TMA Respectfully Outlines Amendments to SB 10: Alternative Payment Systems

Testimony of John Holcomb, MD, on SB 10
House Public Health Committee
Tuesday, May 19, 2009

 

  • Good morning, Chairwoman Kolkhorst and committee members. Thank you for the opportunity to testify before you today. I am John Holcomb, MD, a practicing pulmonologist in San Antonio. Today, I am here on behalf of TMA to testify on SB 10.
  • SB 10 directs the trustees of ERS and TRS, respectively, to establish one or more pilots to test "alternative payment systems" for physicians and health care professionals who participate in the ERS and/or TRS networks. Under the bill, "alternative payment systems" are defined to include "global payment system, an episode-based bundled payment system, pay-for-performance" or some combination of these.
  • Additionally, the bill requires the ERS and TRS board of trustees to adopt quality of care standards to ensure that participating patients receive high-quality, effective health care; to adopt policies to promote "clinical integration" between physicians and health care professionals; and to ensure that the alternative payment system promotes a primary care medical home for each ERS or TRS enrollee.
  • TMA supports efforts to test promising new quality improvement or payment methodologies in both the public and private health care delivery systems . In fact, organized medicine is looking at several such initiatives at the state and national levels, including efforts to promote adoption of the medical home model more widely. However, we feel strongly that for any pilot to succeed, it must include the active involvement of practicing physicians in the design, implementation, and evaluation as well as allow greater flexibility in adapting the pilot to the needs of the participants and patients.
  • To support this bill, TMA respectfully asks that it be amended to do the following:
  1. Establish an advisory committee of practicing primary care and specialty physicians, hospital administrators, and other stakeholders with expertise in physician and provider payment, performance, and quality measurement to provide ERS and TRS regular, ongoing input on the design, implementation, and review of the pilots. Without early buy-in from physicians, we believe the likely reaction will be to view the pilots as cost-containment exercises at the expense of patient quality and the patient-physician relationship.
  2. Ensure flexibility in the design of the "alternative payment arrangements" so that ERS and TRS, in consultation with stakeholders, can design a pilot most appropriate for the region and/or network. This includes retaining some type of fee-for-service payment as an option as well as allowing testing options, such as positive incentives to implement a medical home and/or case management.
  3. We think it is premature to scrap fee-for-service entirely . In Medicare as well as private health plan demonstrations, these types of pilots typically blend fee-for-service payments with incentive-based payments rather than scrap fee-for-service entirely.
  • Ensure ERS and TRS enrollees retain a choice of physicians and hospitals within the pilot . The filed bill implies that ERS or TRS could select a single health care network or organization in a region, thereby limiting not only patient choice but also competition.
  • SB 10 proposes to fundamentally restructure how care is delivered and paid for under ERS and TRS. Such restructuring requires an abundance of careful deliberation by all involved in order not to inadvertently jeopardize enrollees' ability to obtain needed care .
  • While some researchers tout pay for performance, bundled payments, or clinical integration as the holy grail of health system reform, in reality, the evidence is mixed as to whether these initiatives work or can be implemented successfully outside of large health care systems, which  already are integrated.
  • In Texas, more than half of all physician practices are either solo or small groups. Many are already struggling financially and lack the resources to implement electronic health records, which are the foundation of a clinically integrated system.
  • Additionally, TMA policy does not support payment where an entire episode of care, including physician services, are bundled together and paid to a single provider, who then reimburses other providers. These arrangements deprive physicians of the ability to negotiate for their own services and may result in cherry-picking patients.   Even The Wall Street Journal noted that , "for all the enthusiasm about bundled payments, bringing them into widespread use in the fragmented health-care world would be tricky. Doctors could be forced to give control over a large portion of their incomes to hospitals, which in some cases would be responsible for coordinating distribution of bundled payments."
  • All payments systems have inherent advantages and drawbacks. An episode-based bundled payment system has the potential to encourage more appropriate use of resources and appears rational on its face. Yet, to succeed, it is critical to clearly define when such an episode begins and ends. It would seem elementary to define such an episode of care for, for example, a fractured hip, but what about for a myocardial infarction, resulting in serious heart damage resulting in multiple hospitalizations and procedures over the ensuing year? Or, back to the fractured hip: What if the replacement hip joint requires revision nine months later? Is that part of the episode of care?
  • The global payment system, as described, is considered to be capitation by another name. Health plans implemented capitated payment arrangements in the 1990s with integrated physician networks and/or physician hospital organizations. The vast majority of these systems have since failed, ruined financially and besieged by criticism that the scheme induced limitations on medically necessary care. We do not want to see a repeat of those failures. 
  • Pay for performance has been shown to produce measurable gains in quality of care for patients when adequate pay has accompanied well-designed, evidence-based performance measures.  However, the amount of additional compensation shown to be effective in Great Britain and several U.S. studies is about one-third of base physician pay ― some $40,000 to $50,000 per physician. The Medicare pay-for-performance program, offering only 2-percent premium bonus for high performers, has so far not been effective in terms of adoption by physicians.
  • For reference, attached is information prepared by the American Medical Association on alternative payment options under Medicare, including the benefits and risks of each as well as the legal issues that must be addressed at the federal level before many of these proposals can be tested.
  • For your information, also have attached a copy of  TMA Principles and Guidelines for Pay-for-Performance . These guidelines establish the essential criteria for fair, ethical should be the cornerstone of any pilot.
  • Thank you for the opportunity to testify. I would be happy to answer any questions.  We look forward to continuing to work with you to resolve our concerns.

The Wall Street Journal
WSJ.com

By JACOB GOLDSTEIN

As leaders in Congress and the Obama administration look to expand health-insurance coverage while controlling costs, they are considering changing the way doctors are paid for treating patients covered by Medicare.

Critics of the current system, in which most doctors are paid for each procedure they perform, say it creates a financial incentive for unnecessary treatments. Alternatives such as paying a fixed annual rate for each patient have been criticized for giving providers an incentive to withhold potentially helpful treatments.

In search of a middle road, policy makers and some private insurers may opt to make a single, blanket payment for such things as implanting an artificial hip or providing a few months of cancer treatment, which currently can involve many separate billable procedures.

Health and Human Services Secretary nominee Tom Daschle has said he supports episode-based payments because they could lead to "better outcomes and lower cost, and far less hassle for providers." A white paper published last fall by Max Baucus, the Montana Democrat who is chairman of the powerful Senate Finance Committee, said moving Medicare toward bundled payments for hospitalized patients could improve efficiency and encourage doctors to do a better job coordinating patient care.

Medicare, the federal health-insurance program for the elderly, has long used lump-sum payments for hospitals. Before Medicare could make a large-scale shift to bundled payments for physicians, congressional approval would be required. But a new Medicare pilot program splits a single lump sum between the hospital and physicians who care for the patient. Some insurers in the private sector are also experimenting with bundled payments.

But for all the enthusiasm about bundled payments, bringing them into widespread use in the fragmented health-care world would be tricky. Doctors could be forced to give control over a large portion of their incomes to hospitals, which in some cases would be responsible for coordinating distribution of bundled payments.

"It's hugely worrisome to us," said Lawrence Martinelli, an infectious-disease specialist in private practice in Lubbock, Texas. "There's concern about not only how much you're going to get paid, but whether you can negotiate a contract where you can at least break even."

Dr. Martinelli is a member of the Infectious Diseases Society of America, which last year wrote an open letter arguing that bundling physician and hospital payments together could "limit Medicare beneficiaries' access to necessary specialty care."

To avoid creating an incentive for doctors and hospitals to cherry pick the healthiest patients, payments could be higher for those with a higher risk of complications. And there would have to be a check against doctors and hospitals denying care when doing so would be the cheapest option, but not in the best interest of the patient.

Proponents argue that well-designed bundled payments could remedy a central problem in the existing payment system: Doctors who provide subpar care are reimbursed for treating problems that better care might have prevented, while doctors who prevent serious complications see no financial benefit.

In an episode-based payment system designed by Bridges to Excellence, a nonprofit group that is trying to realign health-care incentives, doctors and hospitals treating heart-attack patients would receive a fixed payment that would not increase if a patient had to be readmitted to the hospital a few days after being sent home.

"You're forcing the delivery system to think about the stuff that everybody complains is not happening," says François de Brantes, the group's chief executive. "Don't discharge the patient without coordinating with the treating physician, because that's going to lead to a readmission."

Medicare recently launched its own pilot project at a handful of hospitals that negotiated with doctors and submitted bids to receive bundled payments for a few procedures, including hip and knee implants and coronary-bypass surgery.

Write to Jacob Goldstein at jacob.goldstein[at]wsj[dot]com

 

TMA Principles and Guidelines for use of Pay for Performance

Physician pay-for-performance (PFP) programs that are designed primarily to improve the effectiveness and safety of patient care may serve as a positive force in our health care system. Fair and ethical PFP programs are patient-centered and link evidence-based performance measures to financial incentives.

Such PFP programs align with the following five American Medical Association principles.

  1. Ensure quality of care . Fair and ethical PFP programs are committed to improved patient care as their most important mission. Evidence-based quality-of-care measures, created by physicians across appropriate specialties, are the measures used in the programs. Variations in an individual patient care regimen are permitted based on a physician's sound clinical judgment and should not adversely affect PFP program rewards.
  2. Foster the patient-physician relationship. Fair and ethical PFP programs support the patient-physician relationship and overcome obstacles to physicians treating patients, regardless of patients' health conditions, ethnicity, economic circumstances, demographics, or treatment compliance patterns.
  3. Offer voluntary physician participation . Fair and ethical PFP programs offer voluntary physician participation, and do not undermine the economic viability of nonparticipating physician practices. These programs support participation by physicians in all practice settings by minimizing potential financial and technological barriers including costs of start-up.
  4. Use accurate data and fair reporting. Fair and ethical PFP programs use accurate data and scientifically valid analytical methods. Physicians are allowed to review, comment, and appeal results prior to the use of the results for programmatic reasons and any type of reporting.
  5. Provide fair and equitable program incentives . Fair and ethical PFP programs provide new funds for positive incentives to physicians for their participation, progressive quality improvement, or attainment of goals within the program. The eligibility criteria for the incentives are fully explained to participating physicians. These programs support the goal of quality improvement across all participating physicians.

Guidelines for Pay-for-Performance Programs

Safe, effective, and affordable health care for all Americans is the American Medical Association's goal for our health care delivery system. AMA presents the following guidelines regarding the formation and implementation of fair and ethical pay-for-performance (PFP) programs. These guidelines augment AMA's Principles for Pay-for-Performance Programs and provide AMA leaders, staff, and members operational boundaries that can be used in an assessment of specific PFP programs.

Quality of Care

  • The primary goal of any PFP program must be to promote quality patient care that is safe and effective across the health care delivery system, rather than to achieve monetary savings.
  • Evidence-based quality-of-care measures must be the primary measures used in any program.
  1. All performance measures used in the program must be defined prospectively and developed collaboratively across physician specialties.
  2. Practicing physicians with expertise in the area of care in question must be integrally involved in the design, implementation, and evaluation of any program.
  3. All performance measures must be developed and maintained by appropriate professional organizations that periodically review and update these measures with evidence-based information in a process open to the medical profession.
  4. Performance measures should be scored against both absolute values and relative improvement in those values.
  5. Performance measures must be subject to the best available risk adjustment for patient demographics, severity of illness, and comorbidities.
  6. Performance measures must be kept current and reflect changes in clinical practice. Except for evidence-based updates, program measures must be stable for two years.
  7. Performance measures must be selected for clinical areas that have significant promise for improvement.
  • Physician adherence to PFP program requirements must conform with improved patient care, quality, and safety.
  • Programs should allow for variance from specific performance measures that are in conflict with sound clinical judgment and, in so doing, require minimal, but appropriate, documentation.
  • PFP programs must be able to demonstrate improved quality patient care that is safer and more effective as the result of program implementation.
  • PFP programs help to ensure quality by encouraging collaborative efforts across all members of the health care team.
  • Prior to implementation, pay-for-performance programs must be successfully pilot-tested for a sufficient duration to obtain valid data in a variety of practice settings and across all affected medical specialties. Pilot testing also should analyze for patient deselection. If implemented, the program must be phased in over an appropriate period of time to enable participation by any willing physician in affected specialties.
  • Plans that sponsor PFP programs must explain these programs prospectively to the patients and communities covered by them.

Patient-Physician Relationship

  • Programs must be designed to support the patient-physician relationship and recognize that physicians are ethically required to use sound medical judgment, holding the best interests of the patient as paramount.
  • Programs must not cause conditions that limit access to improved care.
  1. Programs must not directly or indirectly disadvantage patients from ethnic, cultural, and socioeconomic groups, as well as those with specific medical conditions, or the physicians who serve these patients.
  2. Programs must neither directly nor indirectly disadvantage patients and their physicians, based on the setting where care is delivered or the location of populations served (such as inner city or rural areas).
  • Programs must neither directly nor indirectly encourage patient deselection.
  • Programs must recognize outcome limitations caused by patient noncompliance, and sponsors of PFP programs should attempt to minimize noncompliance through plan design.

Physician Participation

  • Physician participation in any PFP program must be completely voluntary.
  • Sponsors of PFP programs must notify physicians of PFP program implementation and offer physicians the opportunity to opt in or out of the PFP program without affecting the existing or offered contract provisions from the sponsoring health plan or employer.
  • Programs must be designed so that physician nonparticipation does not threaten the economic viability of physician practices.
  • Programs should be available to any physicians and specialties wishing to participate and must not favor one specialty over another. Programs must be designed to encourage broad physician participation across all modes of practice.
  • Programs must not favor physician practices by size (large, small, or solo) or by capabilities in information technology (IT).
  1. Programs should provide physicians with tools to facilitate participation.
  2. Programs should be designed to minimize financial and technological barriers to physician participation.
  • Although some IT systems and software may facilitate improved patient management, programs must avoid implementation plans that require physician practices to purchase health-plan specific IT capabilities.
  • Physician participation in a particular PFP program must not be linked to participation in other health plan or government programs.
  • Programs must educate physicians about the potential risks and rewards inherent in program participation, and immediately notify participating physicians of newly identified risks and rewards.
  • Physician participants must be notified in writing about any changes in program requirements and evaluation methods. Such changes must occur at most on an annual basis.

Physician Data and Reporting

  • Patient privacy must be protected in all data collection, analysis, and reporting. Data collection must be administratively simple and consistent with the Health Insurance Portability and Accountability Act (HIPAA).
  • The quality of data collection and analysis must be scientifically valid. Collecting and reporting of data must be reliable and easy for physicians and should not cause financial or other burdens on physicians and/or their practices. Audit systems should be designed to ensure the accuracy of data in a nonpunitive manner.
  1. Programs should use accurate administrative data and data abstracted from medical records.
  2. Medical record data should be collected in a manner that is not burdensome or disruptive to physician practices.
  3. Program results must be based on data collected over a significant period of time and relate care delivered (numerator) to a statistically valid population of patients in the denominator.
  • Physicians must be reimbursed for any added administrative costs incurred as a result of collecting and reporting data to the program.
  • Physicians should be assessed in groups and/or across health care systems, rather than individually when feasible.
  • Physicians must have the ability to review and comment on data and analysis used to construct any performance ratings prior to the use of such ratings to determine physician payment or for public reporting.
  1. Physicians must be able to see preliminary ratings and be given the opportunity to adjust practice patterns over a reasonable period of time to more closely meet quality objectives.
  2. Prior to release of any physician ratings, programs must have a mechanism for physicians to see and appeal their ratings in writing. If requested by the physician, physician comments must be included adjacent to any ratings.
  • If PFP programs identify physicians with exceptional performance in providing effective and safe patient care, the reasons for such performance should be shared with physician program participants and widely promulgated.
  • The results of PFP programs must not be used against physicians in health plan credentialing, licensure, and certification. Individual physician quality performance information and data must remain confidential and not subject to discovery in legal or other proceedings.
  • PFP programs must have defined security measures to prevent the unauthorized release of physician ratings.

Program Rewards

  • Programs must be based on rewards, not on penalties.
  • Program incentives must be sufficient in scope to cover any additional work and practice expense incurred by physicians as a result of program participation.
  • Programs must offer financial support to physician practices that implement IT systems or software that interacts with aspects of the PFP program.
  • Programs must finance bonus payments based on specified performance measures with supplemental funds.
  • Programs must reward all physicians who actively participate in the program and who achieve prespecified absolute program goals or demonstrate prespecified relative improvement toward program goals.
  • Programs must not reward physicians based on ranking compared with other physicians in the program.
  • Programs must provide to all eligible physicians and practices a complete explanation of all program facets, to include the methods and performance measures used to determine incentive eligibility and incentive amounts, prior to program implementation.
  • Programs must not financially penalize physicians based on factors outside of the physician's control.
    • Programs utilizing bonus payments must be designed to protect patient access and must not financially disadvantage physicians who serve minority or uninsured patients.

TMA opposes private payer, congressional, or Centers for Medicare & Medicaid Services pay-for-performance initiatives if they do not meet the AMA's Principles and Guidelines for Pay for Performance (BOT Rep. 14-A-08).

Last Updated On

May 12, 2016

Originally Published On

March 23, 2010

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