December 2011 Washington Update: Page 2 of 2

December 13, 2011

The AGS also endorsed a letter from Rep. Schwartz to the JSCDR calling for its negotiations to include a repeal of the SGR and comprehensive Medicare payment and delivery reform. The AGS  gave its endorsement to a letter from the American Medical Association addressed to the JSCDR and to key members of Congress that called for repealing the SGR. Although the JSCDR ended in mid-November with its members unable to reach a compromise on lowering the deficit, the committee’s members have key roles in Congress and will continue to be involved in issues concerning Medicare. Committee members Sens. John Kerry (D-MA) and Max Baucus (D-MT), for example, are members of the Senate Finance Committee.

With the help of AGS’ Relative Value Scale Update Committee/Current Procedural Terminology “SWAT” team, chaired by AGS member Peter Hollmann, MD, the AGS developed the following principles, which its members continue to call on Congress to implement:

• Define SGR in terms of total

• Support and properly value primary care services

• Transition to a value-based payment model that rewards quality

• Use clinicians and support staff optimally, enhance care transitions, and reduce preventable hospital

• Establish stable and predictable payment updates that accurately reflect increases in provider expenses

• Extend the primary care bonus payment established by the healthcare reform law

• Improve Medicare data collection so that Congress can better assess whether Medicare’s fees are adequate to support efficient care delivery

• Identify overpriced fee-schedule services and revise relative value units accordingly to establish a budget- neutral Physician Fee Schedule

• Effect long-term changes in fiscal policies that drive delivery system changes and stabilize outlays


Final 2012 Physician Fee Schedule Incorporates Recommendations of AGS and Other Eldercare Organizations

While the sustainable growth rate (SGR) problem remained unresolved as December neared, two other Medicare reimbursement issues emerged. In early November, the Centers for Medicare and Medicaid Services (CMS) issued its 2012 Final Physician Fee Schedule, which includes revised policies regarding evaluation and management (E/M) codes and pay-for-observation care codes that reflect recommendations from the AGS and other healthcare organizations.

After CMS issued its proposed physician fee schedule for 2012 in July 2011, the AGS expressed its opposition to provisions that would have the Relative Value Scale Update Committee (RUC) review all E/M codes associated with the highest physician fee schedule expenditures in each specialty. Instead, the society urged CMS to develop new codes that more accurately describe such services, as well as codes that take into account the time and effort involved in providing coordinated care; the 2012 fee schedule incorporates these recommendations.

CMS’ final 2012 fee schedule also aligns the values of observation codes with recommendations from the AGS and other healthcare organizations. The society and these organizations had recommended that observation care be paid at a level recommended by the RUC—a level higher than the one CMS had initially proposed.

The fee schedule changes were the result of collaborative efforts involving many individuals and organizations. These include the society’s RUC/Current Procedural Terminology “SWAT” team, chaired by Peter Hollmann, MD; AGS’ RUC Advisor, Alan Lazaroff, MD; staff and regulatory advisors with AGS’ consulting firm Arnold & Porter, including Paul Rudolf, JD; and other AGS members who assumed leadership roles in the effort. Other participants include AMDA–Dedicated to Long Term Care Medicine; the American Academy of Home Care Physicians; the American College of Physicians; the American Academy of Family Physicians; and the American College of Emergency Physicians.


CMS Revises Accountable Care Organization Policy to Address Concerns of AGS and Other Healthcare Groups 

In late October 2011, the Centers for Medicare and Medicaid Services (CMS) issued a final rule for accountable care organizations (ACOs). The final rule incorporates key changes that the AGS and other healthcare groups had recommended after the agency unveiled its initial plan in June 2011.            

Following the June 2011 proposal, the AGS, along with other groups, hailed the coordinated approach to care that ACOs provide, but expressed several concerns about key provisions. In a June letter to CMS (full text available at http://bit.ly/sBQear), the AGS raised concerns that the initial ACO regulations were too complex and unclear. Among other things, the AGS noted that the number of quality measures each ACO was to report (n=65) was “overwhelming and burdensome.” The society also suggested that the transparency requirements CMS had proposed be phased in more slowly than the CMS timeline prescribed, giving participants time to familiarize themselves with and comply with ACO requirements.

The AGS noted that the initial rules could pose a disincentive to caring for Medicare beneficiaries and those with the most complex needs because the proposed policies did not sufficiently consider beneficiaries’ acuity levels. The AGS and other healthcare organizations also expressed the concern that, under the proposed policies, “the potential for incurring losses rather than achieving savings (in an ACO) in the first 3 years is very real.” To address these concerns, CMS revised the final rules accordingly:

• Providers will be able to participate in an ACO and share in savings with Medicare without the risk of losing money; ACOs will also be able to start sharing in the savings earlier.

• The number of quality measures that ACOs will have to meet to qualify for performance bonuses has been reduced from 65 to 33.

• When the ACOs form, they will be told which Medicare beneficiaries are likely to be part of their system (under the initial proposal, ACOs would not have known which patients were in the ACO until their contract ended).

• Community health centers and rural health clinics—which had been left out of the initial proposal—will now be allowed to lead ACOs.