Meeting of the Advisory Panel on Outreach and Education (APOE) Centers for Medicare and Medicaid Services March 27, 2013.

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1 701 Pennsylvania Avenue, Ste. 800 Washington, DC Tel: Fax: Meeting of the Advisory Panel on Outreach and Education (APOE) Centers for Medicare and Medicaid Services March 27, 2013 Statement of Ann-Marie Lynch Executive Vice President Payment and Health Care Delivery The Advanced Medical Technology Association Good morning. My name is Ann-Marie Lynch and I am speaking on behalf of the Advanced Medical Technology Association or AdvaMed. We appreciate the opportunity to participate in today s meeting of the Advisory Panel on Outreach and Education. Your recommendations to the Secretary and to the CMS Administrator to enhance the effectiveness of consumer education strategies could lead to significant improvements for individuals enrolled in these programs. This panel has an important opportunity and I commend you for your service on this committee. My comments today will focus on the Medicare program and recent changes that will establish new health delivery models for beyond the traditional fee-for-service program and Medicare Advantage plans. The Affordable Care Act included several health care delivery reforms designed to improve efficiency and the quality of care provided to Medicare beneficiaries. AdvaMed supports these goals and believes that medical technology is a key component in achieving them. Two programs in particular, Accountable Care Organizations and the Bundled Payment Initiative, will significantly impact Medicare beneficiaries and the care received from their providers. Bringing innovation to patient care worldwide

2 ACOs and Bundled Payments are intended to lower costs and provide higher quality care by changing payment incentive structures to foster greater cooperation and coordination among providers. However, incentives in these programs to reduce spending could have the inadvertent effect of compromising patient access to the full array of treatment options, and discouraging the use of innovative treatments. These new ACO and Bundling Payment programs will lead to significant changes in the operating structure of hospitals, physician practices, and health care systems. These programs allow many new hospital/physician arrangements and offer significant financial incentives for participating physicians and hospitals, incentives that were previously prohibited by the Stark physician self-referral law, the Federal anti-kickback statute, and the civil monetary penalty laws. The key concern here is that health care entities, physicians, and other practitioners could structure their financial relationships simply to cut costs and enhance profit margins without regard to quality improvement and coordination of care. Expanding the waiver authority opens the door to activity that presents a significant risk of patient abuse. Medicare beneficiaries need to be fully informed about all aspects of these new programs. In addition, the impact of such significant changes on Medicare beneficiaries and, relatedly, their access to care, should be carefully monitored and reported to the public. Accountable Care Organizations (ACOs): CMS approved three waves of applications for providers to participate in the Medicare Shared Savings Program (MSSP) for ACOs program two in April and July of 2012 and a third in January Two other ACO programs were initiated by the Center for Medicare & Medicaid Innovation (CMMI) and include the Pioneer ACO Model, which is designed for organizations having experience in integrated care delivery, and the Advanced Payment Model, which is designed for rural and physician-based ACOs needing start-up resources for building care coordination infrastructure. ACOs have a primary care focus, with providers held accountable for the quality, cost and overall care of assigned Medicare beneficiaries. They may 2

3 be group practices, networks of physicians, acute care hospitals employing physicians, partnerships or joint ventures between hospitals and physicians, and federal health centers. Each ACO has a spending target or benchmark which is then compared to actual spending by the Medicare program for these beneficiaries. If ACO spending in a year is below the target established for that period, and the ACO participants meet certain quality standards, the ACOs may keep a portion of the savings. For large ACOs, the savings could be in the millions of dollars and physicians and other providers will receive significant cash payments for reducing the amount and/or type of services billed to Medicare. A total of 250 organizations are now participating in these three ACO programs, and they are serving 4 million beneficiaries. That s about 9 percent of Medicare beneficiaries. While Medicare beneficiaries choose to enroll in fee-for-service or a Medicare Advantage plan, their participation in an ACO is quite different. In the case of an ACO, it is the primary care doctor, internist, or geriatrician who decides to enroll in an ACO. The practitioner then informs the beneficiary of her choice. If a beneficiary begins to understand the potential implications of the financial incentives allowed in the ACO model and is concerned that the significant financial incentives may impact the care he receives from his physician or referrals to specialists, he must find a new doctor. Bundled Payments. In January, the new CMS Innovation Center (CMMI) announced that it was moving forward with its large scale bundled payment initiative by testing four different bundled payment models that cover various service categories. All four models in the Initiative will be episode-based, and the episodes used in each of the models will be triggered by a hospitalization. If doctors and hospitals reduce spending below a target, hospitals or post-acute care providers may again share up to 50 percent more than the amount that Medicare otherwise would pay for services. Model 1 with 32 hospital awardees will begin as early as April The other three models will begin July 1, 2013, with over 100 participants partnering with over 400 hospitals and other providers. Again, these models introduce considerable changes to the delivery of health care in the ability of providers to provide financial incentives to reduce Medicare expenditures. Under the bundled payment initiatives, participants may receive up to 50 percent of the amount of payments they would have otherwise received from Medicare. A 3

4 physician who bills Medicare $150,000 in a year could potentially receive an additional $75,000 from a hospital in the bundled payment program if that physician helped to reduce the amount and/or type of services provided to her patients, thus reducing Medicare expenditures. Within the Bundled Payment program, there are incentives to use less expensive therapies which may not be optimal for patient. If reductions in spending are the result of reduced readmissions, better scheduling and streamlining of care, less duplication of tests, improved coordination and discharge planning, better hand washing, and reduced infections, care will improve and Medicare beneficiaries will benefit. However, ACO and Bundled Payment participants could reduce Medicare costs to stay below their benchmark or target by stinting on care. In this case, patient care will be compromised. What key information should a Medicare beneficiary receive? What types of questions should be answered? For example: Will the pressure to reduce Medicare spending within an ACO and or Bundled Payment Initiative, result in compromised care? What happens when this pressure is complicated by significant financial incentives, previously prohibited by law? Will patients experience delays in or denials of access to services? Will patients see fewer referrals to specialists? Will Medicare patients with more complex needs or chronic issues receive the level of care they need with such strong incentives to reduce costs? And will they understand that some of these changes might be directly related to the financial incentives contained in the delivery reform models? The rules have changed and beneficiaries and other patients need to know it. This panel has the opportunity to make a meaningful difference through outreach and education. Medicare & You Handbook: Medicare beneficiaries should be fully informed of the potential benefits and implications of new incentives under the ACO programs. The 140-page Medicare & You handbook includes just two short paragraphs on page 126 with very limited information. While Medicare beneficiaries are directed to a website address { with additional guidance., the information on the CMS website is limited and does not fully inform beneficiaries about the risk of the potential for stinting on care, though the site promotes the ACO program. 4

5 Recommendations: Beneficiaries should receive balanced information that fully explains the benefits and concerns associated with receiving care from ACO and Bundled Payment providers, including the potential negative impact of the financial incentives on patient care. Beneficiaries should receive clear information about two distinct decisions they must make. First, whether they will see an ACO participating primary care physician (including a geriatrician, internist, etc.) or move to another primary care doctor who is not tied to an ACO, and second, whether they will decline to share their identifiable claims data with their ACO. A complete listing of ACO and Bundled Payment program participating primary care physicians, and other practitioners should be readily available on the CMS website. Each ACO or Bundled Payment participant, as a condition of participation, should be required to inform the public of the amount of shared savings payments received by each practitioner or provider. Limits of Quality Measures: ACO and Bundling programs rely on reported quality measures to ensure that patient care is not compromised under these new delivery models. Yet these quality measures are limited in scope, may not keep pace with advances in available treatments, and are mostly process measures rather than outcomes measures. For example, the ACO program requires participants to meet certain levels on 33 quality measures yet there are no measures for cancer treatment, major heart procedures, orthopedic procedures or neurological conditions. Beneficiaries should be informed of the limitations in these quality measures and should also understand the limitations in what an ACO or bundled payment quality score can say about quality of care actually received. 5

6 Recommendations: The quality scores for each ACO and Bundled Payment participant should be readily available on the CMS website and on the websites of participating ACO and Bundling providers and practitioners. It is also imperative that quality measures be updated or modified frequently to keep pace with medical advances. Without proper adjustments to the quality measurements used to calculate an ACO s shared savings, physicians could be penalized for being early adopters of new treatment options and providing patients the best options. Finally, the most clear and direct method to determine if Medicare beneficiaries are fully informed about the benefits and potential concerns with these new delivery models is to ask them. An independent survey comparing Medicare beneficiaries whose providers are participating in an ACO or Bundled Payment program to Medicare beneficiaries whose providers are not participating in an ACO or bundled payment program could provide meaningful information. Recommendation: The Secretary should conduct a survey assessing Medicare beneficiaries experiences with the new ACO and bundled payment models compared to other Medicare enrollees. The survey should assess beneficiaries understanding of these programs including the quality measures and the significant financial rewards available to their providers for reducing Medicare expenditures. Referrals to specialists, delays in care, and substitution of services should also be examined. The draft survey questions should be available to the public for feedback and results of the survey should be available to the public. Thank you for this opportunity to share these recommendations with you. We look forward to working with you. 6