AMA details multipronged approach to Medicare pay overhaul

Washington The outdated Medicare payment system needs to offer more options for physicians when lawmakers craft reforms, the American Medical Association stated in an Aug. 30 letter to the Senate Finance Committee.

Sen. Max Baucus (D, Mont.), the committee’s chair, had asked the AMA and other physician organizations to offer suggestions on how to transition to a new payment system after a July 11 roundtable discussion with organized medicine and committee members. During that hearing, senators agreed that the current system is broken and that the sustainable growth rate formula used to help calculate Medicare rates in the fee-for-service system needs to be replaced. The SGR is set to reduce rates by about 27% in 2013.

A new pay system would need to be a significant departure from the current one-size-fits-all program, wrote AMA President-elect Ardis Dee Hoven, MD. It would need to promote delivery models that reward quality of care instead of simply volume of services provided.

“As such, a new delivery system will incorporate multiple solutions and include a menu of the successful innovation options, accounting for varying physician practice types and allowing practices to participate in an option most scalable to their practice,” Dr. Hoven said.

The AMA recommended several congressional and regulatory actions that lawmakers and administration officials can take to improve how Medicare pays for physician services. The Centers for Medicare & Medicaid Services has begun testing accountable care organizations and shared savings payment models. CMS should be required to track these initiatives and work with private insurers to identify new ways to pay for physician services, the Association said.

For instance, CMS could be required to compile an annual report detailing the progress of its Medicare projects. The report would recognize categories of physicians and practices that don’t have opportunities to take part in quality improvement programs.

The Association renewed its call to require CMS to allow physicians to enroll in new initiatives on an ongoing basis. “Expanding enrollment opportunities will increase overall physician participation in new models and will significantly aid the transition for small, solo and rural practices,” the letter stated.

The AMA said the Medicare agency also needs to provide doctors with good data and timely feedback on their performances in quality and shared savings programs. Medicare’s physician quality reporting system has had difficulties releasing information to participants. In the past, PQRS feedback reports have lagged many months behind the close of program reporting periods.

“Modernized systems that would allow for measure reporting and feedback to occur at least quarterly would allow for opportunities for improvement before the reporting year ends,” the letter stated.

The lack of timely feedback apparently has hurt participation in quality programs. In 2010, just 24% of eligible physicians and other health professionals reported PQRS data to CMS, and only 69% of those achieved a bonus incentive. To encourage more physicians to report quality measures, the AMA suggested lowering thresholds and deeming that doctors participating in state or regional quality programs also are meeting PQRS requirements.

The need for reforms to Medicare and the rest of the health care system was emphasized during the Sept. 6-7 meeting of the Medicare Payment Advisory Commission in Washington. Medicare consumed 13% of the federal budget in 2010. In 1980, it represented only 5% of the budget.

Although growth rates in Medicare have slowed in recent years, commissioners are concerned that program costs will represent a much larger portion of the budget as the beneficiary population doubles by 2050. MedPAC is studying ways to change Medicare’s benefit design, including switching to a “competitively determined plan contribution” or defined contribution system that pays a fixed amount for a senior’s total care.