Several electronic fact sheets that address topics are now available, including how to participate in an ACO and improve quality of care and information on the advanced payment model for ACOs. New fact sheets are also available detailing final rule provisions for ACOs under the shared savings program and fact sheets provide information on the methodology for determining shared savings and losses under the program.

Recent professional editorials have talked about creating a “surgical home” or an Accountable Anesthesia Organization as concepts where anesthesiologists would lead a team dedicated to the goals of an ACO. A recent article published in the Journal of the American Medical Association addressed the potential mistakes in implementing ACOs, particularly in failing to recognize interdependencies (http://jama.ama-assn.org/content/306/7/758.full).

It will be interesting to see the CMS response to the final rules for ACOs when they are made available.

The survey of more than 800 administrators and physicians found that 58 percent said they were in the process of forming ACOs or are considering doing so, while 42 percent said their facilities would not be forming ACOs in the foreseeable future.

Of the administrators and physicians moving toward ACOs, 42 percent said physician alignment is the most serious obstacle to their efforts. Forty percent of the physicians and administrators who are not forming ACOs said physician alignment was the reason.

Other obstacles to forming ACOs included lack of capital, the absence of integrated IT systems, and no evidence-based treatment protocol data, according to the survey.

While some Congressional leaders want to permanently fix the SGR, the costs to do so remain a big obstacle.  As an example, the costs to fix this for one year are about $19 billion.  The next deadline before the cuts take place is January 1^st.  Whether the Congress deals with this issue before they adjourn, or the next new Congress deals with it (retroactively) remains to be seen. 

The most recent incarnation of the Medicare reimbursement formula is called the Sustainable Growth Rate (SGR), put in place in 1998. The government uses the formula to set an overall target amount of spending for certain types of medical goods and services. Using Medicare spending in the late 1990s as a baseline, the SGR factored in overall economic growth to create a yearly budget. “It was enacted during a time period when physician payments were not growing rapidly,” said Paul Van de Water, an economist at the Center for Budget and Policy Priorities. “It was assumed that the relative slowdown was likely to continue.”

While the SGR formula seemed sound in 1997, it didn’t account for one huge detail. Overall medical spending grew much faster than inflation. The SGR turned out to be totally unsustainable, leaving physicians with a reimbursement rate that did not keep pace with increasing medical costs, thus requiring a fix — not of the formula but of the payment.

The problem first became apparent in 2002, when Medicare costs outpaced the SGR. A Republican-led Congress stepped in with extra funding the following year, preventing a reduction in physician payments. Congress has continued to do so for seven years now.

Under both Democratic and Republican leadership, Congress has consistently delivered the necessary funds to avoid cuts to physician payments. A CBO report this month estimated that $276 billion would be required to shore up Medicare for the next decade. Not surprisingly, no politician wants to get stuck with that check. So they’ve all politely deferred from the financial commitments in order to avoid the appearance of adding billions of dollars to the national deficit.

But the “doc fix” actually fixes nothing. Health policy experts agree that health spending is not slowing down, so the short-term patches only “kick the can down the road,” as Van de Water put it. “They want to have their cake and eat it, too.” In other words, it’s a face-saving gimmick that makes it look like Congress is sticking to Medicare cost controls when it isn’t, despite numerous red flags over the years. A CBO report in 2006 suggested that “the SGR mechanism … will substantially reduce payment rates for physicians’ services over the next several years. Payment rates could decline by a total of 25% and 35% during that period if physicians continue to provide services at the current rate.”

A 2007 report from MedPac, which advises Congress on Medicare, found that, in addition to failing to keep pace with spending, the SGR had not tamped down physician spending. “The SGR does not appear to have limited the growth in volume — that is, the number of services being furnished to each patient and the level of service intensity provided,” the report concluded.

One option would be to ditch SGR and find a new, better formula that would make the “doc fix” ritual obsolete. The American Medical Association, which has previously supported temporary “doc fix” legislation, has demanded this kind of permanent action, so the short-term fix that landed in the House proposal left them unsatisfied. “The pending Medicare proposal treats the symptoms,” AMA President J. James Rohack said in a statement late last week. “It’s not a cure for the disease. We urge Congress to take action well before the next deadline to cure this problem once and for all to preserve access to care for seniors and military families and enable the success of health system reform and delivery innovations.”

But Congress has declined to move in that direction, and, for now, the exercise carries on. In 2010 alone, Congress has already headed off three scheduled payment drops — in January, March and April. This week, if all goes as the Democrats planned, they will extend the “doc fix” for an additional three years. The problem will be settled in the short term — until the 112th Congress takes up the issue all over again.

Why can’t the Obama Administration get  this right and fix the underlying reimbursement problems asociated with the SGR? With the large number of uninsured that will now be insured under the new Obamacare plan we will need all healthcare providers, MDs, RNs, PAs, etc. in the sytem and productive to meet the increased demand anticipated. Any reimbursement changes that have the impact that the SGR could, would drive providers out of the sytem in great numbers.  Let’s fix the SGR problem once and for all.

On Monday, June 21st the House leadership would not take up the Senate bill (SGR six-month patch) without a jobs bills.  Within hours Nancy Pelosi released a statement saying, “I see no reason to pass this inadequate bill until we see jobs legislation coming out of the Senate.  House Democrats are saying to Republicans in the Senate: Show us the jobs!”

At this point the SGR legislation is languishing because of concerns about a jobs bill.  Meanwhile Medicare is processing claims that had been previously held with dates of service of 6/1/10 forward at the 21.3% reduced rate.  These claims are being processed on a first in / first out basis (FIFO).  The Senate and House are currently at a stalemate regarding jobs bill and SGR which unfortunately have been tied together. 

The Senate may hold votes as early as today, however debate on this bill may continue late into the week before final votes are held. If the Senate approves the substitute amendment, the House of Representatives must still pass the underlying tax extenders bill before it becomes law. If the bill is signed into law, the pending Medicare physician payment cuts would then be scheduled to take effect on Dec. 1, 2010.

2010

• Adults with pre-existing conditions who have been uninsured for at least six months can enroll in a temporary high risk health insurance pool and receive subsidized premiums–beginning three months after the bill’s passage. (The pools expire when exchanges are implemented in 2014.)
• All health insurance plans are to offer dependent coverage for children through age 26; insurers are prohibited from denying coverage to children because of pre existing health problems.
• Insurance companies can no longer put lifetime dollar limits on coverage and cancel policies–except in cases of fraud.
• Tax credits will be provided to help small businesses with 25 employees or fewer to get and keep coverage for these employees.
• The Medicare “doughnut hole,” in which beneficiaries had to pay full cost of their prescription drugs, begins narrowing by providing a $250 rebate this year to those in the gap, which starts this year after they have spent $2,830. The doughnut hole fully closes by 2020.
• Indoor tanning has a 10% sales tax.

2011

• For Medicare beneficiaries reaching the Medicare doughnut hole, prescription coverage will be available with a 50% discount on brand name drugs.
• A 10% Medicare bonus will be provided to primary care physicians and general surgeons practicing in underserved areas, such as inner cities and rural communities.
• Medicare Advantage plans would begin to have their payments frozen—and then lowered in 2012. The plans would have to spend at least 85 cents out of every dollar on medical costs, while leaving 15 cents for plan operations, including overhead and salaries. Reductions would be phased in over the next three to seven years.
• A voluntary long term care insurance program would be made available to provide a modest cash benefit for assisting disabled individuals to stay in their homes or cover nursing home costs. Benefits would start five years after people begin paying a fee for coverage.
• Funding for community health centers would be increased to provide care for many low income and uninsured people.
• Employers would be required to report the value of healthcare benefits on employees’ W 2 tax statements.
• Pharmaceutical manufacturers will have a $2.3 billion annual fee that will increase over time.

2012

• Nonprofit insurance co ops would be created to compete with commercial insurers. Hospitals, physicians, and payers would be encouraged to band together in “accountable care organizations.”
• Hospitals with high rates of preventable readmissions would face reduced Medicare payments.

2013

• Individuals making $200,000 a year or couples making $250,000 would have a higher Medicare payroll tax of 2.35%—up from the current 1.45%. A new tax of 3.8% on unearned income, such as dividends and interest, is also added.
• Medical expense contributions to tax sheltered flexible spending accounts (FSAs) are limited to $2,500 a year—indexed for inflation. In addition, the thresholds for claiming itemized tax deduction for medical expenses rise from 7.5% to 10% of income. People age 65 or older can still deduct medical expenses above 7.5% of income through 2016.
• Medicare device makers would have a 2.3% sales tax on medical devices; devices such as eyeglasses, contact lenses, and hearing aids would be exempt.

2014

• New state health insurance exchanges would be created. Income based tax credits will be available for many consumers in the exchanges. The sliding scale credits phase out for households that are four times above the federal poverty level (about $88,000 for a family of four).
• Medicaid would be expanded to cover low income individuals up to 133% of the federal poverty level—about $28,300 for a family of four.
• Insurers would be prohibited from denying coverage to people with pre existing conditions, or charge higher rates to those with poor or chronic health conditions. Premiums (with limitations) can only vary by age, place of residence, family size, and tobacco use.
• Insurers will be required to cover maternity care as they do other medical procedures
• All legal residents would be required to have health insurance—except in cases of financial hardship—or pay a fine to the IRS. The individual penalty starts at $95 each in 2014—rising to $695 in 2016. Family penalties are capped at $2,250; penalties will be indexed for inflation after 2016.
• Employers with more than 50 workers would be penalized if any of their workers get coverage through the exchange and receive a tax credit. The penalty is $2,000 times the total number of workers employed at the company. However, employers get to deduct the first 30 workers.

2018

• A tax would be imposed on employer sponsored health insurance worth more than $10,200 for individual coverage, and $27,500 for a family plan. The tax is 40% of the value of the plan above the thresholds, indexed for inflation.

2020

• Doughnut hole coverage gap in Medicare prescription benefit is phased out. Seniors continue to pay the standard 25% of their drug costs until they reach the threshold for Medicare catastrophic coverage.

Courtsey of Janice Simmons, for HealthLeaders Media, March 23, 2010