Physicians Push for Say in Value-Based Payments Structure

The American Medical Association is backing an effort in Congress to push Medicare toward a value-based reimbursement system, but doctors are demanding a seat at the table when rules are set for transparency and assessing providers' performance.

Physicians appear energized over a deal announced in Congress last week to repeal Medicare's fee-for-service payment system and replace it with a value-based model. But they say it is critically important for them to be involved in the process of crafting the new reimbursement scheme.

"The consensus is the fee-for-service system is unsustainable," said Peter Roman, MD, specialist medical director for Lowell General Hospital PHO in Massachusetts and a private practice orthopedic surgeon. "We need to move to a system that rewards value, with value defined as quality divided by cost."

On Thursday, members of Congress announced a bipartisan deal to repeal and replace the Sustainable Growth Rate formula, Medicare's current payment system for physicians. The pact calls for a five-year period of stability with a 0.5 percent annual pay rate hike for doctors. In the last five years of the plan, a series of reforms would be launched to push Medicare physician reimbursement to a value-based model.

Part of the SGR repeal deal calls for streamlining existing Medicare quality assessment programs for doctors and increasing transparency of medical care costs through mechanisms such as the Physician Compare service on Medicare's website.

If the SGR repeal deal becomes law, Roman says the transition to a value-based reimbursement system will be successful only if physicians are included on the panels that would design quality assessment programs and transparency rules for physicians. "You have to have some doctors involved if you want doctors to own it," he said.

Ardis Dee Hoven, MD, president of the AMA, told HealthLeaders on Monday that the reimbursement plan outlined in the SGR repeal deal "is a much better system than what currently is in place." But she insisted that doctors must play a role in determining rules for quality assessment and transparency. "We are the ones driving the bus on these quality issues," she said. "Physicians have led the drive for more accurate reporting."

While wary of the future course of Medicare quality assessment and transparency regulations, Hoven said the SGR repeal deal provides the framework to make significant improvements. "As a starting point, it's a reasonable place to start," she said.

'You're Going to Shop Around'
Physicians are crucial to moving the US healthcare industry to a value-based model because they understand the complexities of the field, says Anders Gilberg, senior vice president of governmental affairs at the Medical Group Management Association in Englewood, CO. "The challenge here is there's no one-size-fits-all program," he said.

The proposed SGR repeal deal leaves room for doctors and other stakeholders to influence how the new value-based system would be designed, Gilberg said, calling the pact a foundation for change. "We don't know how this is going to play out," he said. "So much is going to be left to the secretary [of Health and Human Services] to flesh out. … What this does is create a set of criteria."

When new standards for physician assessment are set, the selection of indicators to be measured will be a key factor in creating a value-based system, Roman said. "The measures that work are the measures that look at quality and outcomes. A measure should be meaningful and the physician should have the ability to control it."

To quantify value and promote transparency, Roman says reformers should focus on costs rather than physician fees, noting the fees that doctors can charge for their professional services are largely mandated. "We're all on the same fee schedule, but there are huge variations of cost."

Effective healthcare value measurements assess physician performance in areas of their fields where outcomes and costs differ from doctor to doctor, Roman said. "A good measure would be one where there is a high degree of variation," he said.

In orthopedics there is a wide cost gap between doctors who prescribe professional rehab for their patients and doctors who send their patients home with rehab instructions. Hip replacement with rehab can cost twice as much as sending a patient home, Roman says.

With more and more patients facing high deductibles and other out-of-pocket expenses, making cost figures public would help patients find their most affordable treatment options, the orthopedic surgeon said. "If you have a high deductible, you're going to shop around," he said.

The ACO Model
Earl Ferguson, MD, a California cardiologist and author of the recently released book "American Healthcare Reform," said physician reimbursement reform is needed, but any new rules should avoid imposing more administrative demands on physicians. "We need to incentivize efficiency, productivity and quality, and decrease costs," he said. "But it's getting so complex, it's taking physicians away from actual medicine."

Ferguson, who is medical director of the National Rural Accountable Care Organization, said ACOs are showing great promise as a mechanism to move toward improved provider assessment and transparency. "We're going to be able to analyze data not only for providers but also for each physician," he said.

NRACO, which is promoting "a sustainable model for rural healthcare," is planning to use data collected at its ACOs to highlight the best practices at top-performing providers and to help providers that are underperforming. "I think the ACOs are the best model," Ferguson said of the move to a value-based healthcare system. "They're more of a fee-for-value system."

If the SGR repeal deal becomes law and a Medicare-led drive to create a value-based system is successful, the change would be revolutionary, Roman believes. "In a system where you're rewarded for quality and outcomes, the savings would be substantial," he said, contrasting a value-based reimbursement system with the fee-for-service model. "You eliminate the volume incentive."