined by the CMS and cost, compared to other physicians. Your “score” will have a quality component and a cost component, and will be calculated based on measures reported through the Physician Quality Reporting System (PQRS). And the ACA requires that the program be budget neutral, which means that all rewards to physicians who pull the highest scores must be offset by penalties, or “negative adjustments,” to those who don’t score as well. In essence, the VBPM establishes arbitrary practice standards and spending ceilings; physicians who have the temerity to practice medicine as they see fit, or spend too much relative to their peers, will be punished.
Beyond the obvious and very real possibility of significant financial hardship, there are serious potential consequences inherent in this unprecedented new system. Health care is already among the most regulated industries in the country; the VBPM creates new incentives to practice “cookbook” medicine, and new disincentives to order tests, consults, or medications, even when doing so would clearly be in a patient’s best interest. The inevitable result will be compromised care and further limitation of patient access.
The VBPM’s potential effects on physician-patient relations and legal liability are additional serious concerns. Many patients will object to their physicians’ new reluctance to recommend appropriate interventions for fear of generating excessive costs; and should a less-than-thorough work-up lead to a missed diagnosis, the ACA offers no protection at all from any resulting malpractice litigation.
The already strained relationship between physicians and their hospitals will likely deteriorate as well. Hospital administrators will be scrutinizing each medical decision from admission to discharge, particularly in those institutions already in financial trouble, as is all too often the case. The constant necessity of justifying every significant order and consult will not be in anyone’s best interest, least of all that of patients.
For all the talk that the transition from fee-for-service to value-based reimbursement would result in better care at a lower cost, there is little evidence that care is improving, and even less that costs are decreasing. Conversely, there are plenty of warning signs that physicians in small private practices who can’t meet the new performance standards may face a significant financial burden because of the resulting penalties and lower reimbursements.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News.
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