The high cost of U.S. health care continues to grow, thanks to a combination of factors including inefficient care delivery, operational processes and expansion of health care coverage to vulnerable populations. The need to curb these spiraling costs is clear while improving the value of the overall spend. But the shift to value-based care and related health care reform initiatives by both the government and the private sector are burdening health care providers with unreasonably complex, time-consuming and costly record keeping and reporting requirements, thereby encouraging physicians and other practictioners in private or small practices to either join large provider organizations, such as hospitals and physician services providers, or give up practicing medicine altogether.
Sheridan’s Chief Quality Officer Dr. Gerald Maccioli recently spoke at the 2016 Health:Further Summit about the overwhelming burdens on providers created by current and planned changes to the U.S. health care landscape and offered strategies for managing those burdens.
The Current State of U.S. Health Care
VUCA: “The New Normal” Working Environment for Health Care Providers
Dr. Maccioli began with an overview of the current state of U.S. health care. He used the term VUCA – a concept introduced by the U.S Army War College to describe the volatile, uncertain, complex and ambiguous world environment following the end of the Cold War – to characterize “the new normal” for physicians and other health care providers following the enactment of the Affordable Care Act and now MACRA.
U.S. Health Care Quality
A frequently cited study by the Commonwealth Fund International Working Group on Quality Indicators ranked U.S. health care eleventh globally. But Dr. Maccioli pointed to several other reputable studies and analyses that challenge those findings. The CONCORD study of cancer survival in five continents found that the U.S. ranked first for breast, prostate, and colon cancer survival. The American Enterprise Institute’s report on “The Business of Health” found that when fatal injuries (which are often unrelated to health) are excluded, the U.S. ranking moves up to first place. And researchers at the University of Pennsylvania found that low life expectancy in U.S. is “not likely to be a result of a poorly functioning health care system.” Those metrics indicate that U.S. health care is, in fact, the best in the world.
Health Care Spending Is Outpacing GDP Growth
Since 2009, health care costs in this country have represented more than 17 percent of the gross domestic product (GDP). And despite measures designed to curb those costs, such as the Affordable Care Act, those high costs continue to grow. In 2013, the U.S. spent $2.9 trillion on health care, or $9,225 per capita. And that spend is projected to increase at a rate of 5.7 percent annually – 1.1 percent faster than GDP growth – through 2023, when health care spending will likely reach $5.2 trillion, 19.3 percent of the projected GDP.
So the primary focus of health care reform should be on increasing efficiency and lowering the cost of care delivery, thereby improving the “value” to both the individual patient and society as a whole.
Three Stakeholders = Three Agendas
Patients are demanding consumer-driven, high-deductible plans with greater pricing transparency.
Providers are retooling operations to infuse more focus on care management, cost reduction, data utilization, prevention and overall wellness.
Commercial payers are consolidating, becoming more powerful, and both commercial payers and CMS are shifting risk to providers (both downside and upside risk, based on outcomes). Payers are also increasing the number of value-based programs, such as bundled payments, pay-for-performance and shared savings plans.
The metrics for rating physicians’ quality performance were decided on by federal health officials and insurers. The American Medical Association, various medical groups, patient advocacy organizations and the insurance industry hastily applauded the agreement, glad to finally get broad consensus between CMS and commercial insurers on how physicians would be measured on quality. But that was before more detailed metrics were revealed in the proposed MACRA implementation rules.
Corporate Leaders Adding to Market Pressure
As we discussed in a previous post, 20 major U.S.-based employers with four million covered lives banded together in February 2016 to form the Health Transformation Alliance (HTA). The HTA’s stated goal is “to improve the way corporations provide health care benefits in an effort to create better health care outcomes for their employees. By coming together to share expertise, the companies seek to make the current multilayered supply chain more efficient.”
These large corporations are pooling their employee health care data to analyze spending and outcomes to identify the best treatment options/providers. HTA is expected to design plans with high-performing providers to deliver high-value care to employees and their families. The group also may eventually use its members’ combined purchasing power to drive down the cost of prescription drugs.
Complex and Inconsistent Quality Reporting Requirements Have Made Reporting Expensive and Time-Consuming
Dr. Maccioli highlighted the lack of standardization or alignment in quality reporting requirements. In addition to a panoply of federal requirements in the current CMS quality reporting programs, there are also more than 500 state quality measures in total. There is only 20 percent crossover of those measures among states and medical specialties. In addition, individual insurers and even health organizations often require their own metrics. The cumulative burden of data collection to comply with externally imposed requirements creates an almost unbearable administrative burden for doctors.
Complying with federal and state government and commercial payers’ quality reporting requirements costs U.S. physician practices more than $15.4 billion a year, according to a recent article in Health Affairs that estimates a cost of $40,000 per physician practice annually.
On average, providers in these practices spend 7.6 hours each week on quality reporting – time that otherwise could have been spent delivering patient care. In addition, staff in these practices spend an average of 15.1 hours per week on documentation and reporting activities.
Challenges related to the current state of EHR technology, such as poor usability, time-consuming data entry, interference with face-to-face patient care, inability to exchange health information because of interoperability issues, have significantly lowered doctors’ professional satisfaction in recent years. And the cost, complexity and time burdens of complying with changing quality reporting requirements are becoming so high that many doctors can no longer afford to remain in private practice or smaller physician practices.
Heavy Burden on Doctors Leads to Physician Burnout
Dr. Maccioli pointed out that these overwhelming burdens on physicians are major contributors to this country’s physician burnout epidemic. “They are taking the joy out of medicine” and creating debilitating stress levels, he explained. “Physicians are scared. There is so much pressure on them that modern medicine doesn’t prepare them for.” More and more doctors are taking early retirement or even changing professions, exacerbating the increasing physician shortage crisis.
Seismic Shifts in Health Care Will Multiply the Burdens on Health Care Providers
After reviewing the current state of U.S. health care, Dr. Maccioli addressed the fundamental shifts that are taking place and further increasing the burdens of change on health care providers over the next 8-10 years.
Medicare’s Shift to Value-Based Care
The goal of the CMS is to have 50 percent of all Medicare payments and 90 percent of Medicare fee-for-service payments tied to quality or value by the end of 2018. It is developing and testing new payment models that could put hospital-based physicians at a high risk of commoditization. Yet the stated goals of these programs are encouraging greater integration, coordination among providers and attention to population health, and accelerating the availability of EHR information and interoperability.
The Medicare.gov website allows consumers to compare data on costs and quality.
Hospital Value-Based Purchasing
CMS’s Hospital Value-Based Purchasing (VBP) Program, which rewards acute-care hospitals for the quality of care they provide to Medicare beneficiaries, is shifting its measurement focus from process measures to outcomes.
The Macro-Level Market Shift
The revenue mix for providers is shifting rapidly from fee-for-service to value-based reimbursement.
Dr. Maccioli emphasized that in order to meet value-based goals, both physicians and hospitals will need to reduce utilization among their patient populations, which could potentially reduce their procedure volume and, thus, their revenue.
MACRA Payment Tracks: MIPS and APMs
Dr. Maccioli laid out the two payment tracks for physicians under MACRA – the Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs) – and presented a quick summary comparison. As of this spring and the proposed implementation rules, these programs are now collectively known as “QPP” (Quality Payment Programs).
Physicians’ revenue will be at risk in one way or another in both payment tracks. However, Dr. Maccioli pointed out, MIPS can serially increase physicians’ compensation without requiring them to assume actuarial risk for care. Because CMS wants to shift more and more risk to providers, it is pushing the use of APMs, including bundled payments, medical homes, and prevention and team-based APMs, by giving participation bonuses to participants in qualified APMs and offering additional incentive bonuses to participants in the most advanced APMs – read those that require providers to assume the most actuarial risk for care.
Dr. Maccioli also noted that APMs could well become a graveyard for many hospital-based specialties.
What’s Certain to Change
While there is always the possibility of changes to the proposed MACRA rules between now and the release of the final rule (expected November 1 or thereabouts), the fundamental changes to the CMS payment structure under MACRA are certain.
- Providers will need to be on the fee-for-service (FFS) MIPS track or the APM track, and the basic payment framework for each won’t change.
- Providers in the MIPS track will receive PFS (physician fee schedule) updates, as in the past, plus a new MIPS FFS adjustment (up or down) based on a composite performance score in four weighted performance categories (initially quality, resource use, clinical practice improvement activities and meaningful use of certified EHR technology). During the first six years (2019-2025), providers with composite performance scores in the top 24 percent will also receive an additional positive adjustment factor (capped at 10 percent per eligible provider).
- For those in the APM track, most physicians and practitioners who participate in APMs will receive favorable scoring under the MIPS clinical practice improvement activities performance category as well as APM-specific rewards. A smaller number of providers participating in the “most advanced”/highest-risk APMs who are determined by CMS to be Qualifying APM Participants (QPs) will receive the most favorable treatment. QPs will not be subject to MIPS and will receive guaranteed five percent lump sum bonus payments for years 2019-2024, and then a higher fee schedule update in 2026 and future years.
- Annual updates to the PFS will be made starting in 2026 – 0.25 percent for MIPS and 0.75 percent for APMs.
- The current Medicare quality and value programs, PQRS (Physician Quality Reporting Program), VM (Value-based Payment Modifier) and Medicare EHR Incentive Program (AKA “meaningful use”) will sunset at the end of 2018.
What May Change
CMS has received more than 4000 comment letters since the proposed MACRA implementation rules were put out this spring. As a result of these overwhelmingly negative comments, a September 8, 2016 statement by CMS Acting Administrator Andy Slavitt proposed a possible implementation compromise with potential changes to the MACRA implementation schedule.
The basics of the proposed compromise pathways are as follows (the options will be fully elucidated in the final rule):
Option one: Test the program
According to Slavitt, as long as you submit some data to the MACRA Quality Payment Program (QPP), including data from after Jan. 1, 2017, you will avoid a negative payment adjustment. This option is intended to ensure that the system is working and that physicians will be prepared for broader participation in the coming years as they learn more.
Option two: Partial-year reporting
Physicians can choose to report Quality Payment Program information for a reduced number of days. You could choose a first performance period that begins well after Jan. 1 and your practice could still qualify for an incentive payment.
Option three: Full-year reporting
If your practice is ready to get started on Jan. 1, you can choose to report Quality Payment Program information for the full calendar year. Your first performance period would begin on Jan. 1, and if you submit information for the entire year your practice could qualify for a modest positive payment.
Advanced Alternative Payment Model (APM) option
This option is still available and qualified participants in advanced APMs will be eligible for five percent incentive payments in 2019.
Choosing any of these four options guarantees that you will not receive a negative payment adjustment.
However, Dr. Maccioli emphasized that the actual implementation schedule won’t be known until the Final Implementation Rule is revealed during the first week of November. He said that even if MACRA is delayed, “We need to plan as if MACRA reporting will commence Jan. 1, 2017!“ – a view also shared by The Advisory Board.
Quality Reporting Will Become Even More Onerous and Costly
H.R. 2 Medicare Access and CHIP Reauthorization Act, AKA MACRA, requires all providers to prepare for both Merit-Based Incentive Payment System (MIPS) and Alternative Payment Methodology (APM). This requirement means that although MACRA’s new payment structure changes won’t go into effect until 2019, providers should assume that they must move claims-based quality reporting to registry reporting via a qualified clinical data registry (QCDR) by Jan. 1, 2017 – just three months from now – or face significant penalties from CMS.
The need for eligible professionals (EPs) and PQRS group practices to contract with a QCDR to avoid the 2018 PQRS negative payment adjustment will create a significant incremental expense for those providers. And having to prepare and submit quality data to the QCDR in a complex and rigid format will add yet another layer of complexity to quality reporting.
And between 2017 and 2019, providers will need to collect and submit two different sets of quality data simultaneously – claims-based data and QCDR/registry-based data.
Which Road Should Providers Take?
Beginning in 2019, physicians will be paid according to either a merit-based incentive payment system (MIPS) or through an alternative payment model (APMs). Practices must choose one of those two paths for reimbursement moving forward. Dr. Maccioli advised that even though physicians will be allowed to switch between models from one year to the next, now is the time to select their initial approach and put the appropriate infrastructure into place.
Which is the best choice? It depends. MIPS is closer to the previous fee-for-service model and carries much less risk than participating in APMs. On the other hand, APMs offers the highest maximum reimbursement rate – a guaranteed five percent annual payment increase from CMS over the first six years of the program, within the construct of an ACO… but you have to take whatever the payers define as an APM, which could well change during the course of any year.
Dr. Maccioli said in his opinion, “we have to prepare for MIPS and avoid APMs.”
Preparing for MACRA/QPP’s Impact
Famed British philosopher and logician Bertrand Russell (1872-1970) said, “What men want is not knowledge, but certainty.” Dr. Maccioli promoted the “VUCA Prime” concept introduced by Bob Johansen, Distinguished Fellow at the Institute for the Future, to help organizations reduce the instability associated with the VUCA environment. Johansen asserts that the most effective leaders in the VUCA world counteract volatility, uncertainty, complexity and ambiguity with vision, understanding, clarity and agility.
Dr. Maccioli outlined the opportunity for entrepreneurs, investors and IT professionals, stressing that provider success in the VUCA world will be contingent on three things:
- Interoperability - seamless administrative and EHR data integration.
- Efficient Documentation Tools that reduce the burden on physicians and practitioners and increase their time with patients.
- Analytic Prowess with Learning Systems – a virtuous cycle of improved patient care and learning.
He reminded attendees that all their “customers” are also in the VUCA world, and that because health care providers are in a high emotion/high cost arena, they need to ask themselves the following questions, based on the October 2015 Harvard Business Review article, “When The Customer Is Stressed”:
- What about our service is most likely to trigger intense emotions?
- If customers could magically make one improvement to our service, what would it be?
- What can we do to make first impressions of our exceptional service?
- What are the “never phrases” we need to banish?
- What skills and knowledge are critical to upholding our core purpose?
- How can we learn from each other to perform at peak levels?
Dr. Maccioli also presented his biases, saying he believes health care administrators and physician leaders should frame any enterprise change or decision with the quadruple aim in mind, i.e., Improving the work life of health care professionals, enhancing the patient experience, improving population health, and reducing costs. He believes that even the best-designed solutions to modern health care issues won’t work “if we don’t improve the work life of physicians.”
Dr. Maccioli also said he firmly adheres to a “just culture” approach – creating an atmosphere of trust, accountability, learning and ongoing improvement. (This is in sync with the Japanese Kaizen philosophy and continuous lean process improvement approach used by Sheridan, which has a dedicated office of Kaizen event facilitators.) He emphasized two key concepts of the “just culture” approach:
- Humans inevitably make mistakes, and human error and adverse events should be considered outcomes to be measured and monitored with the goal reducing errors and improving system design.
- Accountability is shared. While everyone is accountable for the quality of their choices, healthcare organizations are accountable for the systems they have designed. Caregivers should be held blameless when errors happened that were not prevented by a systems or processes.