In Diabetes Care, Mixed News on Payment Reform

The movement toward payment for quality took both forward and backward steps as 2013 ended. Positive signs in reimbursement were offset by another delay in a permanent fix to Medicare’s Sustainable Growth Rate (SGR), although Congress does appear ready to resolve this matter in early 2014.

For clinicians involved in the care of patients with cardiometabolic conditions, the news was mixed, as was reaction from professional associations that represent those involved in diabetes care. On November 27, 2013, the Centers for Medicare & Medicaid Services (CMS) unveiled a 2014 Medicare physician fee schedule that featured allowances for care outside of face-to-face visits, starting in 2015.¹

“Healthcare is changing, and part of the delivery system reform is recognizing this and making sure payment systems account for these changes,” CMS Principal Deputy Administrator Jonathan Blum said in a prepared statement. “We believe that successful efforts to improve chronic care management for these patients could improve the quality of care while simultaneously decreasing costs, through reductions in hospitalizations, use of post-acute care services, and emergency department visits.”

On the plus side, the new CMS rules will permit payments for telephonic health services in rural areas where shortages of qualified professionals have been identified.¹ But the 2014 schedule, released the day before Thanksgiving, kept cuts under SGR that Congress was working to eliminate, prompting strong reactions from the American Medical Association (AMA) and the American Academy of Family Physicians (AAFP).²

AAFP Presdient Reid Blackwelder, MD, released a response stating the 2014 schedule reflects the flawed SGR formula that dictates Medicare payment for physician services. “That formula must be repealed, and the AAFP urges Congress to act quickly to do so.”² Congress did act, but not with the permanent remedy for SGR which was outlined in a proposal unveiled October

30, 2013. Instead, the bipartisan budget deal signed by President Barack Obama December 26, 2013, contains a 3-month “patch” similar to others approved year after year, which delays the harsh effects of SGR without unraveling a mechanism critics say has never kept pace with the cost of care.^3,4

The short-term fix is also a mixed bag: while it technically includes a 0.5% “raise,” it also locks in other cuts imposed by the federal sequester and retains them in place for up to a decade.³

Whether SGR reform will happen in the first quarter of 2014 remains to be seen. Proposals discussed in the fall combined long-term rate freezes with movements toward rewards for quality care.⁴ Reaction from professional associations was mixed, with AMA making an initial endorsement of the plan—with the hope of doing something to scrap SGR—while urging Congress to reconsider rate freezes on the heels of previous reimbursement cuts.

Dubbed the Pathway for SGR Reform Act of 2013, this amendment passed the House on December 12, 2013, and the Senate 6 days later. The Congressional Budget Office estimated that the temporary fix would cost $3.3 billion in 2014 and a total of $7.3 billion through 2023. It would be paid for by cutting Medicaid payments for hospital-based charity care and to long-term care hospitals.⁵

How the SGR Shortfall Happened

The problem with SGR dates to 1997, when Congress created the formula in an effort to control spending. The formula was supposed to set realistic yearly and cumulative spending targets; if the cost of care exceeded the target in any given year, rates would be cut the following year to make up the difference. However, inaccurate forecasts meant actual Medicare Part B spending has exceeded the target for more than a decade.

AMA President Ardis Hoven, MD, told MedPage Today after the October 30, 2013, announcement that, each year, the “sword of Damocles” would hang over physicians’ heads as they waited for Congress to pass legislation to thwart the automatic cuts.^6,7 Yet the longer Congress failed to fix SGR, the worse the problem grew.

How big is the problem? Estimates for getting rid of SGR included $377 billion for 2012 and $139 billion for 2013, and there are no good answers on how to address the problem. When asked how the repeal would be funded, AMA’s Hoven said, “I don’t think we really know.”⁷ Some accounts attribute the shrinking SGR shortfall to the fact that physicians have already sustained so many cuts.

Endocrinologists and family physicians involved in diabetes care have been especially attuned to efforts by Congress to reform reimbursement formulas. In a September 2013 interview with Evidence-Based Diabetes Management, George Grunberger, MD, said the existing reimbursement scheme fails to reward knowledge-based specialties and was driving endocrinologists out of the profession.⁸ Severe shortages of these critical specialists have resulted, at the very time when epidemics of obesity and cardiometabolic disease mean endocrinologists are needed more than ever.⁸

Optometrists Sound Hopeful

Meanwhile, the association for another specialty involved in diabetes care—optometry—offered an optimistic response to details of the budget deal and the 3-month fix. Looming SGR cuts “would have been financially devastating to optometric offices,” said Roger Jordan, OD, chair of the federal relations committee for the American Optometry Association (AOA). The temporary fix gives offices enough time to plan financially, with the knowledge that there is a set 3-month period before the cut is put back in place.⁹

Optometrists also supported extending a geographic price index, which Medicare uses to adjust reimbursements based on practice costs in specific areas. Specifics of the extension will retain a provision that prevents Medicare from paying less than the national average for services in lower-cost states, which the AOA states is crucial to ensuring care in rural areas.⁹ References

1. Centers for Medicare & Medicaid Services. CMS finalizes physician payment rates for 2014 [press release]. Washington, DC: CMS Newsroom; November 27, 2013. http://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-Releases/2013-Press-Releases-Items/2013-11-27-2.html. Accessed January 2, 2014.

2. American Association of Family Physicians. Release of the 2014 Medicare Physician Fee Schedule elicits AAFP summary. AAFP News. http://www.aafp.org/news-now/governmentmedicine/20131211finalfeesched.html. Published December 11, 2013. Accessed January 2, 2014.

3. Pittman D. Senate agrees to 3-month SGR “patch.” MedPage Today. http://www.medpagetoday.com/PublicHealthPolicy/Medicare/43507. Published December 18, 2013. Accessed January 2, 2014.

4. Lederman J. Obama signs bipartisan budget deal, defense bill. Associated Press. http://www.boston.com/2013/12/26/obama-signsbipartisan-budget-deal-easing-cuts/YDVAgpYUl-FLBTilPKCb6gL/story.html. Published December 26, 2013. Accessed January 2, 2014.

5. Ault A. President signs budget deal, short-term SGR fix. Clinical Endocrinology News. http://www.clinicalendocrinologynews.com/singleview/president-signs-budget-deal-short-term-sgrfix/efef69bd02100b95e8498d1f3d040f21.html. Published December 30, 2013. Accessed January 2, 2014.

6. Caffrey MK. Oncology groups active in efforts to repeal SGR. Am J Manag Care. 2013;19(SP13):SP440-SP441.

7. Pittman D. AMA president discusses SGR repeal efforts. MedPage Today. http://www.medpagetoday.com/MeetingCoverage/AMA/43041. Published November 20, 2013. Accessed November 22, 2013.

8. Grunberger G. Rhetoric vs. reality: promise of “patient-centered” focus in health reform missing in endocrinology training, compensation. Am J Manag Care. 2013;19(SP7):SP244-SP245.

9. American Optometry Association. Obama signs three-month SGR fix into law. AOA News. http://www.aoa.org/news/advocacy/obamasigns-three-month-sgr-fix-into-law?refer=rss. Published December 30, 2013. Accessed January 2, 2014.