Where CMS Payment for Quality Failed

Thursday, July 14, 2016 | Larry Sobal

 

If you work in health care, you’ve been hearing about the pay-for-value concept for many years. The idea makes sense. Rather than paying hospitals and physicians for the work they do (fee-for-service), the intent is to incentivize and reward those who provide better quality at lower costs (value).

One of the major public health success stories of recent years has been the dramatic decline in the proportion of Americans who die of heart disease and stroke. Each year, the American Heart Association (AHA), in conjunction with the Centers for Disease Control and Prevention, the National Institutes of Health, and other government agencies, brings together the most up-to-date statistics related to heart disease, stroke, and other cardiovascular and metabolic diseases and presents them in its Heart Disease and Stroke Statistical Update.

The most recent report shows that the rates of death attributable to cardiovascular disease (CVD) have declined in the United States. Specifically, from 2003 to 2013, death rates attributable to CVD declined 28.8%. In the same ten-year period, the actual number of CVD deaths per year declined by 11.7%.

Furthermore, according to the Medicare Patient Safety Monitoring System, between 2005 and 2011, adverse event rates in hospitalized patients declined for both myocardial infarction (from 5.0% to 3.7%) and congestive heart failure (from 3.7% to 2.7%).

Similarly, successful results were recently reported by the American Journal of Preventive Medicine. A new study evaluating recent trends in the prevalence of coronary heart disease (CHD) in the U.S. population, aged 40 years and older, showed that CHD rates have decreased significantly, from 10.3% in 2001-2002, to 8.0% in 2011-2012.

Indeed, the heart disease mortality rate is falling so fast that some experts believe cancer will overtake heart disease as the single leading cause of death in the United States. This is already the case in 22 states.

One is inclined to think that stellar results like this would fit nicely into the concept of pay-for-value and that cardiologists would be among those physicians who the Centers for Medicare and Medicaid Services (CMS) would recognize—and reward—for such performance.

Wrong.

Starting in around 2008, CMS began dealing cardiologists a significant blow—cuts in technical reimbursement for their primary in-office ancillary services such as echocardiography and nuclear medicine. Furthermore, CMS eliminated lucrative consultation codes, replacing them with lower-reimbursed E&M codes.

The result is that cardiologists began closing up independent practices and migrating to large medical centers, where imaging reimbursement rates at hospitals are three times more than at independent cardiologists—a cost discrepancy that hit patient pocketbooks hard.

The reality is that CMS disrupted an entire high-performing segment of the health care industry—cardiology private practice—and penalized them in a period of unprecedented success.

Now, Medicare and Congress realize they may have made a mistake. Hospital buyouts of doctors, which have turned independent practitioners into hospital employees, have led to higher spending by private insurers and higher co-payments for their policyholders.

I strongly suspect, in part, that this is what led to last week’s Medicare-proposed 2017 reimbursement rules for outpatients, including a reduced payment rate for medical products and services provided at many hospital-owned outpatient facilities; in effect, eliminating the reimbursement gap that prompted an estimated 70% of U.S. cardiologists to join hospitals.

While I’m not claiming that cardiologists alone are the reason why there have been such dramatic improvements in heart care (certainly primary care and other specialties deserve credit too), but the reality is that CMS disrupted an entire high-performing segment of the health care industry—cardiology private practice—and penalized them in a period of unprecedented success. Now, the plan is to penalize hospitals by taking away OPPS reimbursement to offset the result.

Here’s my conclusion. First, CMS has no idea how to recognize or reward quality. Second, CMS needs to stop referring to this as a value-based change. It’s still all about costs. Finally, CMS has demonstrated it does not have the ability to model its legislative actions and anticipate the likely changes they will cause. That’s a dangerous limitation for an organization with so much influence on our health care system.

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Larry Sobal is Executive Vice President of Business Development at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and insurance. As part of his current role, Larry consults, writes and presents on topics relevant to transforming physician practices and health systems.

 

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