Let’s look at the different benefits to the different stakeholders in the healthcare business. Remember, healthcare is a business, and in business you always follow the dollar.
In a letter to the New York Times, Jeremy Lazarus, MD, former president of the American Medical Association said, “We agree that Congress must pass a permanent solution to the broken physician payment problem that plagues Medicare with frequent scheduled cuts, but eliminating this problem by putting in place other physician cuts rather than true payment reforms will only continue to threaten patients’ access to care. Medicare physician payments have already been nearly frozen for a decade, while the cost of caring for patients has increased by more than 20 percent. More cuts are not the answer. They would compromise physicians’ ability to participate in new models of care delivery.”
The escalating cost of healthcare puts tremendous pressure on an already teetering system in which the threat of reduced Medicare reimbursement to address over-spending against the Sustainable Growth Rate continues to loom large. The SGR was established by Centers for Medicare and Medicaid (CMS) to set a budget trajectory for Medicare expenditures each year. That spending trajectory has been surpassed every year since 2002, without Congressional action.
An American Medical Association letter to Congress in September, 2011, summed up the situation this way, “Continued delay in replacing the SGR has escalated the cost of permanent payment reform from $48 billion in 2005 to nearly $300 billion today. We estimate additional short-term interventions will double the cost to approximately $600 billion by 2016.” (An additional failure by Congress)
Oh, and by the way, according to Congressional Research Services, out of a total of 435 U.S. Representatives and 100 Senators (535 total in Congress,) 170 members of the House and 60 Senators are lawyers. So lawyers compromise the biggest voting block of one type, making up 43 percent of Congress. This ratio is much too large.
ICD-10 and Reimbursement Cuts
The ICD-10 code sets are not a simple update of the ICD-9 code set. The ICD-10 code sets have fundamental changes in structure and concepts that make them very different from ICD-9.
When examining the differences in the code sets, one thing is clear: there will be a need for detailed training to prepare for the transition because of the complexities of converting to the ICD-10 codes.
Justification of the need to make this transition is the concern with the lack of specificity of the information conveyed in the ICD-9 codes. Another issue with ICD-9 is that some chapters are full and impede the ability to add new codes. In some cases, new codes have been assigned to different chapters making it difficult to locate all available codes.
ICD-10 codes have increased character length, which greatly expand the number of codes that are available for use. With more available codes, it is less likely that chapters will run out of codes in the future. Other issues that are addressed in ICD-10 include the use of full code titles and appropriately reflecting advances in medical knowledge and technology. (ICD-9 = 13,000 codes ICD-10 = 69,000 codes)
The move to ICD-10 will not be easy. It will include greater detail, changes in terminology, and expanded concepts for injuries, laterally, as well as other related factors. The complexity of ICD-10 provides many benefits because the increased level of detail conveyed in the codes. Again, the complexity also underscores the need to be adequately trained on ICD-10 in order to fully understand reporting changes that will come with the new code sets.
ICD-10 codes have been in the works for years. Work on the codes began in 1983 and was completed in 1992. Other countries have already adopted the new codes. They include:
Canada – 2000
China – 2002
Korea – 2008
Dubai – 2012
U.S. -2015?
Considering the costs involved for American physicians to make the transition in 2015, Dr. Lazarus’s words become even truer, “More cuts are not the answer. They would compromise physicians’ ability to participate in new models of care delivery…”
To identify, develop, support, and evaluate additional models of payment and care delivery, the government instituted the CMS Innovation Center. (Opposite of innovation is stagnation.) I prefer to call it the “Sinner of Innovation.” Some of the payment reform provisions developed by the Sinner that will that will have an impact on providers over the next few years are:
Medicare bonus payments to physicians who participate in quality reporting
Reduced Medicare payments to hospitals with high readmission rates
Bundled payment pilot program with four models of payment
Hospital value-based purchasing program, with payments
Higher federal Medicaid matching payments for states that pay for care coordination services (ends December 31, 2014)
“Value index” based on quality and costs added to Medicare physician payment methodology; reduced Medicare payments for physicians not participating in Physician Quality Reporting Incentive program; and reduced Medicare Payment rates for hospitals with high rates of hospital-acquired conditions
In 2016, Medicare will launch a pay-for-performance pilot program
Private payers are highly motivated to cut healthcare costs, since they are responsible for treatment costs not covered by government programs or paid directly by patients.
Private payers are trying a variety of payment reforms – none of which are likely to emerge as the dominant model but serve, nevertheless, as steps along the way to the ultimate shape of payment reform. As an example, more than 25 health plans now incorporate Patient-Centered Medical Home recognition into their own programs, and many will offer financial incentives to practices that adopt the model.
“In a scathing study published in JAMA, RAND researchers compared 32 (National Committee for Quality Assurance, NCQA) recognized practices in southeast Pennsylvania with 29 that were not. During a three-year period, a significant difference was found in only one of the 11 quality measures and there was no robust association with utilization of costs. The NCQA recognizes more than 6,800 physician practices as medical homes.” (J.William Appling, “CMS Hasn’t Got a Clue! Memphis Medical News, April, 2014)
It may take a decade or more for healthcare to shift entirely away from fee-for-service, but, with a debt crisis, we have reached the point where payment reform is inevitable. No one knows how payment reform will evolve over time, which programs will succeed and which will fail, but there are a number of common threads.
While reimbursement remains cloudy, some trends stand out: Markets are aligning around value-based healthcare; major initiatives are focused on changing provider and patient behavior; and quality measures are taking hold.
FOLLOW THE DOLLAR.
Bill Appling, FACMPE, ACHE, is founder and president of J William Appling, LLC. He is a national speaker, presenter and a published author. He serves as an adjunct professor at the University of Memphis and is on the boards of Hope House and Life Blood. For more information contact Bill at j.william.appling@outlook.com.
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