Premier Inc.’s Blair Childs on the Coming Revolution in Physician Payment Incentives

March 27, 2015
One day after the U.S. House of Representatives passed legislation that would overhaul physician reimbursement under Medicare, Premier’s Blair Childs spoke with HCI Editor-in-Chief Mark Hagland about the dramatic changes ahead in physician payment

Blair Childs, senior vice president for public affairs at the Charlotte-based Premier Inc., a nationwide alliance of hospitals, physician groups, and other providers, spoke with HCI Editor-in-Chief Mark Hagland on Friday, March 27, one day after the U.S. House of Representatives passed legislation to repeal the sustainable growth rate (SGR) formula  for physician payment under the Medicare program. The SGR repeal legislation, which contains a broad set of provisions creating something to be called the Merit-Based Incentive Payment System, or MIPS. The MIPS would consolidate value-based payment for physicians under Medicare that currently fall in several areas, including the Physician Quality Reporting System (PQRS) program, the Value-Based Payment Modifier under the Affordable Care Act (ACA), and the meaningful use program under the HITECH (Health Information technology for Economic and Clinical Health) Act.

Despite the challenge of a looming month’s-end deadline for the legislation of yet another so-called “SGR patch” by the end of this month, some sources are saying that the U.S. Senate will wait until mid-April to reconvene and vote on the SGR repeal legislation that has just passed the House. Childs is one of these; he is predicting that the Senate will take up the legislation in mid-April when Congress comes back into session.

Childs addressed broad issues around physician incentives going forward in healthcare, and also, briefly, the proposed rule for Stage 3 of meaningful use, in his interview Friday. Below are excerpts from that interview.

To begin with, what do you believe are the prospects for the passage through the Senate of the SGR repeal legislation?

The Senate will pass the SGR repeal after the recess. Right now, they’re scheduled to be out on recess until April 14; in fact, they may even take it up on April 13. [Senate Majority Leader Mitch] McConnell is saying that this is the first order of business. I believe it will pass. The margin in the House was so overwhelming, and the Democrats who first opposed it are now cornered, because the President said he would sign it. So it will pass.

Blair Childs

What are your perspectives on the implications of passage of the legislation, for physician reimbursement going forward? Would you agree that the adoption of the MIPS proposal could be revolutionary for physician payment? And how do you see the connection with the meaningful use process?

There are a  couple of things to address. First off, what’s unfolding today will continue to unfold, which is that meaningful use—all that does not go away. But there’s  the combination of incentives that physicians are having to address—the value modifier, the PRQS, meaningful use—physicians are still increasingly at risk for payment penalties, and it will gradually move down to the individual physician level over the next few years. But the MIPS program will harmonize things—there will be different domains within the MIPS, it will be easier to understand, and the evolution of the measures will be more like it’s been in hospitals, a move away from process measures and a greater focus on measures around outcomes, efficiency, and patient satisfaction.

So in other words, you see the passage of the legislation and the introduction of MIPS as a good thing.

We’re already moving in this direction with all of the payment silos—the Medicare payment silos. There are a lot of silos—home health, skilled nursing, rehab facility, LPAC, hospital, outpatient, and physician, and those silos are all paid differently. And every one of those silos is moving towards a pay-for-performance model. So every physician in fee-for-service will be under a pay-for-performance system that will be more logical and easier to understand, whereas right now you’ve got PQRS, the value modifier, and MU. More importantly, it creates an incentive for physicians to move into alternative payment models. You get a 5-percent bonus if you move into a patient-centered medical home or bundled-payment model or ACO [accountable care organization].

So this does a couple of things very clearly for physicians. It makes it crystal-clear for physicians: they can be in fee-for-service and be at risk for pay cuts under value-based purchasing, and it starts at 4 percent and goes to 9 percent; or they can go to an alternative payment model and get a 5-percent bonus. So the delta—the spread between being a bad performer in the fee-for-service program, you could lose 4 percent. And you’re going to get a 5-percent bonus under one of these risk-based models. Now if you don’t perform well, you could lose that bonus, because you’re at risk. But the potential delta difference is 9 percent, and then it actually goes up to 14 percent if you think about it, because the bonus stays and 9 plus 5 is 14. So physicians, when they look at it, will say, hmm, I can stay in fee-forr-service, and I’ll be at increasing risk, or I can move to an alternative payment model, and I’ll be at risk, and still have to report measures, but I’ll be at the potential for a 5-percent upside.

So from a standpoint of a provider, the incentive is clearly pushing them towards alternative payment models. So for me, this has three big implications. Implication number one is that there have been a lot of healthcare providers out there thinking that this movement towards population health management-focused payment models was a fad. This makes it clear that it’s here to stay. Second, it creates a timeline, per CMS’s goals of moving us towards 30 percent of reimbursement at risk by 2016 and 50 percent by 2018. This just says, by 2019, it will create more of an incentive and really accelerate a shift to those models, even more so. And it creates a pretty clear timeline. I don’t think most physicians really have paid much attention to alternative payment models. I think this will create a real focus for them. And then the last point is that there are going to be more alterative payment models that will be developed exposed.

You released a statement earlier this week supporting the creation of the Healthcare Payment Learning and Action Network.

Yes, the Healthcare Payment Learning and Action Network will be all about sharing information, and will help. But I do think everything will create, for hospitals, there will be probably be a great interest in employment of physicians on the part of hospitals, but it could also create some potential conflict with hospitals on the part of physician groups. So there will be an interest in employment, but also in being in competition with hospitals.

What about the proposed rule for Stage 3 of meaningful use? Any thoughts on that?

We’re looking through it right now. There’s a lot in it we like. We particularly like the emphasis on APIs [application programming interfaces]. We’re still going through the proposed rule right now, though, and doing an analysis on it.

Healthcare Informatics will continue to update readers on this evolving story.

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