By John Carruthers, assistant editor, June 02, 2014
After years of a slow rollout, implementation of the Affordable Care Act (ACA) kicked into high gear as the insurance exchange and Medicaid expansion provisions took effect for 2014 along with the individual mandate to have health insurance. With the year nearly half-over, dermatologists and health system experts say that the culture of health service delivery has begun to change noticeably. Dermatologists report that they are seeing new patients who, finally able to seek vital treatment, are also more aware of the importance of educating themselves and obtaining insurance coverage. Yet on the other side of the coin, network narrowing, high deductibles, and worries about future gatekeepers leave dermatologists convinced that there is much work to come before the system settles into a productive equilibrium.
One early effect of ACA implementation has been an increase in conversation about the health system and the importance of care delivery. The conversation about the ACA that has dominated many cable news programs has also been taking place in homes and doctor’s offices across the country.
Patients, according to Marlborough, Mass., dermatologist Louis Kuchnir, MD, have begun to become aware that they’re expected to be more active agents in securing coverage and managing their care. Dr. Kuchnir, who is also president of the Massachusetts Academy of Dermatology, said that patients have begun to realize that they need to be part of the care delivery discussion, a phenomenon he saw in his home state after then-Gov. Mitt Romney enacted state-wide mandatory coverage in 2006. While any potential culture change nationwide is still in its earliest stages, Dr. Kuchnir said that the first 18 months following the implementation of mandated coverage in his state “changed the way every day in the dermatology office worked.”
“Individuals felt a responsibility to be signed up for some sort of coverage, and young people began to recognize that they were supposed to go online and get themselves signed up — if they weren’t covered, it was their fault,” Dr. Kuchnir said. “Before, patients would occasionally blame others if they weren’t covered for a service or they weren’t able to pay. Now they’re more up-front with us about their level of coverage, and they’re more willing to volunteer that they are uninsured.”[pagebreak]
While getting formerly uninsured patients talking about insurance coverage was productive, getting them signed up through federal and state exchanges during the six-month enrollment period proved difficult for the Department of Health and Human Services (HHS). A series of technical difficulties with the federal exchange site (www.healthcare.gov) drew widespread media coverage and public ire, and some state exchanges also experienced problems. Nevertheless, the Centers for Medicare and Medicaid Services (CMS) reported that more than 8 million people had enrolled in private insurance coverage by mid-April (some people who had started enrollment before the March 31 deadline were allowed to complete the process by April 15). Another 5.9 million had obtained the required coverage through their state Medicaid and Children’s Health Insurance Programs, according to a March survey that the RAND Corporation released on April 8. The report estimated that a third of exchange enrollees were previously uninsured, as were most of those newly covered through Medicaid. The combination of enrollments in the various programs led Gallup to find that the nation’s uninsured rate had dropped to 13.4 percent in April, the lowest figure it had ever recorded. Those uninsured beyond the enrollment deadline will incur a tax penalty of either $95 or 1 percent of total taxable income.
Despite encouraging top-line data on the uninsured, Dr. Kuchnir said, it’s important to note that coverage remains uneven on a state-by-state basis. Some states, such as California and New York, achieved high sign-up rates while embracing all of the ACA’s elements. Others states, like Texas, saw governors or the legislature vehemently oppose the ACA; as a result they did not establish an exchange, encourage use of the federal exchange, or expand Medicaid. These choices made a big difference: overall, Gallup calculated in April, the uninsured rate dropped three times more in states that expanded Medicaid and launched a state exchange than it did in states that did only one or neither of those things.[pagebreak]
Narrowing insurance networks
The cost-saving steps being taken to expand insurance coverage have some specialists worried as the emphasis for insurers shifts from signing up the uninsured to reducing the cost of treating those patients. Dermatology can look like a target for cost savings to insurers and the government; the specialty’s vulnerability to such efforts led the AADA to communicate with members about dermatology being under siege in 2013 (see www.aad.org/members/practice-and-advocacy-resource-center/payment-and-reimbursement/payment-101/Dermatology-is-under-siege), including increased scrutiny of procedures billed with office visits; concerns about use of destruction codes, Mohs surgery, and dermatopathology; and reductions in payments for some services.
In 2014 dermatology has been targeted in another way. One of the ways the ACA’s architects achieved a positive Congressional Budget Office score for the law was to require CMS to bring per-beneficiary Medicare Advantage (MA) spending in line with that of traditional Medicare over time; at the time of the law’s passage, MedPAC showed MA plans spending 114 percent of traditional Medicare’s per-beneficiary amount. (MA plans, which are run by private insurers, offer beneficiaries their Part A and Part B coverage in place of traditional Medicare; most also offer prescription drug coverage. Unlike traditional Medicare beneficiaries who can see any Medicare provider, MA beneficiaries are required to stay within their MA plan’s network.)
The resulting financial pressure on MA plans has led to an unwelcome element of the ACA rollout: a significant number of dermatologists have been removed from MA insurance panels, and those MA plans offer provider network directories that list inaccurate rosters of dermatologists.
“Some plans delisted multitudes of dermatologists in Florida, Rhode Island, Connecticut, Ohio, and northern Kentucky, among others. They said we’re terminating you,’ and didn’t follow proper procedure, or in some cases notify patients in time,” said Brett Coldiron, MD, Academy president. To investigate the situation, the AADA called each dermatologist listed in five networks. The results were discouraging. “After calling around to all of these dermatologists, we found that up to a seven in 10 doctors in a given network were retired, deceased, duplicate listings, not seeing new patients, a resident, a subspecialist, and so forth,” Dr. Coldiron said. “It looks a lot like a smokescreen designed to make these smaller networks appear to be fully populated and viable.” The paperwork to join physician panels, the review found, is also outdated and inaccurate in an alarming number of cases.
As a result Dr. Coldiron and AADA staff traveled to Washington, D.C., to address the issue with Obama administration health policy advisor Christopher Dawe; he emphasized the lack of a clear administrative rationale or fair appeals process as a problem. Northwestern University dermatologist Murad Alam, MD, who chairs the Academy’s Health Care Finance Committee, said that the lack of transparency in the face of such sweeping physician removal is troubling.
“The plans are not being forthcoming or helpful about explaining the reasons a physician has been removed from a panel, or helpful in coming up with formal appeals processes,” Dr. Alam said. “Virtually everyone who does appeal gets denied. Is that an actual process?”[pagebreak]
Though payers often cloak these removals in the language of “more efficient networks” and “eliminating waste,” Peter Damiano, DDS, MPH, director of the University of Iowa Public Policy Center, said that network narrowing, even with the attendant lack of access, is aimed directly at lowering costs. For some plan administrators, he said, achieving financial savings is given the highest priority, at the expense of access.
“You lower costs by adding more controls, and even provider networks are beginning to think in terms of how many specialists they need for a certain population of people,” he said. “It’s a very different mindset than that of an independent three-person practice that is used to doing things its own way.”
The narrowing, Dr. Coldiron pointed out, is not limited to dermatologists. Cardiologists and nephrologists, he said, have also been removed from networks in large numbers. During the AADA review, it was found that the Fort Myers, Fla., metropolitan area, with a population of more than 618,000, had no remaining Medicare Advantage-listed nephrologists in the area after narrowing. The nearest specialist for dialysis patients was located over 50 miles away.
In his practice, Dr. Coldiron has already seen a negative impact on patients. A 90-year-old patient on dialysis with failed renal transplants was forced to drop his MA plan when Dr. Coldiron was dropped from the network. The patient, who also has a significant number of squamous cell carcinomas, had to go back to traditional Medicare in order to see a skin cancer specialist.
While the patient transitioned back into regular Medicare, he had to sign up for Medigap policy, Dr. Coldiron said. (While MA beneficiaries are not allowed to buy Medigap coverage, traditional Medicare beneficiaries often find such coverage vital.) But while Medigap policies cannot make patients wait for coverage to start, they can make patients pay more for coverage for pre-existing conditions, as well as refuse to cover out-of-pocket costs for these pre-existing conditions for up to six months as part of what is called a “pre-existing condition waiting period.” This led to higher costs for his patient, Dr. Coldiron said.
“The catch is that he has pre-existing conditions, so his gap coverage costs four times as much as someone who just comes fresh into Medicare,” Dr. Coldiron said. “It appears as if they’re de-selecting their most expensive patients and re-signing them up on a more profitable product in response to the ACA. I don’t think the White House anticipated this, and we certainly did not.”
In Connecticut, physicians were being removed from Medicare Advantage networks in such numbers that a lawsuit was filed by the Fairfield and Hartford county medical associations, and an injunction placed upon UnitedHealthcare to prevent further narrowing. The AADA filed an amicus curiae brief in the case with the Federal Court of Appeals for the Second Circuit, and issued a joint letter to CMS with the American Medical Association asking the organization to intervene. As that case and other legal actions maneuver through the court system, specialists will be paying very close attention.
The concern of many physicians, including Cordova, Tenn., dermatologist George Woodbury Jr., MD, is that in the future, exchange coverage products will undertake similar measures to lower costs to a point that makes them attractive to cost-conscious consumers. A Kaiser Family Foundation poll found that 37 percent of adults prefer cheaper plans, even with limited networks. Exchange products can cut costs between 5–7 percent by narrowing, according to a March 20 article in Bloomberg Businessweek.
“The effect of the reform depends a lot on the stability of the payer system, which is still very much in question,” Dr. Woodbury said. “If they decide that they have to cut more money out to compete for patients looking for affordable coverage, there’s a looming threat that this could threaten care access.”
As physicians, patients, and the media react to the narrowing of networks, CMS has promised to enact network adequacy standards before 2015. This may include collecting and verifying provider lists, identifying networks that cause delays in receiving care, and ensuring that provider lists are open to the public to aid with patient choice while shopping for a plan.[pagebreak]
The rise of ACOs
As medicine in general becomes more cost-conscious, emphasis on shared cost savings and accountable care organizations (ACOs) will increasingly drive the marketplace, according to Dr. Damiano.
“The ACO model has already caused a big change in the delivery system and has created a hyper-competitive market in certain areas where health systems are expanding rapidly in size and purchasing practices, hospitals, and even home health agencies to try to get as many attributed patients as they can into their systems,” Dr. Damiano said. (ACOs are “attributed” patients based on where a patient receives the plurality of his or her primary care during a year; their results are determined retrospectively based on spending and outcomes for those patients.) “For dermatologists, the big issue will be how to align with the delivery system component of an ACO. Do they contract? Are they employees of it? How can they be part of new payment arrangements? Do they put themselves at risk with these contracts?”
As the system moves from fee-for-service to more value-based payment incentives, Dr. Damiano said, the whole idea of patient management moves to improving quality and reducing costs by keeping people healthy and largely out of the office. “The incentive is to do less and improve quality,” Dr. Damiano said, saying that “the quality side is where many dermatology practices could come in and prove value to ACOs by offering better performance on quality measures and more effective treatment in fewer visits.”
While larger insurance networks have already shown an interest in limiting dermatologic access, some physicians worry that the rise of ACOs will also have an adverse effect on small- and medium-sized practices’ access to patients or the ability of patients to visit the dermatologist of their choice.
“Will this create a tension between the financial motivation of the ACO and the higher cost of specialty services? The worry in a cost-driven partnership is that the primary care physicians and administrators will view dermatology as a cost center,” Dr. Alam said. “We’re worried a great deal about the gatekeeping potential of ACOs.
The referral relationships that dermatologists presently enjoy are likely to be in jeopardy in regions with growing ACOs, according to Dr. Kuchnir.
“It used to be that a doctor didn’t have to refer to a dermatologist whose financial interest aligned with yours, and that referring them to whomever was best for the physician’s employer was seen as both unethical and illegal,” Dr. Kuchnir said. “But the logic now says that the only way to provide high-quality, efficient care is to have common groups working together. The law’s changed, and people believe now that it’s not really unethical. The feeling is, we’re all in this together in competition with this other ACO.’ As a private practice, we’re finding that we have to make sure that we participate as full citizens in the ACOs responsible for providing care to our patients.”
For dermatology practices, Dr. Kuchnir said, it’s important to reach out to ACOs and ascertain the role of specialists in each organization. “As dermatologists, we need to be able to demonstrate to ACOs that we provide good value for our best patients, or as they might see it, customers. A big part of that is quality of care,” Dr. Kuchnir said. “Dermatologists are set up to survive in the ACO system through demonstrating this, but it may mean that we provide fewer $60-copay exams and more high-value dermatologic care to patients who need our expertise. A lot of common care may be provided in these systems by primary care doctors.”[pagebreak]
High deductibles as gatekeepers
The increasing number of high-deductible plans offered through exchanges has also served as a de-facto gatekeeping measure, according to Dr. Woodbury, who has hosted public events to address patients about the specifics of how they’ll be impacted by ACA-related measures. Newly insured patients, despite opting for these plans, may be surprised to find out that they are responsible for the cost of their care.
“The lowest deductibles on many of the plans available through exchanges can still be in the area of $3,000 $5,000,” Dr. Woodbury said. “That level of expense is a big burden to patients, and those deductibles can prevent even our patients with insurance from getting the care that they need.”
The emphasis on Medicaid expansion and insurance exchanges, Dr. Woodbury said, means that dermatologists and their office managers must be keenly aware of the cost of treatment and the specific provisions of a larger array of plans.
“Even the employees of some of the plans that our office is dealing with don’t always have the right information for you,” Dr. Woodbury said. “We’ve had a clerk tell us that there’s not an applicable deductible for a patient when there actually is, so we’re spending a lot more time on making sure we’re keeping up to date on patient coverage and plan specifics.”
In time, while the results of these vigorously debated measures play themselves out in the health system, some dermatologists hope that the rocky beginnings of the ACA will give way to a system that achieves the stated end goal of better treatment for existing patients and quality care for the previously uninsured. Bentonville, Ark., dermatologist Missy Clifton, MD, said that the larger pool of insured patients, while not immediately apparent in her daily practice, has rendered a positive effect in her public skin cancer screenings.
“At a recent screening, there were two patients in particular that we didn’t think would have come to the screening prior to the ACA because they didn’t have insurance, and knew they couldn’t have afforded treatment,” Dr. Clifton said. “They said that they knew that they had something on their skin one of them ended up having three melanomas but they put it off for years because of those worries. Over time, I hope we’ll see more of those patients and be able to provide the service they’ve clearly needed.”
IPAB: A task for the next president?
In originally opposing the ACA legislation, the American Academy of Dermatology Association expressed concern in particular about the creation of the Independent Payment Advisory Board (IPAB). The 15-member panel of officials is to be tasked with achieving Medicare savings without a deleterious effect to either coverage or quality. But recommendations are unlikely to be required until at least the next administration due to slower-than-anticipated health care spending growth – which could explain why President Obama has not appointed any members.
How does IPAB work?
Beginning in 2013, the ACA required CMS actuaries to monitor Medicare spending to determine if a targeted per-capita growth rate has been exceeded. By April 30 of each year, those actuaries must project whether Medicare’s per-capita spending growth rate in the forthcoming two years will exceed a targeted rate set by CMS. The baseline initial targeted rate is based on the projected five-year average percentage increase in the urban Consumer Price Index and the Consumer Price Index for urban consumers of medical care; beginning in 2019, the target will be set at the gross domestic product per capita plus 1 percent. If Medicare spending is projected above the targeted rate, IPAB will be required to propose recommendations to decrease spending.
Why haven’t there been recommendations yet?
CMS recently projected the five-year growth in Medicare spending from 2011 to 2015 at 1.15 percent. The five-year average growth rate would have had to be projected at 3.03 percent to trigger recommendations. Because the figure is a five-year average, an unprecedented one-year increase in Medicare spending would be needed this year to trigger IPAB before the end of the Obama administration.
Why is IPAB so troubling to dermatology?
The concern among dermatologists and other physician groups stems from the fact that no active physicians would be appointed to the panel. While the IPAB membership qualifications call for health providers, they also include a requirement that members not be engaged in “any other business, vocation, or employment.” This led to worries that accountants, actuaries, administrators, and other appointees not well-versed in medicine would constitute a majority of the panel. Further, the panel’s decisions would be binding barring a supermajority vote in Congress.
“We’re concerned that the IPAB does not really provide a good system for resource allocation. The RUC-CPT process is time tested, and is a rational way of allocating scarce resources by experts in the actual medical field to ensure that they’re best distributed among patients who need them. We believe it’s not in the interest of patients or the house of medicine to appoint people who do not have understanding of the complexities of medical issues,” Murad Alam, MD, chair of the Academy’s Health Care Finance Committee, said.
“While the current way of determining reimbursement is stressful, giving things up to unaccountable appointed officials is a much worse system,” Academy President Brett Coldiron, MD, added. “Unfortunately, the latest SGR patch does just that by targeting overvalued’ services to be reduced at will by CMS by any sort of data.”
Who is supposed to be on IPAB?
In appointing the IPAB, the President is expected to appoint three members, and to consult with the Senate majority and minority leaders concerning three appointments each, as well as the Speaker of the House and House minority leader for an additional three each a total of 15 appointments. The Secretary of Health and Human Services, the administrator of CMS, and the administrator of the Health Resources and Services Administration would also be automatically appointed as non-voting members.
The IPAB has not been funded, nor have any appointments been made. Legislation to repeal it has attracted bipartisan support, including seven Democrats who voted for a repeal bill that passed the House in 2012; a bill in the current Congress has attracted two Democratic co-sponsors, both running in tight re-election bids. In 2013, both Speaker of the House John Boehner and Senate Minority Leader Mitch McConnell declined to make any recommendations for appointments to the IPAB. The President has not made any appointments.
What happens if no one is ever appointed to IPAB?
If Medicare spending growth triggers IPAB but no members have been approved, the Secretary of Health and Human Services will assume the IPAB’s powers and responsibility to propose cost-cutting measures annually.
While, according to the CBO, the economic conditions necessary to trigger implementation will not be reached by the early 2020s, “that still doesn’t detract from the concern that the system doesn’t take into account patient needs,” Dr. Alam said. And in a scenario where the HHS Secretary takes on IPAB’s duties, he said, “the possible outcomes would be uncertain and possibly even more subject to political considerations since there would be a single primary decision-maker.”
Online-only: Payment adjustments in 2014 and beyond
In addition to adapting to the effects of health care reform on their patient load and referral relationships, dermatologists face the threat of payment adjustments from Medicare that could reduce their reimbursement from the program by at least 7 percent by the end of the decade if they do not successfully report quality measures and use electronic health records.
One provision of the ACA yet to fully kick in is the value-based modifier (VBM), which currently applies to Medicare payments for all physicians in groups of over 100 eligible professionals (EPs) who submit claims under a single tax identification number. The value-based modifier will be applied to EPs in these groups beginning Jan. 1, 2015 on the basis of 2013 Physician Quality Reporting System (PQRS) reporting. Physicians in groups of more than 100 EPs that elected to not participate will receive a 1 percent deduction.
For physicians in smaller groups or solo practice, the application of the modifier is still a few years away. All physicians participating in fee-for-service Medicare will be affected by the value-based modifier by 2017, according to CMS, though it has not yet announced the amount of a potential downward payment adjustment. For more information on the value-based modifier, go to www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/ValueBasedPaymentModifier.html.
In addition to the VBM, EPs in practices of any size who did not report data on quality measures during the 2013 program year will be subject to a 1.5 percent negative payment adjustment to their Medicare reimbursement under PQRS in 2015. In 2016, those who did not participate in PQRS in 2014 will be subject to a 2 percent adjustment.
Those who do not attest to meaningful use of en electronic health record (EHR) will face further financial penalties. While physicians who begin meaningful use participation in 2014 can still earn as much as $24,000 in incentives by attesting in 2014 through 2016, those who have not started using an EHR are being penalized. All providers who began meaningful use prior to 2014 must demonstrate meaningful use for a 90-day quarter period (i.e., beginning Jan. 1, April 1, July 1 or Oct. 1) during 2014 to avoid a 2 percent penalty in 2016; if these EPs did not demonstrate meaningful use in 2013, they will also be subject to a 1 percent payment adjustment in 2015. EPs who chose to begin meaningful use in 2013 must report by Oct. 1, 2014 to avoid a 1 percent payment adjustment beginning Jan. 1, 2015. The adjustment will continue to rise 1 percent per year through 2019, when it will potentially reach 5 percent for those who have never demonstrated meaningful use; meaningful use must be demonstrated each year to avoid subsequent payment adjustments.