Nagging Questions About Government Plans for Ophthalmology

Laird Harrison


April 14, 2016

In This Article

A Return to Capitated Payments?

For doctors who would prefer not to participate in MIPS, MACRA offers an alternative: They can instead participate in an officially designated alternative payment model. An ACO is one such model. A patient-centered medical home is another, although this is mainly for primary care. Taking bundled payments is also an option for specialists. Participants receive a 5% annual bonus for participating in these models.

In an ACO, for example, a group of doctors form a network and coordinate their patients' care. Some of these organizations may be paid through capitation—receiving a flat reimbursement for each patient regardless of the amount of care the patient needs. If the patient is managed for less than the amount negotiated with CMS, the doctors keep the difference. If the expenditures are greater, they lose money.

The role that ophthalmologists play in ACOs can vary.

"We think in most cases that the primary care physician will get the payment and go out and try to choose specialists without increasing costs," says Dr Glasser. "Most of the programs are not designed with specialists in mind."

Another way to participate in an alternative payment model is through bundling, in which providers receive a flat fee for taking care of a patient's episode of care. An example would be a flat payment to treat a patient's cataract, good for all the care related to this condition, including taking a history, doing a physical exam, preoperative testing, surgery, postoperative care, and any care related to complications from the surgery.

The period of time the payment would cover remains to be determined. "They're talking about 120 days," says Dr Glasser.

This approach could be problematic if applied to macular degeneration or macular edema. "This model would incentivize undertreating the patient," says Dr Emerson. "There is good evidence that if you undertreat the patient, they lose vision."

But exactly how an alternative payment model would affect ophthalmologists depends a lot on the details that are still pending. And it may not be easy for a lot of ophthalmologists to participate in one of these models at all, says Dr Glasser. For providers to qualify, three quarters of the provider's practice revenue has to come through participation, and the provider has to have more than "nominal risk" at stake, a term that has yet to be defined, he says.

Tinkering With Medicare Part B

While CMS is hashing out all of these regulations, it has launched a separate pilot program to experiment with the way it reimburses providers under Medicare Part B for drugs that they administer directly. The first phase of the pilot could start as early as this fall.

Currently, providers receive the average sales price of a drug plus a 6% add-on. (Dr Glasser points out that the Budget Control Act of 2011, known as "budget sequestration," lowered Medicare spending by 2%, so providers are effectively receiving the average sales price plus 4%.)

Under the new initiative, CMS would assign some providers to receive the average sales price plus 2.5% plus $16.80. (That's 0.5% plus $16.80 if you subtract 2% for sequestration.) It's not clear yet how many providers CMS would assign to the new reimbursement formula, but it plans to make the division by ZIP code.

The idea, according to CMS, is "to test different physician and patient incentives to do two things: drive the prescribing of the most effective drugs, and test new payment approaches to reward positive patient outcomes."[2] But when all is said and done, it's to encourage providers to use less-expensive drugs.

Among ophthalmologists, the change would affect retina specialists the most because they administer a lot of aflibercept and ranibizumab for conditions such as age-related macular degeneration and diabetic macular edema. These drugs both cost about $2000 per dose.[3]

Under the new plan, Dr Emerson thinks doctors will lose money on these drugs.

"I think policymakers believe the 6% is a profit, but it's really not," he says. "It's paying for costs that include denied insurance claims, unpaid copays, local taxes, and staff time spent administering these drugs."

Doctors could avoid losing money on the drugs in the new pilot program by instead administering bevacizumab, which costs about $50 per dose.[3]

But research suggests that the drugs are not always equally effective. For example, in the Protocol T trial, which compared three commonly used vascular endothelial growth factor inhibitors—aflibercept, bevacizumab, and ranibizumab—for treatment of diabetic macular edema, patients with the worst visual acuity fared significantly better if they took aflibercept rather than bevacizumab; outcomes with ranibizumab fell approximately midway between the two other drugs.[4]

And if one drug doesn't work in a particular patient, doctors would like to have an alternative. "Each patient is an individual, and it's nice to have all three options," says Dr Emerson.

Also, new rules from the US Food and Drug Administration could make bevacizumab hard to obtain, most notably by imposing a beyond-use date of 5 days, longer than experts say it takes to test the drug's sterility.[5] This would put retina specialists assigned to CMS's new reimbursement formula in a bind: The doctors would, in effect, be economically incented by one federal agency to use a drug that is less readily available due to restrictions by another federal agency—and, on top of that, is sometimes less efficacious than the alternatives.

New Tools to Reduce Drug Costs

In the next phase of CMS's cost-control experiment, which might begin as early as 2017, CMS would split each of the two physician groups from phase 1 into two subgroups. The groups added in phase 2 would test a suite of "value-based payment tools." With this phase 2 subdivision, physicians would be reimbursed for Medicare Part B drugs in one of four ways:

  • The average drug sales price, plus 6%, as it is now;

  • The average drug sales price, plus 6%, but using some of the proposed value-based purchasing tools;

  • The average sales price, plus 2.5%, plus $16.80;

  • The average sales price, plus 2.5%, plus $16.80, but using some of the proposed value-based purchasing tools.

CMS hopes that the comparison will reveal which combination of drug sales price, percentage payment, and tools strikes the best balance between the cost of drugs and their effectiveness.

So, what are these "value-based payment tools"? One would discount or eliminate patients' share of the cost.

Another would offer feedback to providers on their prescribing patterns.

A third would vary the amount paid for a drug depending on what evidence shows about the drug's effectiveness. For example, reimbursement for aflibercept could be different if used for macular edema than for macular degeneration. "This is often called 'indications-based pricing," CMS says in a proposed rule. "Drugs are often indicated for more than one condition and may be more effective when used in one condition than another."[6]

As an example of how this might work, CMS cites reports by the Institute for Clinical and Economic Review, which analyze the cost-effectiveness and comparative effectiveness of high-impact drugs and calculate a benchmark price for each drug.[6]

"I'm not opposed to that line of thinking," says Dr Emerson. "I just don't know where they are going to set the prices."

A final tool would link the price paid to the manufacturer for a drug to patients' outcomes.

"I'm not sure why a drug company would volunteer to be part of that," Dr Emerson says, "but it theoretically could help save cost."

According to CMS, private insurers have already entered into agreements like this with some drug companies.[6]

Dr Emerson says ASRS could get behind another idea for cutting Medicare costs: Let CMS negotiate with drug companies for the price of drugs. It's an idea that has support among some presidential candidates, with Republican Donald Trump and Democrats Hillary Clinton and Bernie Sanders all signing on.

But the pharmaceutical industry has lobbied against this proposal, and bills to allow it have failed in Congress in the past. That may be one reason why CMS keeps turning toward doctors when it looks for ways to save money.


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