Physicians should have more freedom to coordinate care, MedPAC says

The commission tells Congress that ACOs and payment bundling could prove flexible enough to move the system away from the downsides of fee for service.

By Charles Fiegl amednews staff — Posted July 9, 2012

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Physicians must be given flexibility in how they participate in new Medicare payment models for care coordination efforts to be successful, according to a new report by a congressional advisory panel.

Recent government studies have shown that most Medicare demonstrations on coordinating care have failed to improve patient outcomes and produce cost savings. However, some models — ones that give doctors more leeway and additional options in caring for patient populations — have proven to raise the quality of care and lower program spending, according to the Medicare Payment Advisory Commission’s annual June report. MedPAC provides advice to Congress and the administration on how to reform the way Medicare pays for services, but they are under no obligation to follow the recommendations.

“To be successful, a program of care coordination has to be carefully woven into the practice environment where it occurs,” said MedPAC Chair Glenn Hackbarth. “It’s not possible to achieve good care coordination by imposing it externally. It’s not the sort of thing you can design from a distance and plug into a local health care system.”

Hackbarth provided testimony on the commission’s report during a June 19 hearing of the House Ways and Means health subcommittee. He said Medicare’s fragmented fee-for-service model has created gaps in care coordination, leaving patients to fall through cracks in a health care system where spending continues to rise. Fee for service has lacked tools for physicians and other health professionals to communicate easily across patient care settings and has lacked financial incentives to coordinate care.

Furthermore, fee for service does not hold physicians accountable for coordinating care, the report states. Patients and their families are responsible for being the link between doctors, so the failure of previous care coordination experiments in the Medicare system was to be expected. “These care coordination interventions must work against strong incentives and patterns of behavior in [fee for service] that push in the opposite direction.”

MedPAC said two approaches can improve coordination — changing incentives to provide better instead of just more care and giving physicians the flexibility to use available resources to raise quality of care for beneficiaries.

“Some of the new payment models, such as the shared savings payment approach for accountable care organizations or bundled payment initiatives, can move the Medicare program toward these goals,” the report said.

The American Medical Association was pleased to see sections of the MedPAC June report focus on care coordination, said AMA Immediate Past President Peter W. Carmel, MD. The Association has advocated support for increasing coordination in Medicare to improve quality of care for patients and further stabilize the solvency of the program.

“We are especially pleased the report stresses the need for Medicare to recognize and pay for care coordination services that physicians are already conducting, including telephone calls, patient education and medication management,” Dr. Carmel said. “These services are critical to improving patient outcomes, especially for chronically ill patients.”

The Centers for Medicare & Medicaid Services does not pay for these services under the fee-for-service payment model. The Chronic Care Coordination Workgroup, which is a joint effort of the AMA’s CPT Editorial Panel and the AMA/Specialty Society Relative Value Scale Update Committee, has urged CMS to acknowledge the need to pay for the services. “As a result of the work group’s efforts, new codes and relative values will be available for CMS to consider for implementation” on Jan. 1, 2013, Dr. Carmel said.

Medicare’s fee schedule lacks outpatient evaluation and management codes to pay doctors for care coordination services, the MedPAC report states. The program does pay for hospital discharge activities.

To a certain extent, physicians have gone without pay for engaging in coordination activities, such as the services provided under the patient-centered medical home model, said Roland A. Goertz, MD, board chair of the American Academy of Family Physicians. The report clearly states that coordination is important and that Medicare needs to pay for it, he said.

Including new care coordination codes would be budget-neutral to the program, the report said. However, MedPAC did caution Congress that program spending could increase if utilization of the new services outpaces expectations.

Like other policymakers, MedPAC commissioners want Medicare to transition away from relying on the fee-for-service models that reward poor efficiency and high volume. Care coordination models, such as ACOs and shared savings programs, reward doctors for quality and hold them accountable if health spending for their patients rises above certain limits. Hackbarth said the system should apply pressure and “make it difficult” for doctors who remain in fee for service over the long term.

During Hackbarth’s testimony to lawmakers, Rep. Tom Price, MD (R, Ga.), asked him what he meant by making it difficult for physicians and how such a policy would improve patient care.

MedPAC recommends that there be pressure to move to new payment models, which would free physicians from the stringent billing requirements of fee for service. This would allow doctors to focus on patient care without having to worry about which codes to bill for the services, Hackbarth said. However, he said patients and physicians should continue to have the choice to participate in the fee-for-service program.

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Care coordination lowers hospitalization rates

The Medicare Payment Advisory Commission has given Congress evidence that some care coordination demonstrations successfully reduced hospitalizations. A June MedPAC report concluded that health care organizations improved outcomes during three Medicare projects, which offered patient management fees to doctors to support care coordination services. But not every participant was able to reduce net spending for the program.

Project and group Hospitalization
Cut spending Cut spending
when fees included
Medicare coordinated care demonstration
Georgetown University -24% Yes Yes
Health Quality Partners -11% Yes No
Mercy Medical Center -17% Yes No
Care management for high-cost beneficiaries demonstration
Care Level Management -6% No No
Health Buddy Consortium -26% Yes Yes
Massachusetts General Hospital -24% Yes Yes
Village Health -10% Yes Yes
Medicare health support
Aetna -6% Yes No

Source: “Report to the Congress: Medicare and the Health Care Delivery System,” Medicare Payment Advisory Commission, June (link)

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