Moving from volume to value

Practices face pain of 'moving from volume to value'

Published with the approval of MedAxiom from its "2013 Perspectives: A Year in Review" report.

To hear Cathie Biga tell it, while some of the largest healthcare systems are well aware that they face financial penalties for non-compliance with new government regulations, they have made a strategic decision not to comply for now, and are willing to live with the consequences.

“Several large health systems are saying, ‘we face a 1.5 percent penalty, but compared to the cost of complying, it’s only 1.5 percent. We’ll leave it alone, and we’ll knowingly taking that hit,’” said Biga (pictured), president and CEO of Cardiovascular Management of Illinois, in Woodridge, Ill.

“It’s a new world, one in which we’re moving from volume to value,” Biga said. “Every one of these governmental programs, from e-prescribing to meaningful use and more, has an infrastructure of value. But when we presented at the American College of Cardiology [ACC]'s annual convention, we found a number of doctors who find this a hard concept to grasp. For them, it’s like they have one foot on the dock, and one foot in the boat.”

Biga cited the “pain” of having to evolve into a new way of approaching the delivery of services and being compensated for them. She noted that while many practices are still being paid under the traditional fee-for-service approach, they are studying the transition into reimbursements under evolving systems, such as those implemented under the Affordable Care Act such as accountable care organizations.

“CFOs and others will have to adjust,” Biga stated. “There is a balancing act to this transition and our financial colleagues want us to turn on a dime, and make changes only when it’s absolutely needed; in reality, these changes may take two years to achieve.”

The unanswered question, she said, is whether practices and physician health systems are making enough money under the existing volume model to cover the cost of penalties paid to the federal government for failing to meet standards deadlines. “Until the penalties pass their net income, some practices may straddle both worlds. It will ultimately change, and it may be painful, but the bottom line is when do we take our one foot off the pier and hop in the boat of value-based reimbursement?”

The penalty phase mandated by many of the federal regulations have already begun kicking in, with actions and data submitted from prior years already impacting practices’ revenue stream, and will continue from this point on. “For example, if you did not successfully submit data from 2011 that met e-prescribing requirements, you were docked a one percent penalty in 2012,” Biga said, noting that it should serve as a wakeup call for practices that have not actively begun implementing other initiatives. She added that 2013 is the last year the government will offer practices an incentive for implementing e-prescribing systems. The incentive is modest -- one-half of one percent -- but beginning next year, the government will impose a two percent penalty for failure to have those systems in place.

“We should have learned from this that Medicare is going to be reviewing data from at least 12 to as much as 24 months ahead of the penalty phase.

“The Physician Quality Reporting System [PQRS] penalty of 1.5 percent begins in 2015; if you’re not participating by now you need to since the data from 2013 will be used for the 2015 penalty,” she explained. “Here’s what we know; in 2010, approximately 38 percent of all doctors across country participated in PQRS. That’s less than half, and to me, that says the majority of doctors aren’t sure about what they’re required to do,” Biga noted. She added that while there has been more discussion about the emerging requirements, especially from industry groups such as MedAxiom and ASNC, doctors in smaller cardiology groups may not fully understand that the rules pertain to their practices as well. They do, of course, and Biga pointed out that if they don’t start paying attention, they may face Medicare reimbursement penalties of up to six percent, beginning in 2016.

That’s not all: “Sequestration cuts may reduce reimbursements by another two percent and failure to comply with meaningful use may bring additional penalties. Ultimately, we’re talking about the tolerance level; where do these cuts really begin hurting?" she asked. "Some practices may feel they can get by with a two percent reduction, but when you hit four or five percent, you’re really talking.”

Time is of the essence in implementing systems that will enable compliance, Biga said, noting that Stage 2 of meaningful use is due to start in January 2014, with Stage 3 beginning the following year. “You’re on the march. If you wait until 2014 to buy your system, it can take as long as 14 months to get everything up and running to meet the 15 core measures and five of 10 objective measures, and six clinical quality measures. Here’s the big issue: It takes a long time to comply with Stage 1. If you’re not there yet, Stage 2 is more difficult to meet. The government’s given us three years to comply with Stage 1 initially, but only two years if you have not started yet. Two years will be the norm each for Stage 2 and Stage 3. The longer you wait, the shorter the timeframe you have to implement,” Biga said.

And don’t count on any additional delays from the administration or Congress. “They’ve already delayed implementation of ICD-10 once. I don’t see them delaying [Stage] 2 when they’re delaying ICD-10 as well. Practices must be very careful, and not assume there will be extensions. If they don’t comply, be it e-prescribing, PQRS, or meaningful use, they will face penalties,” she cautioned.

That holds true for the implementation of physician value-based purchasing (PVBP), as well. Physician groups of more than 100 doctors must report PQRS data this year to be in compliance two years from now, according to Biga; by 2017, every doctor in the United States must implement value-based purchasing.

“The majority of doctors don’t even know there’s a PVBP plan, nor do they understand that the government’s taking an approach that’s different from e-prescribing,” Biga noted. She said PVBP will be reported at the group level and involves a conscious decision on the part of practices to “self-nominate,” as well as having to make a decision whether to take part in the quality tiering component. Each practice will have to decide whether to apply for the potential incentive (high quality, low cost care), pay the penalty for not reaching goals (high-cost, low-quality) or to simply stay neutral. Biga explained, “The first enrollment period is already closed; the next period opens this July.” Practices over 100 providers must self-nominate under the Group Practice Reporting Option, then must decide if they want to participate in the quality tiering program, or simply report PQRS data and achieve a neutral position.

“It’s apparent that healthcare in the United States is migrating from volume to value,” Biga said, “but it may be a bumpy road.”