Current Payment Challenges and New Payment ModelsCecil B. Wilson, MDImmediate Past President

College of American Pathologists

May 7, 2012

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Overview

• SGR outlook• Payment and delivery reform• Collaborative efforts

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© 2011 American Medical Association. All rights reserved.

Growing Gap Between Costs and Payments

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

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ulat

ive

chan

ge s

ince

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Practice Cost Inflation (MEI)

Payment Updates

Can not overstate the SGR’s:• Obstruction to positive change

• Impact on physician attitudes, views, satisfaction

• Political implications

• Uniqueness and complexity

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© 2011 American Medical Association. All rights reserved.

Collateral Damage Caused by SGR

• Flat payment rates impede practice investments and innovation

• Consumes resources, splinters medicine• Issue fatigue on all sides

– Side-effects on perception of organized medicine’s effectiveness

• Feeds perception of physicians’ obsession with income (1% problem)– Access threat is real, but obscured

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Obstacles to SGR Reform• Escalating cost

– In 2004, repeal cost was $48.6 billion– In 2011, repeal cost was $289.7 billion

• Beneficiary premiums an early concern– Seniors value choice of physician, and now support

medicine (to a point)• Other Medicare providers have been cut

– No more low hanging fruit• Uncertainty about what comes afterward

– There is no one silver bullet

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Bipartisan Support for SGR Repeal• Simpson-Bowles “Moment of Truth”• Senate “Gang of 6”• Senator Tom Coburn (R-OK) “Back in

Black”• Senator Pat Toomey (R-PA) “Restoring

Balance”• Congressional Super Committee• Proposals by Senator Jon Kyl (R-AZ), Rep.

Allyson Schwartz (D-PA)

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© 2011 American Medical Association. All rights reserved.

AMA Framework for Reform

• Developed in consultation with states and specialties last year

• Three-pronged approach– Repeal the SGR– Provide 5 years of stable, positive updates

that keep pace with practice costs– Transition to a broad array of new payment

models• One-size does not fit all

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Outlook and Next Steps on SGR

• Further develop transition plans• Prepare for the next “big deal”

– Be ready for lame duck action, just in case• Congressional committees are looking

ahead this year• Continue efforts to learn from, and shape

new models• Prepare physicians for change

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AMA Perspective and Objectives for Payment and Delivery Reform• Current system is unsustainable; no one is

satisfied– The “default” scenario is not a good one

• Preserve the patient-physician relationship• Reward physicians for all that they do

– Break down payment silos• Align incentives, streamline administration• Provide array of choices for practices

– There will always be some fee-for-service component• Remove barriers to physician leadership

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Obstacles to Adoption of New Models• Physicians don’t know where to begin• Many do not want to change• Regulatory, legal, financial, and other

barriers– Antitrust rules– Fraud and abuse statutes– Lack of actionable data on quality and cost– Lack of adequate risk adjustment– Burdensome regulations

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Recent Successes• ACOs rules provide for physician leadership and

more shared savings• Advanced Payment ACOs designed for small

physician practices• CMMI Bundled Payments for Care Initiative

offers alternative models• Improved antitrust rules• Eased regulatory burdens• There is still much to learn, and physicians need

the tools

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AMA Efforts to Prepare Physicians

• Innovator Committee• Payment Pathways white paper, seminars,

webinars, other educational programs• How to Manuals• Working with private payers

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Recent AMA/ CAP Collaboration

• Principles for personalized medicine and laboratory developed tests

• Joint efforts through the Personalized Medicine Coalition Policy Council

• PDUFA/ MDUFA proposals• Gene patents• Z codes

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Concluding Thoughts• Physicians need to be engaged

– Don’t succumb to issue fatigue• We need to shape the systems of the

future– Physician satisfaction is key to success

• We need to prepare ourselves and our colleagues for change

• Let’s continue working together

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