The 'Doc Fix' Disaster
J. Wellington Wimpy, the glutton from the comic strip Popeye, is famous for saying "I'd gladly pay you Tuesday for a hamburger today."
As part of the Balanced Budget Act of 1997, Congress based the Medicare "Sustainable Growth Rate" (SGR) on economist Robert C. Higgins's formula for calculating how quickly a corporation's sales can grow. It hoped to prevent Medicare payments to health providers from rising faster than the rate of growth (or contraction) of the Gross Domestic Product, weighted for the number of Medicare beneficiaries. Were spending to rise or fall faster than that in a given year, payment rates for the following year would be adjusted to maintain budget neutrality, paralleling Wimpy's offer, albeit in reverse.
But like a "Guess What Happens Next?" segment from America's Funniest Home Videos, you already know this won't turn out pretty. The idea that a future penalty, imposed on all providers, could somehow limit current services provided by individuals defies common sense. Higgins, for example, did not see his formula as a reason for corporations to raise their prices whenever sales didn't meet targets.
"You mean, if I have a hamburger now, the ones sold next Tuesday might be an ounce smaller? Who cares? I'm hungry today, and there might not even be a next Tuesday!"
So the Medicare SGR may have actually (at least initially) encouraged overutilization by creating the expectation that future reimbursements could be lower for the same work. Indeed, with the exceptions of 2000 and 2001, each year has been slated for a reimbursement cut (see chart) -- but Congress hasn't had the stomach to enforce it since 2002, recognizing the threat posed to health-care access for seniors, a key constituency.
The nearly annual financial patch is now lovingly called the "Doc Fix." However, since Congress has only rarely allocated money to offset these costs, the SGR formula does not incorporate Doc Fixes into its baseline and now produces yearly cuts of 20 to 35 percent, which would bankrupt most practices if they ever occurred. What could actually have been a real incentive to control costs has, for nearly twelve years, become nothing more than an expensive game of crying wolf.
Building on its "success" with the SGR, Congress has since, through various laws (the 2006 Tax Relief and Health Care Act, the 2009 Health Information Technology for Economic and Clinical Health Act, and the 2010 Affordable Care Act), overlaid it with similarly well-intentioned but dubious mechanisms attempting to encourage cost containment -- but now also "quality" care -- by tying Medicare payments to "performance." These include the Physician Quality Reporting System, the "Value-Based Modifier," and standards for demonstrating "Meaningful Use" of electronic health records.
Were it only as simple as Dana Carvey might have put it, impersonating President George H.W. Bush: "Quality gooood ... Gooood, spending too much baaaaad." Unfortunately, the overly complex and time-consuming processes that have since taken shape -- with looming potential combined penalties of around 10 percent for failure to achieve statutory goals -- will almost certainly give Congress yet another chance to blink.
Measuring a provider's quality in a credible way would require actual chart review by qualified peers of a sizable number of different types of patient encounters over time. Such a comprehensive assessment could determine whether reasonable care had been given over a reasonable timeframe in a reasonably cost-effective way based on individual patients' circumstances. Unfortunately, this is an extremely labor-intensive and thus expensive process.
So we instead are asking computers to divine "quality" from claims or registry data using unproven surrogate measures. For example, one measure uses the glycosylated hemoglobin (A1c) blood test as a surrogate for good control of diabetes. This unfairly penalizes providers who have higher-than-average proportions of Medicare patients who either are non-adherent or do not respond to accepted treatment regimens -- something not under the provider's control. More concerning, the mere existence of such a measure may cause providers to focus solely on the test at the expense of other non-measured yet vital aspects of diabetic treatment -- the "treating to the test" phenomenon (similar to "teaching to the test" in education).
And providers aren't the only ones concerned. The well-respected Robert Wood Johnson Foundation strongly cautions, "The adoption of flawed measurement approaches that do not accurately discriminate between providers can undermine professional and public support for provider accountability, reward indiscriminately, and divert attention from more appropriate and productive quality improvement efforts."
In addition, data just disclosed by the Centers for Medicare and Medicaid Services (CMS) at a November 4 meeting indicate that only about 2 percent of 500,000 participating providers have to date attested to meeting the most current (Stage 2) of standards related to "Meaningful Use" of electronic health records, raising concerns about the complexity of this program as well.
One might conclude the government is actually relying on the inability of providers to navigate such complexity to generate the maximum penalties, regardless of quality or cost containment, as a surefire means of stabilizing the Medicare Trust Fund. After all, rather than addressing the standards themselves, CMS still recoups through audits vast sums from providers who fail to understand or consistently implement complex Medicare documentation requirements that have been in place since the late 1990s -- a period notable for Susan Powter's "Stop the Insanity" weight-loss craze.
We need to follow her advice.
Yes, it is very important to get quality and value for the money we spend on health care. And it's not as if the programs put in place had no potential at all. But any surrogate quality measures need to be validated -- perhaps through small regional pilots -- by comparing their results with those of more accepted means (such as chart review) before they are applied to an industry that constitutes one-sixth of the U.S. economy. Furthermore, rather than passing hard-and-fast laws with unachievable deadlines on these issues and treating providers as the enemy, Congress could increase its odds of success by giving CMS more general directives to innovate to restrain costs (perhaps with flexible targets) in actual partnership with those rendering care.
The Medicare SGR Repeal and Beneficiary Access Improvement Act of 2014, sponsored by Senate Finance Committee chairman Ron Wyden (D., Ore.), would have eliminated the SGR, limited many of the above-referenced draconian penalties, and -- at least according to early estimates that included other fixes -- cost a relatively small $131 to $180 billion over ten years. (This is just 2 percent of total Medicare outlays.) The bill almost passed with bipartisan support, but was scuttled at the last minute in favor of another temporary "fix," with Congress unable to reach agreement on a funding mechanism during an election year.
Interestingly, based on the Congressional Budget Office’s own estimates (see page 2) for the next decade, the Wyden bill's cost to taxpayers represents just shy of 2 percent of total Medicare outlays. I may be going out on a limb here, but if that money can't be found in the budget, providers might be willing to accept the cut (or some portion) instead if -- in fairness -- other sectors of Medicare (hospitals, etc., that have been spared the SGR over the same twelve years in favor of modest annual increases) did so as well. However, this would have to be in exchange for sidelining or scaling back the above-discussed programs and similar onerous and costly ones affecting the other sectors, possibly including abandoning the counterproductive "ICD-10" disease-classification system as I have previously advocated, making all of this potentially a financial wash.
Of course, the next cycle of crying wolf has already begun. CMS has just announced the SGR will yield a cut of 21.2 percent when the most recent patch expires in April 2015, which almost no one believes will happen. Given its track record, can a similar "fix" for program penalties be far behind?
It’s time to say enough is enough. Now that the election is over, the lame-duck Congress has one final chance to address these issues, and the outcome of the election shouldn't change the bipartisan resolve to get this done. However they fund it, legislators need to swap their hamburgers for some spinach so they can be strong to the finish like Popeye.
Craig H. Kliger is an ophthalmologist and executive vice president of the California Academy of Eye Physicians and Surgeons.