A New Era of Physician Accountability

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Doctor PhotoWith the implementation over the next few years of the Medicare Access and CHIP (Children’s Health Insurance Program) Reauthorization Act, including the gradual build-out of ‘Physician Compare‘, a consumer website lauched by the Affordable Care Act, we are entering a new era of physician accountability. 

MACRA is a quality measurement and payment system for physicians who treat Medicare patients. Beginning in 2019, physician payment will be much more tightly tied to quality and performance measures.

With the attention to the inefficiencies of physician payment, MACRA may trigger a “disruptive innovation” in health care. In group practices large and small, and individually, physicians will have the incentive to address the failings that vex our health care system. As a reminder, these include:

  • A 25 percent to 30 percent rate of unnecessary, inappropriate, or excessive care;
  • All too common misdiagnosis and medical errors;
  • Care whose “value”—results for the money paid—is suboptimal;
  • High and escalating prices, the highest paid physicians in the world, and an unsustainable cost growth trend; and,
  • The most expensive health care system in the world even as it yields poorer overall results compared to other developed nations that spend less.

Doctors clearly are not to blame for the totality of these failures. But since roughly the year 2000, consensus has grown that no gains can be made in tackling the above problems without changing the drivers of physician behavior. They are the main actors in the system; they deliver the care and order it. In doing so, they generate the majority of costs. Increasingly, they also run health care systems and hospitals.

Many avenues to changing physician behavior exist: regulation and oversight; education and training; professional standards and rewards; peer pressure and review; community standards; the threat of malpractice; performance/quality measurement; financial incentives; and competition.

This post reflects on the last three of those avenues — performance/quality measurement, financial incentives, and competition.

Performance And Quality Measurement

Assessing physician performance as a way to drive quality improvement and consumer choice is coming under newly intense scrutiny. Measurement was supposed to become easier, better, and more meaningful with the development of electronic health records. That hasn’t happened. So the field remains largely dependent on direct reporting and claims data.

At the same time, the number of measures has proliferated; it’s now well over a 1,000. And the application of these measures via Medicare, insurers, health systems, and payers has been chaotically executed. Some experts advocate a 50 percent reduction in the number of measures.

Physicians and their staffs are now spending an unacceptable amount of time dealing with the reporting of quality measures — 15 hours per physician per week at a cost of just over $40,000 per doctor per year.

It is also suggested by experts that this time commitment and level of scrutiny has deepened physician dissatisfaction and burnout, with the majority of doctors in a 2014 survey expressing negative feelings about their profession and its future.

But despite physicians’ grumbling, new attempts to rate doctors are actually proliferating, as consumers’ interest in and engagement with this information grows. Millions of people are now rating their doctors online and media organizations, such as Consumers Checkbook, are using Medicare data and other data to probe physicians’ quality of care, and issue consumer-friendly report cards. Here too, though, methodology and results have stirred up controversy.

Financial Incentives

Into this contentious environment comes MACRA. It mandates financial incentives starting at 4 percent of Medicare reimbursement, as bonus or penalty, in 2019 and rising to 9 percent in 2022 for physicians who choose to enroll in what the Centers for Medicare and Medicaid Services (CMS) has dubbed the Merit-based Incentive Payment System, or MIPS. 

Doctors in MIPS must report performance measures to CMS. They’ll then be graded on four factors: quality-of-care (30 percent); resource use (30 percent); meaningful use of electronic health records (25 percent); and clinical practice improvement activities (15 percent). Quality-of-care metrics must include patient experience.

Alternatively, doctors can become part of an Alternative Payment System, such as an Accountable Care Organization.

Although the American Medical Association and other physician organizations helped design and generally support the new payment scheme, they disagree with many of the proposed details. These were aired in a plethora of comments to CMS in late 2015.


Basing payment on performance is one way to change physician behavior. Another way is to foster competition based on those same measures of performance and quality. That happens at the insurance plan and payer level but it can also happen at the consumer level. Doctors are already vying for network inclusion, for example, and group practices are being scrutinized by everyone. Indeed, it’s likely that under MACRA virtually every physician will be profiled based on their quality of care, resource use, patient experience, use of data and technology, etc.

Looking Ahead

First, physicians have a legitimate distaste that the burden of measurement today is excessive. It’s time to overhaul a dysfunctional measurement scheme and strive, where we can, to let doctors focus on being doctors. For too long, the lack of physician accountability let our health system function at low levels of performance and poor value.

Second, there’s reason to be optimistic: The science of measurement is improving, as is the art of public reporting. And, by all accounts, CMS is committed to creating a much better payment incentive system under MACRA, and to making Physician Compare a meaningful site.

Third, financial incentives work. By 2022 or so, the majority of doctors will either have 30 percent to 50 percent of their income tied to performance (with government plus private-sector payment initiatives) or be salaried in an integrated system. That’s perhaps the right direction.

Fourth, consumer choice in a robust marketplace must be part of the solution. It works in other areas of our economy; indeed, it’s the foundation of our economy. As consumers face rising premiums and higher out-of-pocket spending, they deserve no less than to be armed with clear comparative information on health plans, providers, treatment options, and costs.

Medicare Advantage Plan Audits

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Billing and Patient

Negligent, lax auditing has given overcharging encouragement to Medicare Part C advantage health insurance plans.

With the mounting evidence that federal officials have been overpaying some Medicare Part C advantage health insurance plans by tens of millions of dollars a year, the government revisited efforts to reclaim as much money as possible.

Records of the Centers for Medicare and Medicaid Services reveals that officials there as early as 2008 identified a group of privately run Medicare Part C Advantage health insurance plans they suspected of ripping off the government.

CMS officials chose to do only 30 in-depth financial audits to recover overpayments each year, even though the records make clear they could complete many more.

In February 2012, CMS announced it would do just that — which meant about 5 percent of the roughly 600 Medicare Advantage contracts in force would be audited in a year.

The agency expected to complete the first batch of the Medicare Advantage audits, which covered 2011 spending, and to “recoup overpayments” in early 2014, according to another document. But it has yet to do so. A spokesman said the Medicare agency “anticipates completing” the audits in 2016.

The CMS records were recently released to the Center for Public Integrity through a court order in a Freedom of Information Act lawsuit.

Since 2004, the government has paid the health plans using a risk score it calculates for each patient based on diseases reported by the health plans. Medicare expects to pay higher rates for sicker people and less for those in good health. But overspending tied to fast-rising risk scores has cost taxpayers billions of dollars in recent years, as the Center for Public Integrity reported in a series of articles published in 2014, leading to widespread suspicions that some risk scores are being purposefully inflated.

Many of the records released by CMS are heavily redacted, with dates and the names of their authors sometimes missing. More than 1,400 pages have been “withheld in their entirety” by CMS, including names of the health plans and how much they were overpaid.

 The government’s relaxed pace in chasing down overpayments — and the secrecy surrounding the audit results — brought a sharp rebuke from Senate Judiciary Committee Chairman Charles Grassley.

“The agencies are responsible for getting the payments right in the first place and pursuing full refunds of all over-payments for the taxpayers,” the Iowa Republican said in a statement.

“The agencies also have an obligation to be as transparent as possible in the public interest about a taxpayer-funded program,” Grassley added.

The CMS records make clear that Medicare Advantage overpayments have piled up mainly because the complex formula relying on risk scores that is used to pay the plans has few safeguards to discourage abuse. One memo describes it as an “honor system.”

A CMS spokesman didn’t directly address written questions posed by the Center for Public Integrity about the history of the audits. But the agency offered a statement that read in part: “CMS takes seriously program integrity and payment accuracy in Medicare Advantage, and is taking steps to protect taxpayers, Medicare beneficiaries, and the Medicare program.”

The CMS records include an earlier confidential audit of 2005 payments to 22 Medicare Advantage health plans; it showed that auditors couldn’t confirm that 31 percent of the patients had the diseases Medicare was paying plans to treat.

Some plans were much worse than others. The average error rate for 17 of the 22 plans was more than 10 percent above the norm, with some even higher. The confidential 2005 audit, conducted by consulting firm BearingPoint, projected 2005 losses at $4.2 billion from what it termed a “substantial overpayment” to Medicare Advantage plans.

The audits are called RADV, for Risk Adjustment Data Validation. Auditors review medical records of a sample of 201 patients to verify they have the diseases their health plan is being paid to treat.

CMS officials also appeared to have doubts about the legality of RADV because it lacked a formal appeals process. The health plans were not penalized until February 2012 — even though officials knew payment errors were wasting billions of tax dollars.

Audits for 2007, for instance, dragged on for more than five years before ending with a whimper. CMS had anticipated collecting from $500 million to $800 million from 37 health plans audited that year.

That never happened. Instead, CMS collected less than $14 million, and some health plans, including UnitedHealth Care, have spent years appealing to get at least some of that money recovered.

The Centers for Medicare and Medicaid Services, which is part of the Department of Health and Human Services, spends about $17 million a year conducting RADV audits and estimating payment errors. So far, these efforts have returned about $15 million to the agency.

By contrast, other medical fraud and abuse efforts are said to more than pay for themselves. HHS announced in March 2015 that fraud recovery efforts by the department returned $7.70 for every dollar spent.

CMS officials have said the threat of being audited, and a provision of the Affordable Care Act requiring prompt return of any excess payments, have led Medicare Advantage insurance plans to voluntarily send back more than $1 billion to the Treasury**, mostly since 2010.

The CMS spokesman said audits of 30 Medicare Advantage insurance company contracts and their spending from 2012 have begun and that plans were chosen based on how aggressively they report diagnosis codes to CMS for payment.

But Steve Ellis, vice president of the budget watchdog group Taxpayers for Common Sense, said it was troubling that the audits have not delivered better results. “You really have to enforce audits and act on them and not let the bad actors off the hook,” he said.

**Please note:  When millions of dollars are paid to settle a Medicare or Medicaid false claim allegation, where is the reclaimed money allocated? Some of the fines, mostly paid by health care companies, are rewarded to whistleblowers…close to $2.5 billion from 2009 to 2014. Another portion goes to the Crime Victims Fund and other funding goes to the Healthcare Fraud and Abuse Control Program.  So, what happens to the remaining Medicare fraud reclaimed tax dollars? Well, the remainder of recaptured fraud dollars is placed in the Department of Justice “slush fund” with a present balance of $9 billion. And, is used for what the department considers important matters such as terrorism. To reiterate, a large portion of the money is not returned to Medicare or Medicaid for replacement of illegal payments to fraudsters.





Private Medicare Plans and 2016 Doctor Directories

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Smiling DoctorStarting this year, the federal government will require health insurers to give millions of Americans enrolled in Medicare Advantage plans or in policies sold in the federally run health exchange up-to-date details about which doctors are in their plans and accepting new patients.

Medicare Advantage plans and most exchange plans restrict coverage to a network of doctors, hospitals and other health care providers that can change during the year. Networks can also vary among plans offered by the same insurer. So it’s not always easy to figure out who’s in and who’s out, and many consumers have complained that their health coverage doesn’t amount to much if they can’t find doctors who accept their insurance.

Under a rule published in April, 2015 by the Centers for Medicare & Medicaid Services, Medicare Advantage plans must contact doctors and other providers every three months and update their online directories in “real time.” Online directories for policies sold through healthcare.gov, the health law exchange run by the federal government in 37 states, must be updated monthly, CMS announced in a separate rule.

Inaccuracies in the Medicare Advantage directories may trigger penalties of up to $25,000 a day per beneficiary or bans on new enrollment and marketing. CMS will also use the directories to help determine whether insurers have enough doctors to meet beneficiaries’ needs.

The federal exchange insurer plans could face penalties of up to $100 per day per affected beneficiary for problems in their directories.

Studies have shown massive error rates in these directories, including states in the federal exchanges. If consumers select a health plan because they believe their hospital or physician is a participating provider and it later turns out that’s an error, they could be stuck with that plan for the year.

Regulators also rely on these provider directories to make assessments about network adequacy.  And when provider directories include physicians who have died, moved out of state, or aren’t accepting new patients, adequacy of the network is overstated.

The administration last year [2015] announced rules designed to make sure those networks have adequate numbers of providers. The newest rules will help guarantee that consumers get good information on those networks.

People in some states have had trouble finding doctors in their plans and others who were misled into thinking their providers were in network have been socked with huge out-of-network bills.

The new Medicare Advantage rules are a response to complaints from beneficiaries and doctors about “directories including providers who are no longer contracting with the [plan], have retired from practice, have moved locations, or are deceased,” CMS officials said in the notice to insurers. Some directories also list providers who are still in the plan’s network but not available to new patients.

About 16 million seniors have enrolled in the private Medicare Advantage [Part C] plans, which are an alternative to traditional Medicare.

Sometimes people start treatment with a doctor who doesn’t stay in the network for the  whole year or think they are they are picking a plan that covered a certain doctor and then discover it did not. Because most Medicare Advantage members are locked into their plans for the calendar year, they don’t often have good alternatives when their provider networks shrink.

It is critically important that people with Medicare have timely access to the information they need to make decisions about their care. Reflecting this priority, Medicare will be requiring health plans to ensure that their online directories are up-to-date and accurate as soon as their networks change.

Medicare Advantage insurers have mixed reactions to the new rules. Some are concerned about the increased cost of compliance. A spokesperson from one of the largest Medicare Advantage providers, said the company is still reviewing the rules.