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I Knew It!

February 18, 2014

Most of you don’t know this, but I have been invited to write for the blog Wright on Health, started by Brad Wright at the University of Iowa.  It’s a health policy site mainly, so I’ve been trying to speak intelligently about health policy, at least to Brad.  A few weeks ago I wrote a piece for him about the “doc fix”.  Here’s what I said:

Let’s talk about the Doc Fix.  No it doesn’t mean that surgeons will get any less cranky or that your urologist will improve his bedside manner.  What I am talking about in this case is the Sustainable Growth Rate formula. You see, the Center for Medicaid and Medicare Services, or CMS, has to figure out every year how much it’s going to pay for things. The SGR is supposed to ensure that as fees for everything in healthcare go up, the rate of increase does not outpace the growth of GDP. In a complicated middle-man maneuver, CMS sends a report to the Medicare Payment Advisory Commission, which in turn advises Congress on how much medicare spent last year and how much it’s targeted to spend next year.  There is a conversion factor that adjust payments based on how much over or under the target cost was the previous year.  The SGR is that conversion factor, and believe me unless you have the beautiful mind of John Nash you don’t want to know how it’s calculated.  The SGR was formulated in 1997 and, put simply, is a way to control costs.

So the SGR is a formula to control medicare costs.  OK.  So what’s the problem?  The problem is that as healthcare spending has outpaced GDP, every year since 2002 physician reimbursement has gone down.  The SGR demands it, because every year cost is over the target.  And every year Congress, under the heavy lobbying of the AMA, passes short-term overrides to prevent these cuts.  And why is THIS a problem, since everything Congress does these days is emergency short-term fixes?  Money. The gap between what the SGR says we should pay for medicare and what it actually costs is about $300 billion.  The gap will get bigger and bigger.

You can read the rest at  If you do, you will find that I predicted that the alternative to the SGR would have something to do with physician performance measures.  Medscape Medical News, an industry news feed, has just informed me that I was right.  Unfortunately.  A new hammer has been proposed with which to bludgeon us called the Merit-Based Incentive Payment System (MIPS).  It’s not really new, it’s just three smaller hammers put together: Meaningful Use, Physician Quality Reporting System, and the Value-Based Payment Modifier.  Yeah, those all exist.  You didn’t know?

Here’s how Robert Lowes, the author of the Medscape article, explains MIPS:

“The proposed MIPS program would assess physicians in 4 categories: the quality of their care, EHR meaningful use, use of healthcare resources (eg, ordering too many tests), and activities undertaken to improve clinical practice. Physicians would receive a score of 0 to 100, according to their performance in each of the 4 categories.  Medicare would compare a physician’s composite core with a performance threshold that would be either the mean or the median of the scores for all clinicians subject to MIPS. In a zero-sum game, clinicians who score above this threshold would receive bonuses funded by the penalties imposed on physicians who fall below the threshold. Bonuses would max out at 3 times the penalties, which are capped at 4% in 2018, 5% in 2019, 7% in 2020, and 9% in 2021. The law would award an additional $500 million per year from 2018 through 2023 to exceptional performers.”

I feel like a figure skater.  Ooh!  I hope I can be an “exceptional performer!”   I really want to get bonuses funded by penalties lowered upon my colleague next door for failure to ask enough people if they smoke or for failing to prove that they use their computer meaningfully.

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