SBCMS News/Media

Medicare locality reform ("The California GPCI Fix") clears House Congressional Committee as part of the Medicare SGR overhaul legislation

On July 31, the House Energy and Commerce Committee voted unanimously to approve a BIPARTISAN Medicare Sustainable Growth Rate (SGR) overhaul legislation, H.R. 2810.  Included in the bill is the CMA-sponsored California Medicare locality reform known as the “California GPCI Fix.”  The California locality provision is a compromise between Committee Chairman Fred Upton (R-MI) and Ranking Democrat Henry Waxman (D-CA) who insisted the California update be part of the committee bill.  It is based on legislation by Congressman Sam Farr (D-Santa Cruz/Monterey) and Darrell Issa (R-San Diego) who are leading the effort to see it enacted.   House Majority Whip, California Congressman Kevin McCarthy (R-Bakersfield), was also key to the agreement.  The Obama Administration also stepped-in to assist with the legislation.

CMA is pleased with this herculean effort to include a bipartisan California locality provision in the Energy & Commerce Committee Medicare SGR legislation.  CMA physicians have cleared the first hurdle in a long legislative process to achieve locality reform.  The bill now moves to the House Ways and Means Committee and the Senate Finance Committee is expected to start to move their Medicare legislation in the fall.  While this is a positive first step, CMA cautions physicians that we have a long way to go.

The Medicare SGR provisions generally follow the subcommittee bill which repeals the SGR, allows a period of stability, provides updates for physicians participating in fee-for-service quality measure and clinical improvement projects and gives physicians  incentives to participate in alternative payment models.  A short summary is outlined below.  While CMA has concerns with the legislation, particularly the penalties, inadequate updates, and the loss of funding for the RUC process and new codes, CMA is pleased that Congress is moving forward with a bill to eliminate the SGR, establish stability, and provide a path to a better payment system.    CMA will continue to advocate our goals as this bill moves through Congress.  Given the bipartisan nature of this SGR bill and the early timeline, CMA is cautiously optimistic that Congress will address the SGR issues this year.

Below are summaries of the Locality Update and the SGR reform. 

Summary of the Medicare Locality Provisions (“The California GPCI Fix”)
Background: While Medicare updates the hospital geographic regions and payments annually, it has not updated the physician regions in over 16 years.  Therefore, counties such as, San Diego and Sacramento are still designated as rural and not accurately compensated based on their higher local costs to provide care.  Fourteen California counties (San Benito, Santa Cruz, Marin, Santa Barbara, San Diego, Monterey, Sonoma, Placer, El Dorado, Yolo, Sacramento, San Luis Obispo, Riverside and San Bernardino) are underpaid by up to 10% each year according to Medicare’s own data.  

Medicare could update the localities, but it would cause an immediate and corresponding reduction to physicians practicing in rural counties.  Therefore, CMA sought legislation to update the newly urbanized counties and minimize the reductions to the rural counties.  The Institute of Medicine (IOM), GAO, MedPAC and others have studied the problem and agree the localities need to be updated.  California physicians and their Medicare patients in these regions forego $54 million in Medicare funding each year.  And this does not include the private sector contracts tied to Medicare rates. 

The Locality Reform Proposal
The GPCI locality provision would start to transition all California Medicare physician payment localities to Metropolitan Statistical Areas (MSAs) in 2017 just as Medicare pays and organizes hospitals according to MSAs.  

The higher rates would be phased-in 1/6 per year over 6 years until full implementation in 2021/2022. 

The rural counties in Locality 99 and Locality 3 would be held harmless from payment cuts permanently.

The Committee agreed that the ~$200 million cost would be funded from the Medicare SGR funding sources once those are worked out in the Ways and Means Committee.

Payment Impact By County
All counties currently in Locality 99 will receive a .30% increase in 2014/2015 pursuant to the CMS proposed fee schedule and GPCI update for 2014.  Counties in Locality 3 will also receive the 1.4% update in the CMS proposed fee schedule and GPCI update for 2014.   These CMS proposed updates are in a proposed regulation and separate from the legislation. 

While it is difficult to predict the 2017 MSA factors, the payment increases are likely to fall in into the following ranges based on the 2013 and 2016 MSA data:

All counties currently assigned to Locality 99 or Locality 3 not listed above will be held harmless from cuts permanently. The bill establishes a payment floor at the 2016 rate.

Physicians practicing in Alameda, Los Angeles, Orange, Santa Clara, San Francisco, San Mateo, and Ventura will not be impacted by this legislation. 

Next Steps
The House Ways & Means Committee is expected to move a yet-to-be released Medicare SGR bill in September.  Then the Energy & Commerce and Ways & Means Committees will reconcile their different Medicare SGR bills into one package that moves to the House floor.  The Senate Finance Committee is also expected to move forward with their Medicare SGR legislation in the fall.  All Committees are waiting until there is final agreement on the policy before assigning funding sources to pay for the SGR repeal.  Some of the identified funding sources include hospital outpatient services that are reimbursed at higher rates than when provided in a physician’s office, higher cost-sharing by Medicare beneficiaries, benefit changes, pharmaceutical rebates and controversial sources from the Affordable Care Act. 

Summary of the Medicare SGR Provisions
These provisions were adopted by the Committee on a bipartisan basis. 
 
Summary     
1) Repeals the SGR
2) Provides a Period of Stability for 5 years with 0.5% annual payment updates
3) Allows physicians to choose to participate in a fee-for-service (ffs) program or an alternative payment model. 
4) In 2019, for those physicians participating in ffs, it provides up to 1.5% updates for reporting on physician-developed quality measures and for participating in physician-developed clinical projects.  Physicians who score poorly will be subject to a net 0.5% cut. 
5) Alternatively, physicians may choose to participate in physician-developed alternative payment models.    The incentives favor physicians who are willing to take the necessary steps to participate in new payment and delivery models.

The bill was formally introduced by Congressman Mike Burgess (R-TX), a physician leader on the Committee and cosponsored by all of the Committee Republican and Democratic leaders – Chairman Upton (R-MI), Subcommittee Chairman Pitts (R-PA), Ranking Minority Leaders Waxman (D-CA) and Pallone (D-NJ).    The bipartisan nature of this bill is notable.  California members on the committee include Lois Capps (D-Santa Barbara), Anna Eshoo (D-Santa Clara), and Doris Matsui (D-Sacramento) who also supported the bill.  

CMA Advocacy
While there are several aspects of the bill that concern CMA, including the downside penalties and lack of adequate updates, the bill meets many of the goals that CMA advocated to Congress to eliminate the annual threat of nearly 30% SGR payment cuts, 5 years of stable updates, a continuation of the Fee-for-Service (FFS) program with opportunities for updates, and incentives to help physicians transition to new payment and delivery models.  There is still much work to be done on the entire bill and Congress recognizes that.

Detailed SGR Summary
The bill will repeal Medicare’s flawed Sustainable Growth Rate (SGR) formula immediately in 2014.

For 2014-2018, it provides modest, positive updates of 0.5%.

The current reporting programs, PQRS and the EHR Incentive program, will continue through this period. 

Fee-for-Service Program:  In 2019, the 0.5% updates will continue. 
The bill also maintains a fee-for-service (ffs) program that involves a new quality reporting program.  Physicians in the ffs program will receive additional updates based on meeting quality measures and participation in clinical practice improvement activities.  Physicians will develop the measures and select the measures and clinical projects that work best for their practice.
Physicians would self-select a “clinical cohort” applicable to their specialty and type of practice, and would be measured based on how well they performed on clinical performance measures.  Emphasis would be on measures that improve care coordination, patient safety, prevention, and patient experience with the care provided. 

Physicians would be scored on a scale of 1-100, and those scoring in the top third would get an annual ffs update of 1.5%, those scoring in the next third would get a 1% update, and those in the lowest third would get a net minus 0.5% update.  Those who decline to participate in the FFS quality reporting program OR an alternative payment model will receive a 5.0% payment cut per year starting in 2019. 

Alternative Payment Models:   The bill provides strong incentives and opportunities for physicians who are willing to participate in alternative payment and delivery models, such as risk-adjusted capitated Patient Centered Medical Homes, Patient Centered Medical Neighborhoods (for specialists),  Accountable Care Organizations,  Shared Savings programs, case management fee chronic disease programs or other models that combine FFS with shared savings.  These models are an alternative for physicians who do not want to participate in the ffs quality reporting program. 

These models will be developed by physicians.  Physicians may choose which model works best for their practice situation.  Physicians in these models would be paid under the rules applicable to their model. 

In 2015, Medicare would be directed to begin paying physicians for care coordination of patients with complex chronic diseases.  To qualify for such payments, physicians would have to be in a Patient Centered Medical Home for primary care or specialty care recognized by NCQA or other approved entities.  

California Medical Liability Protection Adopted
Another CMA-sponsored  medical liability provision was included and will ensure that any new payment policies or practice guidelines adopted by the Affordable Care Act (ACA) do  not establish a new standard of care in medical liability proceedings.   This is an important liability protection that CMA has been seeking since the passage of the ACA. 

Final Message
Congress is sending a clear bipartisan message to incent physicians to participate in alternative models.  The Committee is establishing opportunities for physicians to be reimbursed in different ways for care coordination, managing patients with chronic conditions, participating in clinical improvement projects, setting up primary care or specialty specific medical homes, or achieving overall Medicare savings by reducing ER visits and hospital admissions. 

The bill does not yet include funding sources.  Congress is waiting to get further agreement on the policy details before discussing the funding.  Of course, the funding could be the most controversial aspect of this legislation.  For instance, the Committee is proposing to remove the budget neutrality provision in the RUC process for misvalued codes and redirect it as an overall legislative funding source.  Under current law, any savings from changing misvalued codes are reinvested in other physician services.  These savings will be particularly important for the new care coordination and patient management services the bill is promoting.  CMA, AMA and other state and specialty societies weighed-in heavily with the Committee to remove this provision. 

Meetings with Members of Congress During the August Recess
CMA is asking County Medical Societies and physician leaders to meet with their Members of Congress during the month-long August recess about the Medicare SGR legislation and the other CMA priorities. It is crucial that Members of Congress hear from physicians about this significant reform of the Medicare payment system.  Talking Points will be available August 1.

Contact:  Elizabeth McNeil, VP, Federal Government Relations, CMA, emcneil@cmanet.org.

CMA urges CMS to postpone changes to QIO program

The Centers for Medicare and Medicaid Services (CMS) recently called for public comments on how it can best organize the national cadre of Medicare Quality Improvement Organization (QIO) contractors. The mission of the QIO program is to improve the effectiveness, efficiency, economy and quality of services delivered to Medicare beneficiaries.

Currently, CMS contracts with one organization in each state to serve as that state's QIO contractor. QIOs are private, mostly not-for-profit organizations, staffed by physicians and other health care professionals who are trained to review medical care, help beneficiaries with complaints about the quality of care they receive, and to implement quality improvements throughout the spectrum of care.

CMS is looking for provider opinions about four potential options that it may use to divide work among a varying number of QIO contractors into service areas (jurisdictions or regions) that are focused on quality-improvement-related work only. CMS is also seeking fresh new ideas about other options for organizing QIO contractors.

The California Medical Association (CMA) joined the American Medical Association (AMA) and other medical organizations to urge CMS to postpone any changes to the QIO contracting process until a later date, as there is no statutory mandate requiring them to make changes. With the health care industry facing the imminent implementation of the Affordable Care Act, as well as the value-based payment modifier, ICD-10 and meaningful use, CMA doesn't believe it is wise to undertake yet another large scale change at this time.

"All of these legislative mandates require learning curves that involve changes to practice infrastructure, staffing, workflow and other costly burdens," wrote the groups in a letter to CMS. The letter urged CMS to postpone consideration of QIO changes until the pace of health care reform is less frenetic, physician practices are more stable and we all have a clearer sense of how the QIO changes would impact quality and cost.

"Moreover, one measurable impact of the health care exchanges will be the influx of millions of new patients into the health care system. Physicians are likely to lean on their QIOs for help to ensure that these new patients, many of whom will have newly diagnosed and/or untreated conditions, receive high quality and cost effective care," the letter said. "It is unwise to pursue a consolidation of the local QIOs, which are community resources that are trusted by patients and providers alike, just as the demand for services is likely to increase."

View the letter here.

Contact: Elizabeth McNeil, (800) 786-4262 or ecmneil@cmanet.org.

CMA files amicus brief in physician whistle-blower case

Last week, the California Medical Association (CMA) and the American Medical Association (AMA) filed an amicus curiae brief in the California Supreme Court to urge for broad protection of physician whistleblowers in hospitals.

The brief focuses on a medical staff physician’s rights as a whistleblower under Health & Safety Code section 1278.5. In the case, Fahlen v. Sutter Central Valley Hospitals et al., the plaintiff physician alleged that his staff privileges were terminated in retaliation for reporting nursing errors and insubordination to the hospital. He sued the hospital under section 1278.5, which provides that any medical staff member who suffers retaliation can sue for damages and reinstatement of privileges. The statute also creates a presumption, which applies in the case, that adverse action taken within 120 days of a whistleblower complaint was retaliatory.

The defendant hospital argued, however, that the action under section 1278.5 was improper because the alleged retaliation involves an adverse peer review decision. The hospital claims that the physician instead must first try to overturn the termination of his privileges through a writ process in which the physician faces evidentiary hurdles and a presumption that the peer review action was correct. Only after that writ process, according to the hospital, can the physician pursue a whistleblower claim.

CMA and AMA argue in their amicus brief that physician whistleblower protection is too important to be subsumed under the peer review "exhaustion requirement." They point out that the Legislature provided all health care workers in a hospital the same level of broad and immediate whistleblower protection in order to encourage reporting of patient safety issues in hospitals. Requiring physicians to go through a protracted writ process only thwarts this public policy and effectively denies physicians protection under section 1278.5. The amicus brief asks the state's high court to hold that the peer review "exhaustion requirement" does not apply to whistleblower actions.

Click here to read the brief.

Contact: CMA's legal information line, (800) 786-4262 or legalinfo@cmanet.org.

House committee releases bipartisan Medicare SGR reform bill

Three congressional committees have been hard at work over the past few months on legislation that would eliminate the desperately broken Medicare sustainable growth rate (SGR) formula that is used to determine physician payment rates. On Friday, the health subcommittee of the U.S. House of Representatives Energy and Commerce Committee's health subcommittee released its bill to repeal the SGR. One Tuesday the bill was approved by the subcommittee and now heads to the full committee for consideration. The House Ways and Means Committee and the Senate Finance Committee have held hearings on Medicare payment reform this year, but they have yet to introduce their bills.

The bipartisan bill introduced would eliminate the SGR and provide a stable five-year transition period during which physicians would see annual payment raises of .5 percent. Starting in 2019, the bill would replace the current system with a fee-for-service model that calculates payment rates based on physicians' performance on quality measures as compared to their peers. Physicians would be scored on a scale of 1-100, and those in the top third would get an annual update of 1.5 percent, those scoring in the next third would get 1 percent and those in the lowest third would see a 0.5 percent payment cut.

As an alternative to the fee-for-service track , the bill would also provide incentives for physicians to participate in alternative payment models, such as risk-adjusted capitated patient-centered medical homes, patient centered medical neighborhoods (for specialists), accountable care organizations, shared savings programs, case management fee for chronic disease programs or other models that combine fee-for-service with shared savings. These models are alternatives for physicians who do not want to participate in the fee-for-service quality reporting program.

Physicians who do not participate in either the fee-for-service quality reporting program or alternative payment models would see their payments cut by 5 percent starting in 2019.

Energy and Commerce Chair Fred Upton (R, Mich.) has said that he hopes that the bill can be approved by the full committee before Congress breaks for its summer recess in August.

While the California Medical Association (CMA) has serious concerns with the legislation, particularly the penalties and the inadequate updates, we are pleased that Congress is moving forward with a bill to eliminate the SGR and establish a stable payment system that provides incentives for patients and physicians. It is crucial that Congress repeal the SGR this year. The bill continues to be a work in progress and CMA will continue to voice our position that there be appropriate payment updates for physicians.

The bipartisan nature of this bill is notable. It was formally introduced by Congressman Mike Burgess (R-TX), a physician leader on the committee and is cosponsored by all of the committee Republican and Democratic leaders – Chairman Upton (R-MI), Subcommittee Chairman Pitts (R-PA), Ranking Minority Leaders Waxman (D-CA) and Pallone (D-NJ). California members on the committee include Lois Capps (D-Santa Barbara), Anna Eshoo (D-Santa Clara) and Doris Matsui (D-Sacramento), who are expected to support moving the bill forward.

The bill meets many of the goals that CMA advocated to Congress including the elimination of the annual threat of nearly 30 percent SGR payment cuts, five years of stable updates, a continuation of the fee-for-service program with opportunities for updates and incentives to help physicians transition to new payment and delivery models.

There are, however, many details that still need to be worked out. CMA is still working to include a payment locality (GPCI) update and has given Congress several options to move the outdated payment localities to Metropolitan Statistical Areas while mitigating the cuts to the rural counties.

The bill does include a CMA-sponsored medical liability provision that will ensure that any new payment policies or practice guidelines contained in the Affordable Care Act (ACA) do not establish a new standard of care for medical liability proceedings.

The bill does not include any funding sources at this point in time. Congress is waiting to get further agreement on the policy details before discussing how it will pay for the SGR repeal, which is expected to be the most controversial aspect of this bill.

For more details on the bill, click here.

Contact: Elizabeth McNeil, (800) 786-4262 or ecmneil@cmanet.org.

CMA publishes Medicare quality reporting guide

The Medicare Physician Quality Reporting System (PQRS) is a reporting program that uses a combination of incentive payments and payment reductions to promote reporting of quality information by eligible professionals.

Up until now, this program has been voluntary and physicians have received bonuses for participating. That's about to change. Failure to participate now means physicians could face significant penalties in 2015 and beyond.

Find out more in CMA's new guide, "Getting Started with the Medicare Physician Quality Reporting System." The guide is avaialble to members only.

Contact: CMA's reimbursement help line, (888) 401-5911 or economicservices@cmanet.org.

Get involved: Submit a resolution to the 2013 House of Delegates

The most effective way an individual member can influence CMA's policies and activities is to submit resolutions to the House of Delegates, the association's legislative body. The delegates meet annually to debate and act on resolutions and reports dealing with myriad medical practice, public health, and CMA governance issues. This year's annual meeting is October 11-13 at the Disneyland Hotel in Anaheim, and the deadline to submit resolutions is August 12.

Any CMA member may author a resolution, but a delegate, alternate delegate, component medical society, or specialty delegation must submit the resolution. Before authoring a resolution, physicians are strongly encouraged to review CMA's policy compendium to make sure that the association does not already have similar policy on the issue. The policy compendium is available to members only.

For more information on submitting a resolution, contact your county medical society. Click here for detailed instructions (including required format, allowed subject matter, and submission rules).

Contact: Roger Purdy, (916) 444-5532 or rpurdy@cmanet.org.

CMA Launches Exchange Resource Center

In 2010, Congress passed historic sweeping health care legislation, the Patient Protection and Affordable Care Act (ACA), which reformed the individual and small group health insurance markets and, beginning in 2014, will provide health insurance to much of the nation's uninsured. Under the ACA, two-thirds of California's uninsured may be eligible to purchase coverage through the health benefit exchange. The exchange's goal is to begin open enrollment on October 1, 2013 – with coverage beginning on January 1, 2014.

To help educate physicians about the exchange and ensure that they are aware of important issues related to exchange plan contracting, the California Medical Association (CMA) has developed a resource page where physicians can find all of CMA's exchange-related news and resources.

The new exchange resource center can be found at www.cmanet.org/exchange.

Medicare Transition Update: Noridian adds additional Meet and Greet Workshops

At the request of the California Medical Association (CMA) and other organizations in California, Noridian has added seven additional Meet and Greet Workshops throughout the state. Transition of the Medicare Administrative Contract from Palmetto GBA to Noridian is scheduled for September 16, 2013 (Part B).

Following is the list of locations in California:

CMA encourages practices to attend. It is an opportunity to meet Noridian staff and learn about the transition, including what will and will not change with the transition.

Registration is required to attend these workshops, and can be accessed through the Schedule of Events link on the Noridian website.

Can’t attend a workshop? View the Implementation 101 Workshop View and Listen Tutorial. Just click on the link from the Noridian Jurisdiction JE implementation homepage.

Extra! Extra! Read all about it! New Medicare transition webpage available

Attestation for Medi-Cal primary care rate increase to begin in July

The Centers for Medicare & Medicaid Services (CMS) released regulations in early November 2012 implementing rate increases for primary care physicians who treat Medicaid patients. The goal of the increase is to recruit more physicians to treat low-income patients who will be newly eligible for health coverage under the Affordable Care Act (ACA). Under the ACA, primary care physicians will see their reimbursement rates raised to Medicare levels in 2013 and 2014. According to CMS, states must also incorporate the increased payment rates into their contracts with managed care plans so that primary care physicians contracting with Medi-Cal managed care plans see the higher rates. The increase is financed 100 percent by the federal government.

The rate increase applies to evaluation and management codes 99201 through 99499 and vaccine administration codes 90460, 90461 and 90471 – 90474.

The California Department of Health Care Services (DHCS) had previously indicated that it expected to implement the rate increase in summer 2013, but DHCS now reports a likely implementation date in the fall.

DHCS is currently still waiting for approval from CMS on the State Plan Amendment, which details California's proposed payment methodology for both fee-for-service and managed care payments. Once approved, the increases will be retroactive to January 1, 2013.

To qualify for enhanced payments, providers will first be required to self-attest eligibility. The attestation will be available through the Medi-Cal website (www.medi-cal.ca.gov) in late July. Physicians will be required to complete the attestation online (paper copies will not be accepted).

Medi-Cal managed care plans have the option of either using the DHCS online attestation system or developing their own attestation tools. The California Medical Association (CMA) is in the process of querying the major Medi-Cal managed care plans on how their attestation processes will work.

For more information on which specialties qualify for the increase, see CMA’s Medi-Cal Primary Care Physician Rate Increase FAQs.