Obamacare—Past, Present, and Future, Part 3 November 26, 2012 Health Care Reform, Physician Resource SGR, ACA, Obamacare 0 By Andy Calman, MD, PhD Note: This article was originally published in the October 2012 issue of San Francisco Medicine. Due to members' request for more information on health care reform and its impact on medicine, SFMS is publishing a four-part series in the SFMS blog section. Click here to read Part 2 of this 4-part series on Obamacare and its impact on U.S. physicians and patients. Alternative Delivery and Payment Models A large component of Obamacare is an attempt to “bend the cost curve” and reduce the rate of Medicare expenditure growth. There are several components to this, many of which have been greeted with skepticism from the provider community. It is worth noting that past efforts to limit Medicare spending through Medicare Plus Choice and Medicare Advantage (essentially HMOs and PPOs) have actually increased costs compared to traditional fee-for-service (FFS) Medicare. The HMO experiment has already been done twice and was a failure. However, most members of Congress are not well versed in the scientific method, are convinced that FFS is evil and rewards greedy providers, and are inclined to keep trying similar experiments in the hopes that this time they will actually work. Currently, the Medicare Payment Advisory Commission (MedPAC) makes recommendations to Congress on changes to Medicare payment and program rules, but it has no power to enact such rules itself. However, beginning in 2014, the new Independent Payment Advisory Board (IPAB), dubbed “MedPAC on steroids,” will have the power to set Medicare payment rates and rules for the following year, and its rulings can only be overturned by a Congressional supermajority. The AMA and other physician groups have set the elimination or restriction of IPAB as a high legislative priority, as its powers are viewed by many as excessive and unchecked. In addition to IPAB, Obamacare has established a Patient-Centered Outcomes Research Institute to perform comparative effectiveness research. Its recommendations may be considered by CMS but are not binding. There is also a new Center for Medicare and Medicaid Innovation within CMS, which is tasked with overseeing new delivery and payment methods in order to improve care while lowering costs. Obamacare also sets up new entities dubbed Accountable Care Organizations (ACOs), which are groups of providers who contract to provide care for Medicare FFS beneficiaries. These ACOs may include individual providers, IPAs, and/or hospitals. ACOs will, in theory, be rewarded financially for quality and efficiency of care. The initial response from the medical community was lukewarm, with few groups willing to accept the downside risk of bidding for ACO contracts. In response, CMS released updated ACO guidelines in 2011, which streamlined the organizational and reporting requirements and limited the downside risk. Whether ACOs will be a successful component of Medicare remains unknown, but the larger local IPAs, HMOs, and hospital chains can be expected to organize and compete in this arena in the years to come. Individual providers may feel compelled to join with larger entities in order to retain their patient bases and remain viable. Obamacare has also set up a new Federal Coordinated Health Care Office, targeting dual-eligible Medicare-Medicaid beneficiaries, primarily the low-income elderly and disabled, for cost savings. States are encouraged to set up programs to integrate care for these beneficiaries. California, at the behest of Governor Brown, has requested a CMS waiver to expand an existing “pilot project” from four counties (including Los Angeles) to involve the entire state. This project, opposed by CMA, would force California’s low-income seniors into managed care, with a six- or twelve-month “lock-in” provision. Physician fees and access to dual-eligible patients may be severely affected, even though most of the savings from such a forced migration would probably come from long-term care rather than physician services. What about the SGR? One of organized medicine’s highest priorities for the past several years has been the repeal of the Sustainable Growth Rate (SGR), which adjusts aggregate Medicare physician payments based on the gross domestic product rather than the actual demographic growth rate of the Medicare population, the medical inflation rate, or the cost of new technologies. As a result, medicine faces an annual threatened payment reduction of about 30%, which is usually averted at the last minute by Congressional action, often after a temporary payment cutoff to physicians. It is worth noting that the House of Representative's version of Obamacare, championed by our own member of Congress and by House Democrats, contained a complete repeal of SGR and was generally much more favorable to physicians. However, it was the Senate version that prevailed (after the election of Senator Scott Brown provided a forty-first vote for a filibuster, and the final Senate bill was amended through reconciliation), and Obamacare as passed did not address the SGR. The main reason for this is that keeping the SGR in the payment formula allows Congress and the administration to maintain future cost estimates that are artificially optimistic, while averting drastic payment cuts in an annual Congressional drama. However, there is no guarantee that a future Congress, in a deficit-cutting mood, will continue to avert these annual SGR disasters. Dr. Andrew Calman practices ophthalmology at CPMC-St. Luke’s and teaches at CPMC and UCSF. He is past president of the California Academy of Eye Physicians and Surgeons, chair of the SFMS’s Political Action Committee, and served for many years on California’s Medicare Carrier Advisory Committee as well as the National Health Policy Committee of the American Academy of Ophthalmology. Comments are closed.
