Fee-for-service lives on — but for how long?
Bookmark and Share

If Mark Twain were a dermatologist living in this century he would say that the rumors of the death of fee-for-service (FFS) have been greatly exaggerated.

It’s true that the FFS payment system is being slowly phased out, but it’s unlikely that it will be replaced entirely this year, next year, or even the year after that. Even as alternative payment models, including value-based payment, accountable care, and bundled payments, continue to be rolled out, FFS will likely play a role, albeit an increasingly smaller one, in physician reimbursement for the near future. This is especially true for specialists, including dermatologists, who remain — for now — on the periphery of the shift in payment mechanisms away from payment based on volume and toward payment based on results.

Reimbursement in 2014

“All payers want to move beyond FFS, but nobody has figured out how to do so in a common-sense and easy-to-implement manner,” said Brent Moody, MD, who serves on the American Academy of Dermatology’s Workgroup on Innovations in Payment and Delivery. Consequently, FFS will remain the dominant payment model for dermatologists in 2014 and until more substantial health care reform takes place, he said.

One of the reasons that FFS will remain intact for a while is that it is the basis for pay-for-performance payment models used by both public and private payers. That includes the Physician Quality Reporting System (PQRS) and the Medicare Shared Savings Program (MSSP) as well as the nearly 500 accountable care organizations (ACOs) that have been established across the country since passage of the Affordable Care Act (ACA). However, as participation in these value-based programs moves from voluntary to mandatory, dermatologists will find it increasingly difficult to continue to be paid solely under the traditional FFS system, Dr. Moody cautioned. [pagebreak]

Dermatologists who plan to be practicing for at least the next five years will need to participate in such pay-for-performance payment models, he said. For most dermatologists, opting out of Medicare and insurance plans altogether and maintaining a cash-based practice is not a viable option, Dr. Moody said, because the size of the “cash only” market is unknown and likely would not support more than a few dermatologists in any given market.

Oliver J. Wisco, DO, dermatology clinic chief at Keesler Medical Center in Mississippi, who serves on the Academy’s Workgroup on Innovations in Payment and Delivery and is chair of its Performance Measurement Task Force, concurs. “Fee-for-service won’t go away, but how much you’ll get paid in the future will depend on how you’re performing on the outcomes-based measures that the different organizations will be collecting,” he said. Whether that compensation will come in the form of salary or a year-end bonus as part of shared savings remains to be seen.

Public payers call for accountability

Fueled by more ACA provisions taking effect this year, the Centers for Medicare and Medicaid Services (CMS) and Congress are continuing down the path of holding physicians accountable for both cost and quality, Dr. Moody said.

For example, the value-based payment modifier (VBPM) is CMS’s attempt to establish a budget-neutral payment system that will be used to adjust physician fee schedule payments based on the quality and cost of care physicians deliver. The VBPM is expected to be phased in over a two-year period beginning in 2015. It’s confusing because CMS is trying to create measures based on billing codes combined with performance measures and then develop a formula for how much pay or what percentage of shared savings a physician will receive, Dr. Wisco said. “It’s very unclear as to how CMS is going to do this,” he added. Dermatologists won’t be affected by the VBPM next year unless they belong to a large hospital group that reports on non-dermatology measures using the group reporting option. Eventually, though, the VBPM will be stratified into the different specialties, Dr. Wisco explained. [pagebreak]

Then there is CMS’s Bundled Payments for Care Improvement initiative, which is unlikely to impact dermatology in the immediate future but could have ramifications down the line. Each of its four models involves organizations entering into payment arrangements that include financial and performance accountability for episodes of care. “Unlike PQRS, VBPM, and MSSP ACOs, this initiative really does aim to move beyond FFS,” Dr. Moody said. There are 48 episodes of care from which participants can choose along with relevant diagnosis-related groups, but none of those episodes really apply to dermatology, he noted.

Private payers embrace ACO models

On the commercial side, private payers are embracing ACOs and other value-based payment models. Aetna has 32 accountable care agreements across the country; it expects to have 60 agreements by the end of 2014. Aetna also has 112 Medicare Advantage Provider Collaborations, 41 single-payer commercial patient-centered medical homes (PCMHs), eight multi-payer PCMHs, and 63 Medicaid PCMH agreements. Approximately 15 percent of Aetna’s medical spending is paid through some form of value-based contract, and its goal is to increase that to more than 45 percent by 2017, according to a company spokesperson. Humana has more than 900 accountable care relationships with 30,000 providers and one million Medicare Advantage members across 40 states and Puerto Rico. It has 600,000 additional members participating in initial value-based arrangements. UnitedHealthcare has 15 ACOs with additional ones being launched in several states in 2014. UnitedHealthcare is working to significantly expand the use of accountable care contracts across its commercial, Medicare, and Medicaid businesses, according to a company spokesperson.

The appeal of ACOs in the private sector is that there is more leeway in how they can be designed, Dr. Moody explained. For example, private payers can offer benefits that encourage plan members to use network providers, affording them more direct control over costs; this is not permitted in Medicare ACOs. [pagebreak]

Akin to Medicare’s Pioneer ACO contracts, Blue Cross, Blue Shield of Massachusetts (BCBSMA) has reached year five of its Alternative Quality Contract (AQC). In 2012, BCBSMA reported that payments for the care of more than 44 percent of its membership and 49 percent of its payments were made under global budget/payment arrangements. Being touted as a national model for payment reform, this contract model combines a per-patient global budget with significant performance incentives based on nationally endorsed measures of quality, effectiveness, and patient experience. The initial global budget is based on historical health care cost expenditure levels adjusted annually for inflation and patient health status. Providers can earn an additional 10 percent of their payment as part of performance incentives based on quality and safety metrics. Some AQC contracts are solely with physician groups, including specialists, while others are with delivery systems that include both physicians and hospitals.

The goal of the AQC is to reduce the medical expense trend of participating organizations by half over a five-year contract term. In a study published in Health Affairs in July 2012, AQC groups spent 3.3 percent less than FFS groups in the second year of the contract. In addition, AQC groups showed improvements in the quality of chronic care management, adult preventive care, and pediatric care. While 11 AQC groups participated in the study, the program has grown; there are currently 16 groups involved in AQCs.

Despite the growth of ACOs in both the public and private sectors, the vast majority of dermatologists involved in them are those practicing in university-based practices or large multi-specialty groups, noted Carl Johnson, MD, chair of the AAD’s Private Sector Advocacy Task Force and a member of its Health Care Finance Committee. If the ACOs prove to be a viable payment model in the long run, then they will need dermatologists to flesh out their panels, he said. [pagebreak]

Moving toward outcomes

While value-based payment systems currently determine quality largely using process measures (see www.aad.org/dw/monthly/2014/january/are-you-a-good-neighbor) they are expected to move to outcomes measures. This shift requires replacing administrative claims-based data collected largely from electronic health records (EHRs) with more robust clinical data, such as those derived from more advanced EHRs and clinical data registries, Dr. Moody said. It is now widely recognized that claims-based data are the easiest to collect, but they do not necessarily capture the complete picture of clinical care.

Later this year, the AAD expects to release two measure sets that will both include outcomes measures. The psoriasis measure set includes one outcomes-based measure and the non-melanoma skin cancer measure set has several outcomes-based measures, Dr. Wisco noted. These specialty-specific measures are in addition to the measures related to melanoma and biopsy follow-up that are already in the PQRS; the number of measures applicable to dermatology, which has been plagued with a dearth of measures, is slowly growing.

Dermatologists who would like to earn a 0.5 percent bonus from Medicare this year through PQRS must report on nine measures (one of which must be outcomes-based) that cover at least three National Quality Strategy domains. The domains associated with the measures are patient safety, person and caregiver-centered experience and outcomes, communication and care coordination, effective clinical care, community/population health, and efficiency and cost reduction.

This means that not all of the PQRS measures many dermatologists report will be dermatology-specific, Dr. Wisco said — and this affords dermatologists the opportunity to position themselves as an integral member of the physician team. For example, dermatologists need to demonstrate that they are providing coordinated care; some of the measures in the Academy’s registry product, including 138, melanoma coordination of care, and 265, biopsy follow-up, reflect a desire in the health care system to see more care coordination between specialists and primary care providers. “If you see a patient, you need to send a note back to the referring physician,” he said. “That seems basic, but not everyone does it.” An EHR system can help, but only if it is connected to the referring physician’s network. [pagebreak]

Dermatologists can also do medication reconciliation, inform the patient about smoking cessation, and take his or her blood pressure to achieve a PQRS bonus. “These are easy to do and shouldn’t be overlooked,” he said. Moreover, they are quality metrics that are coming out in the PQRS and will eventually be monitored. “These tasks are part of basic prevention and they’re what we should be doing to show that we’re putting in an extra effort,” Dr. Wisco added.

In addition, in the future dermatologists will be able to choose a clinical data registry option for reporting measures on the PQRS. CMS is expected to release a list of approved registry entities, such as a certification board or collaborative, on its website this fall. The PQRS registry option may empower organizations to develop their own quality improvement programs, Dr. Wisco said. “They can incorporate everything from Maintenance of Certification to quality reporting to insurance reporting requirements. Large organizations will be able to create measures that are relevant to their systems and show how their physicians perform well and how everyone can achieve at a certain level.” Although it’s still unclear how this option, which is currently voluntary, will be rolled out, Dr. Wisco believes that it is a significant step in the right direction. “This option shows a newer innovative way of thinking that is going to open a lot more doors.”

Choosing a payment model

In the meantime, choosing which performance-based payment model to join can be challenging. “The administrative burden of participating in multiple models and understanding all of their nuances and overlapping requirements can be a serious problem and barrier to physician participation,” Dr. Moody said. To minimize physician reluctance to participate in these new models, CMS will need to partner with medical societies to provide more educational and technical assistance for physicians. Additionally, CMS and maybe even Congress will need to revisit the rules governing these new payment models to ensure that they do not have duplicative reporting requirements, and that they do rely on valid and reliable metrics and methodologies, and offer more flexibility overall, he said, making them relevant and meaningful to a range of physician practice types and patient populations. Dr. Moody points out that many questions still remain about the intent of the law regarding whether specialists are required to have an exclusive contract with one ACO or can join more than one. These questions could result in access issues and other unintended consequences, he added. Dr. Moody expects the AAD will play a large role in member education, as well. (Indeed, the AAD has a variety of resources available for members grappling with questions about ACOs.) [pagebreak]

Despite FFS being around for the near future, dermatologists would be wise to evaluate the different value-based programs being offered by the various health plans in their respective markets to determine which best suits their practice style and limit the practice to those arrangements, Dr. Moody said.

Look at hospital systems and how they are tied into these payment mechanisms, Dr. Wisco advised. “Joining a well-run organization that offers shared savings could be beneficial.” But he cautioned not to be the first person to join a new payment model. “Keep an eye on how the rest of the specialists are participating. Dermatologists are still on the periphery,” Dr. Wisco concluded. “We need to watch and see how all of this unfolds.” 



Key definitions
Additional payment issues affecting dermatologists
NCQA program recognizes specialty practices