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Written By: Jason Shafrin - Apr• 16•15

What is MIPS?

Written By: Jason Shafrin - Apr• 15•15

Yesterday I posted about MIPS, the new Medicare physician reimbursement program set to begin in 2019.  The Health Affairs blog provides a nice summary of some of the changes.

First and probably most importantly, the formulaic approach to setting base payment rates is gone, replaced with automatic increases for all doctors from 2015 through 2019. For six years after that…no automatic increases will be provided and doctors’ respective rates will be altered based on their performance under a Merit-Based Payment Incentive System (MIPS).

The MIPS is basically a consolidation of three pay-for-performance programs already underway and the addition of another…Current penalties under these programs are repealed, though, and the new incentive structure would be budget neutral. For every doctor that makes more from the MIPS, there will be one who makes less. A true zero sum game, if you will.

Assessments will be based on four categories of metrics: (1) quality; (2) resource use (or efficiency); (3) meaningful use of electronic health records…and (4) clinical practice improvement activities. The poorest performing doctors, determined by their composite score drawn from relevant aspects of all four categories, will see their payments cut by up to nine (nine!) percent…

Congress here would also set payments for the years 2026 and beyond. Then, the degree to which an individual doctor’s pay is increased will be dictated by their participation in so-called Advance Payment Models (APMs). Right now, that means accountable care organizations (ACOs), medical homes, bundled payment models, and the like.

Other provisions of interest include:

  • The specific MIPS measures have not yet been selected.  However, my guess is that they will likely be based largely on existing measures from the  Physician Quality Reporting System (PQRS) and the physician Value-based Payment Modifier (VPM).  
  • There is additional funding for measure development, especially in the areas of “outcome measures, patient experience measures, care coordination measures, and measures of appropriate use of services, and consider gaps in quality measurement and applicability of measures across health care settings.”
  • The financial impact of MIPS will be even larger than the current VPM system “Negative payment adjustments will be capped at four percent in 2018, five percent in 2019, seven percent in 2020, and nine percent in 2021″…a nearly 10% payment cut for physicians is huge.
  • Physicians who participate in APMs (read ACOs, medical homes, etc.) are not eligible for MIPS.
  • MIPS results will be posted on the Physician Compare website.

‘Doc fix’ fixed?

Written By: Jason Shafrin - Apr• 14•15

This may be the case.  Fox News reports:

The Senate overwhelmingly passed legislation permanently overhauling how Medicare pays physicians late Tuesday in a rare show of near-unanimity from Congress.

The legislation headed off a 21 percent cut in doctors’ Medicare fees that would have taken effect Wednesday, when the government planned to begin processing physicians’ claims reflecting that reduction. The bill also provides billions of extra dollars for health care programs for children and low-income families, including additional money for community health centers.

Although changing the legislation to correct for physician payment reductions that would have little chance of actually coming to fruition, according to Vox the cost of the doc fix is $141 billion over the next decade. The bill also includes other payment reforms:

  • Merit-Based Incentive Payment System (MIPS). This programs rolls three other older incentive programs into one larger one that gives doctors a quality score. If their scores are really great, doctors’ reimbursement rates will go up.
  • Alternative Payment Model. These are typically payment arrangements that require a whole group of doctors to band together and take a lump sum of money to care for a certain group of patients. If they can provide the care for less — and hit certain quality metrics — they get to keep some of the leftover cash. The hope is that these models will force doctors to be vigilant against wasteful care, since doctors have a financial incentive to spend less than their lump sum amount.

As I reported earlier, CMS aims to tie about 30% of provider reimbursement to value-based payments. This reform may just be the tip of the iceberg.

On being well-informed

Written By: Jason Shafrin - Apr• 14•15


HT: Justin Wolfers via The Incidental Economist.

Robots vs. Physicians?

Written By: Jason Shafrin - Apr• 12•15

The Economist reports that adverse events occur relatively frequently when physicians insert catheters:

placing needles inside veins deep in the body is notoriously difficult. Some 15-30% of attempts suffer complications, mainly punctured arteries that can lead to infection (around 250,000 cases in America annually), but also bleeding, collapsed lungs and even cardiac arrest. Failure rates in children can be higher still.

However, there may be a solution.

A team led by Hugo Guterman, a robotics expert, has built a prototype device that uses ultrasound, machine vision and a robotic needle-dispenser to make placing a central venous catheter a push-button affair.

The operator lays the wireless device on a patient’s arm, leg or neck and views an ultrasound image on a nearby computer screen. The system then identifies the centre and edges of each blood vessel, as deep as 15cm inside the body and as narrow as 0.5mm in width, making it particularly useful for treating children. Using a joystick, the operator aligns a target icon over a vein. The system uses a tracking algorithm to keep the blood vessel aligned. When ready, the operator simply presses a button to insert the needle.

Will robotic insertion of catheters become the new norm? The technology promises to greatly reduce the number of adverse events and improve patient health. However, there may be backlash from physicians. The device does not require the robot operator to be a physician. Physicians may feel that the robotic procedure is unsafe if it is no supervised by a physician. This may be true in the early stages of implementing the robotic procedure, but as people become more familiar with the technology (assuming it does in fact work), then the physicians may not be needed. Having physician oversight, in fact, could simply increase the cost of the robotic procedure so that the technology increases cost rather than decreases it.

It is not clear how the use of robots will change the practice of medicine, but innovators must worry about backlash from entrenched interest groups (e.g., physicians) if the new technology could jeopardize part of their financial stability.

4 Questions

Written By: Jason Shafrin - Apr• 08•15

It is currently Passover, the Jewish celebration of the Exodus from Egypt. One of the many traditions at the Passover Seder is to read the 4 questions. Here at the Healthcare Economist, I will also bring you 4 questions…health-care related questions that is on some of the more interesting topics from the past week.

Medicaid Expansion and States’ bottom line

Written By: Jason Shafrin - Apr• 07•15

A recent RWJF Issue Brief notes that states that expanded Medicaid received more revenue from the federal government and had less state-level spending on programs that support the uninsured.

In examining Medicaid expansion across eight states—Arkansas, Colorado, Kentucky, Michigan, New Mexico, Oregon, Washington and West Virginia—it is clear that states are realizing savings and revenue gains as a result of expansion.

  • Savings and revenues by the end of 2015 (just 1.5 years into expansion) are expected to exceed $1.8 billion across all eight states
  • In Arkansas and Kentucky, savings and revenue gains are expected to offset costs of the expansion at least through SFY 2021

Findings from these eight states suggest that every expansion state should expect to:

  • Reduce state spending on programs for the uninsured
  • See savings related to previously eligible Medicaid beneficiaries now eligible for the new adult group under expansion
  • See revenue gains related to existing insurer or provider taxes

Does this mean that states who failed to expand Medicaid are stupid? The answer is no. It was clear to all states that expanding Medicaid would increase federal government funding and decrease the need for state funds. Clearly, the ACA Medicaid expansion was a short-run fiscal win.

In the long-run, however, there is a risk that federal generosity for the Medicaid expansion decreases and states are left holding the bag. Poorer states with a larger Medicaid population would be at significant financial risk in this case.

Of course, there are the politics of Medicaid expansion, but whether or not states should or should not expand Medicaid is a question that cannot yet be answered.


Quality-Adjusted Cost Of Care

Written By: Jason Shafrin - Apr• 06•15

One of my paper (along with co-authors Darius Lakdawalla, Claudio Lucarelli, Sean Nicholson, Zeba M. Khan and Tomas J. Philipson) was published at Health Affairs.  The title of the study is: Quality-Adjusted Cost Of Care: A Meaningful Way To Measure Growth In Innovation Cost Versus The Value Of Health Gains.  The abstract is below.

Technology drives both health care spending and health improvement. Yet policy makers rarely see measures of cost growth that account for both effects. To fill this gap, we present the quality-adjusted cost of care, which illustrates cost growth net of growth in the value of health improvements, measured as survival gains multiplied by the value of survival. We applied the quality-adjusted cost of care to two cases. For colorectal cancer, drug cost per patient increased by $34,493 between 1998 and 2005 as a result of new drug launches, but value from offsetting health improvements netted a modest $1,377 increase in quality-adjusted cost of care. For multiple myeloma, new therapies increased treatment cost by $72,937 between 2004 and 2009, but offsetting health benefits lowered overall quality-adjusted cost of care by $67,863. However, patients with multiple myeloma on established first-line therapies saw costs rise without corresponding benefits. All three examples document rapid cost growth, but they provide starkly different answers to the question of whether society got what it paid for.


Does your doc want to be in an ACO?

Written By: Jason Shafrin - Apr• 05•15

The answer is likely “It depends.”  To see why this is the case, let us consider the case of some proposed health reforms in Switzerland to force physicians into managed care (MC) networks.  As described in Rischatsch (2015):

In 2012, Switzerland held a referendum…aimed at encouraging the nationwide development of MC networks. Among other changes…the legal text contained that the health care providers organized in physician networks are financially responsible for the medical provision of the network-insured individuals. In other words, the implementation of a budgetary co-responsibility for ambulatory care physicians was intended. The referendum was rejected by a strong majority of voters (76%)…The physician community successfully campaigned against the referendum with the argument that the reform would abolish free physician choice because the reform also intended to impose a higher co-payment for patients that were not treated in a physician network.

Motivated by this referendum, Rischatsch conducts a discrete choice experiment to examine physician preferences.

The discrete choice experiment, completed by 872 physicians in 2011, reveals a strong preference heterogeneity among Swiss ambulatory care physicians. On the one hand, a first group of physicians – mainly general practitioners – is indifferent between working in a network or in independent practice as long as no budgetary responsibility is imposed, but preferences change depending on the design of the reimbursement mechanism. On the other hand, a major share of physicians – mainly specialists with surgical activities – are unwilling to work in a physician network regardless of how the reimbursement scheme is designed.

In summary, there are some physicians who are interested in actively sharing in risk and others–particularly specialists–who have little incentive to do. These are two extremes, but is important to take into account not only patient and payer preferences for managed care (or accountable care organizations), but also the physician preferences as well.


Friday Links

Written By: Jason Shafrin - Apr• 02•15