The payment outlook for 2014: cloudy

This year, most primary care physicians (PCP) will need to prepare their practices for small increases in payment levels from Medicare and commercial payers. The good news? The sustainable growth rate (SGR) formula will likely be repealed, and its replacement will reward value, not volume. How much it will pay for value is another question entirely.

Another unknown will be the impact of the Affordable Care Act (ACA) on physician payments. Through the end of November about 1.2 million people had visited either their state’s or the federal government’s healthcare insurance exchange. Of those, slightly more than 800,000 were found to be eligible for Medicaid or the Children’s Health Insurance Program, with the remaining 400,000 enrolling in private insurance plans, according to statistics compiled by the Kaiser Family Foundation.

Still unanswered is how many of the newly-covered now receive free or discounted care, and how many will be new patients? How much care will new patients require? And will insurance providers, in their quest to keep premiums low, eliminate many physicians from their panels? The answers to these questions will have a significant impact on practices’ bottom lines.

The SGR: Finally going away?

The biggest determinant of reimbursements for most PCPs is the annual Medicare Physician Fee Schedule (PFS.)  As it has for about the past decade, the 2014 PFS includes a cut in Medicare reimbursements mandated under the SGR-this year scheduled to be nearly 25%. In the past, Congress has stepped in at the last minute to lessen or reverse the cuts.

During 2013, however, Congress pushed that would permanently scrap the SGR. By the end of December the Ways and Means and Energy & Commerce committees of the U.S. House of Representatives, and the Senate Finance Committees, all had passed repeal bills.

“Given that the legislation has been passed in a bipartisan, bicameral way, we’re optimistic that it will keep moving,” says Shari Erickson, MPH, vice president of governmental and regulatory affairs for the American College of Physicians (ACP). “There are still lots of issues to be resolved, the biggest being how to pay for it.  But we feel good about where the policies have landed.”

Because it will take some time until the repeal actually becomes law-assuming that it does-Congress authorized a .5% Medicare reimbursement increase for the first three months of 2014 as part of the budget agreement passed in December. And while details of SGR’s replacement haven’t yet been worked out, policy analysts expect it will include, among other elements:

• creating a single, Value-Based Performance Payment Program, that would replace existing quality improvement programs such as Meaningful Use and the Physician Quality Reporting System,

• providing funding to help small practices transition to payment models that focus on the quality of outcomes rather than fee-for-services, and

• creating a process for identifying misvalued services and redistributing the resulting savings to others in the PFS.

• Apart from removing an enormous source of financial uncertainty for PCPs, repealing the SGR would have the additional benefit of enabling Congress and physicians’ groups to begin focusing attention on other aspects of the healthcare industry, says Reid Blackwelder, MD, FAAFP, president of the American Academy of Family Physicians (AAFP). “I think everyone’s tired of this (SGR) political football,” he says. “There’s been a recognition that SGR has stalled so many other aspects of moving healthcare delivery and payment reform forward, people said we’ve got to get this done so we can get on to other discussions.”

Changes to the Physician Fee Schedule

The actual changes in the 2014 fee schedule most likely to affect PCPs concern telehealth services and the Physician Quality Reporting System (PQRS). Regarding telehealth, the schedule essentially expands the geographic boundaries in which Medicare will cover telehealth services to include designated “health professional shortage areas” in rural portions of metropolitan areas that the Census Bureau defines as urban.

The change is a positive development in that it will help more patients gain access to healthcare, says Paul Martin, DO, a family physician in Dayton, Ohio, and immediate past president of the American College of Osteopathic Family Physicians. “It’s another way to contact our patients and make the diagnosis they need, but it’s not going to replace seeing the patient face-to-face,” he says. In addition, the 2014 schedule updates the list of covered telehealth codes to include the two Transitional Care Management codes (99495 and 99496) newly-included in the 2013 schedule.

For the PQRS, the fee schedule allows physicians to satisfy reporting requirements by satisfactorily participating in a qualified clinical data registry in 2014, which is the last year that incentive payments can be earned under the PQRS. However, the schedule also increases from three to nine the number of measures on which doctors must report to obtain the payments. “Anything that adds a documentation burden is a real challenge, because the more time we spend documenting, the less time that we are seeing patients,” says Blackwelder.

“We’re having to document more and more to get small payments,” he adds. “From a financial perspective, if the amount of increased pay is not enough a doctor can actually lose money by documenting.”

Codes for Chronic Care Management coming

Along with the changes going into effect in 2014, the PFS includes information about codes that will pay for non face-to-face chronic care management (CCM) services beginning in 2015. The Center for Medicare and Medicaid Services defines chronic care management services as:

• the development, revision, and implementation of a plan of care;

• communication with the patient, caregivers, and other treating health professionals; and

• medication management.

The services cover patients with multiple chronic conditions that are expected to last for at least 1 year or until the death of the patient. Patients receiving the services can choose a physician or other eligible provider to provide the services over 30-day periods.

Medical society representatives say the addition of the CCM codes, viewed in combination with the transitional care management codes and other recent changes in reimbursements and payment models, represent a welcome development. “We’re very pleased they (CMS) are continuing to expand the scope of non-face-to-face services they’re willing to pay for,” says the ACP’s Erickson. “It’s pretty clear there’s a longer-term interest in transitioning Medicare from paying for acute services to services that contribute to better outcomes and better values for the system as a whole.”

Blackwelder points out that he, like most family physicians, treats patients for a wide variety of medical problems, which frequently requires coordinating care among subspecialists and different facilities. “The CCM issue is recognizing that what I do on a regular basis for my patients, especially those with chronic problems, is ongoing and has value.”

However, coding specialist Maxine Lewis, CMM, CPC, warns that the CCM codes will have to be valued at a high level to justify the amount of time they will require from physicians. Moreover the rule, as currently written, is vague on issues such as what constitutes a chronic condition, or what happens if a patient dies during the 90-day period covered under the codes.

“It’s good that the government has recognized that physicians often aren’t compensated for this (chronic care management), but at the same time they’ve put so many regulations in that it might not be worthwhile for the provider,” Lewis says.

Medicaid expansion, Medicaid/Medicare parity

Beyond the Medicare PFS lie several other factors that will influence PCP reimbursements in the year ahead. Among these is Medicaid expansion. As of early December, 26 states and the District of Columbia had chosen to raise the income level for Medicaid eligibility to 138% of the federal poverty level for a family of four, as permitted under the ACA. Physicians practicing in these states who currently provide free or discounted care to a large percentage of their patients can probably anticipate some revenue increase in 2014.

Another relevant factor is the status of Medicare/Medicaid parity. The ACA included funding to raise Medicaid reimbursements to the levels of Medicare during 2013 and 2014.  State legal requirements and bureaucratic delays meant that few physicians were seeing the higher Medicaid reimbursements for most of 2013. By December, however, 30 states were reporting that they had begun raising reimbursements for all their Medicaid payments, and eight more had increased them for their fee-for-service-but not managed care¬-reimbursements, according to statistics compiled by the American Medical Association.

In November, representatives of the AAFP, ACP, the American Osteopathic Association, and several other medical societies, wrote to members of the Senate Finance and House Energy and Commerce committees, urging them to extend Medicare/Medicaid parity at least through 2016. “Because the program took so long to get up and running, we can’t assess how successful it’s been in persuading doctors to treat more Medicaid patients, which was a big part of the intent behind it,” says Erickson. “So it needs to be extended at the very least to see what the impact has been.”

ACA: The great unknown

The final piece in the reimbursement puzzle is the ACA. At this point the questions outnumber the answers. For example, what will the insurance products new patients bring in actually consist of? “The exchange has set up lots of different insurance constructs, with a variety of impacts on the patient and the formularies and benefits they’ll have access to,” says Erickson. “That information is important for our members to know, because they’ll need to be sure their patients can adhere to the treatment plans developed for them.”

A fear some physicians have expressed about the legislation’s impact is being dropped from the plans insurers offer on the state and federal healthcare exchanges-fears that were heightened in November by insurance giant United Healthcare’s announcement that it planned to drop thousands of doctors from its Medicare Advantage panels. Blackwelder thinks such fears may be overblown, however, and that so far the AAFP has not heard of it being an issue among the academy’s members.

“It’s certainly a risk, but it doesn’t make sense for payers to limit the number of PCPs available in their network,” he says.  “The whole goal is to bring more people into the system, and you’ll need primary care to get that work done and improve patient outcomes and lower costs. It wouldn’t make sense to create a system where you’re starting to narrow your panels.”

Asked if he thought 2014 would be a good year for primary care overall, Blackwelder says, “There are a lot of things in place to show that the country is starting to walk the walk when it comes to the importance of primary care. We’ve got a lot of catching up to do, but I’d say I’m cautiously optimistic.”