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July 27, 2018

One patient has a head cold. The other has Stage 4 breast cancer. Should doctors be paid the same for both visits?

Daily Briefing

    Read Advisory Board's take: What does this mean for reimbursement, documentation and treating complex patients?

    CMS earlier this month proposed significantly overhauling the way Medicare reimburses doctors for office visits—but some providers say the changes could lower payments for those who treat more complex medical conditions, Robert Pear reports for the New York Times.


    Under the current system, which has been in place since 1995, CMS uses five levels to determine physician reimbursement. Level 1, the Pear reports, is primarily used for nonphysician services, such as a brief visit with a nurse to check blood pressure. Levels 2 to 5 are used to determine reimbursements for in-office services provided by the doctor, with Level 5 representing the most complex visits and requiring the most documentation. For example, a physician could bill through Level 5 for a thorough, hour-long evaluation of a patient with chronic obstructive pulmonary disease, heart failure, high blood pressure, and uncontrolled diabetes.

    According to the Times, Medicare payment rates for new patients currently range from $76 for a Level 2 office visit to $211 for a Level 5 visit, while payment rates for established patients range from $45 to $148.

    CMS in the latest Medicare Physician Fee Schedule rule proposed replacing Levels 2 to 5 with a single level and a single payment rate of about $135 for new patients and $93 for established patients.

    CMS CMO Kate Goodrich said, "The differences between Levels 2 to 5 are often really difficult to discern and time-consuming to document." CMS estimated that the change would save each doctors about 51 hours of clinic time per year.

    The proposal would not reduce Medicare's spending on doctor office visits, which the Times reports totals about $70 billion per year, but instead would redistribute the money among doctors. CMS is accepting public comment on the proposal until Sept. 10.

    Providers voice concerns

    But some providers say the changes could significantly reduce payments for doctors who treat patients with the most complex medical needs, such as rheumatologists and oncologists, and could discourage some physicians from treating Medicare beneficiaries.

    Ted Okon, the executive director of the Community Oncology Alliance, an advocacy group for cancer doctors and patients, said it's "simply crazy" that under the proposal Medicare would pay the same rate for evaluating a patient for a head cold as it would for a patient with complicated Stage 4 metastatic breast cancer.

    Angus Worthing, a rheumatologist, said while he understands CMS is trying to alleviate physicians' documentation burden, he's is concerned the "proposal is setting up a potential disaster." He said, "Doctors will be less likely to see Medicare patients and to go into our specialty. Patients with arthritis and osteoporosis may have to wait longer to see the right specialists."

    Atul Grover, executive vice president of the Association of American Medical Colleges, said, "The single payment rate may not reflect the resources needed to treat patients we see at academic medical centers—the most vulnerable patients, those who have complex medical needs."

    Pear reports that Medicare officials acknowledged that physicians who typically bill at Levels 4 or 5 could see lower payments. But they said those losses could be partially offset by "add-on payments." According to the Times, the proposed rule contains a table that suggests OB-GYNs could see the biggest payment gains, while dermatologists, podiatrists, and rheumatologists would see the biggest losses.

    Some providers also have raised concerns that the proposed changes could increase the risk of inaccurate or fraudulent payments because doctors would submit less information to document the services provided.

    But others say it would be a positive step if the proposed changes do reduce the amount of paperwork. David Glasser, an assistant professor of ophthalmology at the Johns Hopkins University School of Medicine, said, "We sometimes joke that it can be more complicated trying to get the coding level right than it is to figure out what's wrong with the patient" (Pear, New York Times, 7/22).

    Advisory Board's take

    How would you expect these changes to impact practices' reimbursements?

    Hamza Hasan, Practice Manager, Medical Group Strategy Council

    I'd expect a mixed picture. If a physician tends to see a larger portion of healthier patients, this change will be positive for their overall reimbursement. Those with sicker patients may not benefit or may even see a small cut in reimbursement.

    In general, I suspect this will be a net benefit to primary care providers, who tend to see a greater variety of patients, but will have mixed results for specialists, who tend to see higher-acuity patients.

    What about the rule's impact on physician documentation?

    That's where the proposal has clearer benefits. Many physicians complain (and understandably so) that a tremendous amount of their time is spent on documentation. A recent study in the Annals of Internal Medicine found that the average physician spent just 27% of their time with patients and the remaining 73% on supporting administrative tasks.

    This proposal could help. By shifting Medicare coding to a single visit type, it should reduce administrative burden. That, in turn, should help address physician burnout.

    But medical groups shouldn't wait on these changes to address the root causes of burnout. We recently researched ways to mitigate the administrative burden of physician practice—particularly by streamlining EMR use—and found that simple changes can have a big impact. To see what we learned, read the medical group leader's EMR optimization playbook.

    Get the Playbook

    What will this mean for providers treating complex patients?

    Tomi Ogundimu, Practice Manager, Population Health Advisor, and Petra Esseling, Consultant, Population Health Advisor

    We'd expect these changes to increase the importance of chronic care management (CCM) and other fee-for-value codes. If physicians receive the same flat reimbursement for complex patients, the only way they can afford to care for more complicated patients is to look for additional revenue streams, and these supplemental codes are a clear first step.

    We'd also assume that this change will push providers operating in value-based environments to take on full risk, while simultaneously discouraging providers operating in fee-for-service environments from taking on complex patients. In these fee-for-service environments, younger, more consumer-minded patients will be even more desired and elderly patients even less so.

    Finally, we'd expect that this change will further primary care transformation and  team-based care approaches. It will be important to ensure physicians can work at top-of-license and see more patients, while ensuring complex patients’ needs continue to be addressed holistically. Since physicians won't be able to provide as much support for more complex patients, care management staff will likely have to step in to make sure patients receive the support they need.

    Practices with a high number of high-risk, high-cost patients will have to carefully plan how to ensure effective care coordination. We suggest reading our report on advancing a super-utilizer program to get tactics for how to do so.

    Read the Report

    What impact will new telehealth regulations have on high-risk patients?

    While the new regulations will allow for more virtual options for chronic disease management, a lack of phone support will limit the overall efficacy of these changes. The proposed rule adds reimbursable codes for virtual check-ins, but those check-ins must be video visits or visits supported by photos. However, few Medicare-age patients are open to visiting with their doctor virtually (as you can see in our infographic on consumer preferences by age), and those who are open to it would rather connect via phone or email. Patients over the age of 65 consistently rank video appointments as their least-preferred type of virtual visit.

    Furthermore, our research has found that the most effective and cost-efficient chronic disease management programs rely on telephone consultations. Not allowing phone-based consults in this proposed rule means missing an opportunity to scale chronic disease coaching under value-based care principles.

    Even so, providers can still incorporate video into their practices relatively easily. To learn more about how you can use telehealth for chronic disease management, view our primer.

    View the Primer

    Learn more about the MPFS 2019 proposed rule and how Medicare wants to pay providers next year

    Join Advisory Board experts on August 29 at 3 pm ET to learn about the 2019 Medicare Physician Fee Schedule proposed rule—including major changes to Medicare's approach to telehealth, a new bundled payment model for treating opioid-use disorders, reimbursement cuts for some prescription drugs, and more.

    Register Now

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