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Inside Health Policy: Health Care Experts Push Expanded Delivery Reforms As Possible SGR Pay-For

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A group of health care experts said a proposal to accelerate and expand upon delivery system reforms initiative by the health reform law could be used as a basis for legislation this fall in connection with -- and to help pay for -- a patch or permanent repeal of the Medicare Sustainable Growth Rate physician payment formula.

A group of health care experts said a proposal to accelerate and expand upon delivery system reforms initiative by the health reform law could be used as a basis for legislation this fall in connection with -- and to help pay for -- a patch or permanent repeal of the Medicare Sustainable Growth Rate physician payment formula. Some of the experts touted the approach as a preferable alternative to blunt payment cuts across providers.

Delivery system reforms initiated under the Affordable Care Act and previous laws began to lay the groundwork needed to curb rising spending and encourage better care, but more dramatic steps are needed, the experts said. None of the current delivery system reforms have the scale needed to reach all stakeholders in the system and to create the necessary change, they said.

The panel touted a paper to implement 12 delivery system and payment reforms, including expanded bundled payments and competitive bidding. The experts said the reforms should be linked to enforcement policies to ensure their success. "Policymakers could consider coupling delivery system reforms with well-designed enforcement mechanisms that can both spur the transformation of health care delivery and provide some assurance," the paper said.

The paper was released in conjunction with a panel discussion Thursday (Sept. 12) held by the Moment of Truth Project and National Coalition on Health Care panel. The Moment of Truth project is a project of the Committee for a Responsible Federal Budget, a bipartisan, non-profit committee is made up of leading budget experts including many of the past chairmen and directors of the Budget Committees, the Congressional Budget Office, the Office of Management and Budget, the Government Accountability Office, and the Federal Reserve Board. The National Coalition on Health Care represents more than 80 organizations -- including medical societies, businesses, unions, health care providers,faith-based associations, pension and health funds, insurers, and groups representing consumers, patients, women, minorities, and persons with disabilities.

Specific reforms advocated by the paper include: accelerating and expanding value-based purchasing, value-based insurance design, shared savings programs and episodic bundled payment; further reducing rates of preventable readmissions and healthcare-acquired conditions; reforming the medical malpractice system through safe harbors, health courts and disclose and offer policies; improving care coordination for dually eligible beneficiaries; offering alternative benefit packages; expanding competitive bidding; and promoting generic drug competition by introducing cost-sharing for brand-name drugs in Medicare's low income subsidy program.

Panelists said many of these delivery system reforms have been shown to successfully create savings, and while others might not produce scoreable savings today, they are worth pursuing because of the potential for future savings -- though some providers like the American Health Care Association say delivery system reforms like bundling and value-based payments aren't quite ready for large-scale implementation in the post-acute sector. The Center for Medicare and Medicaid Innovation is currently running demonstrations testing many of the ideas.

CMS' innovation center already has the authority to scale up any demonstrations it deems successful. CBO has projected that $1.3 billion will be saved from CMMI projects between 2010 and 2019 and $4.9 billion from the Medicare Shared Savings Program.

Ed Lorenzen with the Committee for a Responsible Federal Budget said that it's not really a choice for providers between moving to a new system or keeping the status quo, but rather between delivery system reforms and much blunter cuts across the board. In that context, delivery system reforms are the better choice, he added.

Larry McNeely, the policy director at the National Coalition on Health Care, told Inside Health Policy that in order to get savings from accelerating these demonstrations, like bundled payments, Congress would have to enact a new law that went over and above the limited and voluntary pilots to enact reforms across Medicare services and providers. There won't be substantial savings with limited, voluntary programs, McNeely said, but what providers will need to consider is whether accelerated and expanded delivery system reforms would be better than across-the-board cuts that could serve as the other option for Medicare savings.

For some really high volume cardiac and orthopedic procedures, instituting bundled payments across the board could be appropriate, McNeely said. But this is not one-size-fits-all situation, McNeely cautioned.

Delivery system reform is still at the experimental stage, and some programs would work better than others in different locations, panelists said, and providers should have a range of options.

One way to ensure savings without becoming overly prescriptive is value-based withholds, John Rother, the president and CEO of the National Coalition on Health Care suggested. Savings could also be ensured by adding targeted payment reductions into delivery or payment reform proposals, "thereby sharpening the incentives for providers to deliver higher-value, more coordinated care," the paper says.

Step one to achieving health care savings through delivery system reform would be replacing the SGR formula to move away from the emphasis on fee-for-service, said Rother. He said the SGR replacement bill passed unanimously by the House Energy & Commerce Committee in July, but which contained no offsets, is only a first step. "In my view we need to be a little bit more aggressive. It's time to really push this forward in a more sustained way," he said.

The House Ways & Means and Senate Finance committees are also expected to release their own draft bills to replace the SGR around the end the month. The Energy & Commerce bill would increase physician pay by half a percent each year for five years, but the legislation from Finance and Ways & Means is expected to give doctors little to no pay increase in a push to keep costs down.

The Energy & Commerce bill did not include any offsets, and the Ways & Means and Senate Finance bills likewise are not expected to contain offsets.

"These ideas that we put forward are potential savers, and so that could very much enable the SGR bill to go forward," Rother said.

Sep 13 2013