CMS reneges on mandated 0.5% Medicare rate increase

Physicians Decry Broken Promise of Medicare Raise in 2016

By Robert Lowes
Medscape Medical News, November 3, 2015

The law that repealed Medicare's sustainable growth rate (SGR) formula for physician pay called for an annual raise of 0.5% from 2016 through 2019 as part of a transition to value-based reimbursement.

When Congress passed the law in April, some leaders of organized medicine noted that the modest raise lagged behind the inflation rate, but said it was better than nothing. It was certainly better than the disastrous 21% pay cut that the SGR formula would have triggered in 2016. Medical societies sold their membership on the legislation, called the Medicare Access and CHIP Reauthorization Act (MACRA), in part by saying it would stabilize Medicare rates for several years.

However, the promised raise of 0.5% turned into a 0.3% pay cut in the fine print of the final 2016 Medicare fee schedule released last week. The reason? The Affordable Care Act (ACA) and several other laws that set Medicare reimbursement policy trumped MACRA.

Organized medicine isn't taking it too well.

"Physicians were told that they would get an increase, and they're not," said Wanda Filer, MD, president of the American Academy of Family Physicians (AAFP). "It's a morale breaker."

In its 2016 fee schedule, the Centers for Medicare and Medicaid Services (CMS) walked through the math that produced the tiny pay cut in 2016. (For a fairly detailed explanation, click on the Medscape link below.)

Organized medicine saw the stealth pay cut coming in the 2016 fee schedule when it was released in draft form last summer for public comment. At that time, CMS said that its misvalued codes initiative had reduced fee-for-service spending by roughly 0.25%. In response, medical societies such as the AAFP, the American College of Physicians, and the American Medical Association, as well as the Medical Group Management Association (MGMA), urged CMS to tweak its methodology for essentially repricing codes and calculating the savings so it could hit the 1% target and avoid canceling the MACRA raise. MGMA called the agency's approach "narrow." The association recommended, among other things, that CMS base its calculations on a broader group of repriced codes than what the agency used.

In the final fee schedule issued last week, CMS stood its ground. "We continue to believe this approach is appropriate and compliant with statutory directives," it said. The agency repeatedly stated that it was bound by "current law" — in other words, MACRA, the ACA, PAMA, and ABLE.

Halee Fischer-Wright, MD, the president and CEO of MGMA, said her group is "extremely disappointed that CMS failed to meet the [1%] target set by Congress."

"Instead, CMS's inaction will result in an across-the-board cut to physicians in 2016," Dr Fischer-Wright said in a statement given to Medscape Medical News. "For all the ambitious plans touted by the agency to move Medicare toward a value-based payment system for physicians, its inability to adequately review misvalued codes under current fee-for-service calls into question how CMS will be able to implement far more sophisticated payment models in the future."

Primary care physicians will feel the 0.3% Medicare rate cut more keenly than their specialist peers, said AAFP president Dr Filer.

"I think primary care physicians are working a minimum margin and working frequently at a deficit," she said. "Practice costs haven't declined, and primary care has been undervalued for a very long time.

"Any cut is a financial hit."

The comments from Dr Filer and Dr Fischer-Wright stand in contrast to what the White House says about MACRA on its website: "At last, the doctors who care for seniors and many Americans with disabilities will no longer have to worry that about the possibility of an arbitrary cut in their pay."


SGR Fix: APMs threaten physician burnout (RAND)

Comment by Don McCanne, M.D.
Quote of the Day, March 24, 2015

HR 1470, which Congress is scheduled to approve in only two days (March 26), would replace the flawed Sustainable Growth Rate (SGR) method of determining Medicare payments with a new Merit-based Incentive Payment System (MIPS). MIPS introduces considerable administrative complexity which would be a great burden to physicians, but the legislation allows physicians to opt out of MIPS by joining Alternative Payment Models (APMs) such as Accountable Care Organizations (ACOs) or Patient Centered Medical Homes (PCMHs). This RAND study of APMs reveals that physician members of APMs are at very high risk of BURNOUT.



By Don McCanne, M.D.

Earlier this year medical societies celebrated their success in helping to get Congress to eliminate the Sustainable Growth Rate (SGR) formula - a formula that could have resulted in a 21% reduction in Medicare payments - and replace it with a 0.5% yearly increase for the next few years. There are two important stories here.

The first is that SGR would be replaced with a new onerous Merit-based Incentive Payment System (MIPS) which would be used to push physicians into Alternative Payment Models (APMs) such as Accountable Care Organizations (ACOs) or Patient Centered Medical Homes (PCMHs). At that time RAND warned that physician members of APMs are at very high risk of burnout. Trading an SGR formula that was never enforced for a career in misery is hardly a rational move. But at least they got a 0.5% raise, or did they?

The second important issue is that CMS has reneged on the legislated promise of a 0.5% increase and instead is reducing rates in the traditional fee-for-service Medicare program by 0.3%. This is part of a long-term strategy to control Medicare spending by keeping rate increases below the rate of inflation. Over time, physicians have been struggling to meet expenses of caring for their Medicare patients and still have anything left to take home, with inflation eating away at their payments.

But more than that, this decision appeared to represent one more example of CMS supporting the privatization of Medicare. We have reported several examples of CMS overriding the legislated mandate to reduce overpayments to private Medicare Advantage (MA) plans. Each year they have been able to use administrative chicanery to convert the mandated reduction into an increase in payments for the private MA plans. But this year they are also using administrative chicanery to convert the legislatively mandated increase in payments into a decrease in the traditional FFS Medicare program.

Another example is that the government has reneged on their mandate to pay the costs that exceeded the risk corridors for the CO-OP plans, contributing to the financial collapse of over half of them this year. Although the CO-OPs were not Medicare plans, they were quasi-public plans that were designed to compete with the private insurers. Do you really believe that the government can readily find funds year after year to shore up the private Medicare Advantage plans, but in the first year of the CO-OPs they are incapable of finding more than 13% of the mandated funds to support risk corridor losses for these organizations?

Our government, under the Obama administration, is actively moving towards privatization of our public insurance programs. Under the private insurers we are seeing higher costs, impairment of access, financial hardship for patients, and no improvement in quality or outcomes.

We need single payer, but we also need to elect responsible stewards for our public programs.