Oncology Hit Hard by SGR Debacle

Allen S. Lichter, MD, Chief Executive Officer, American Society of Clinical Oncology (ASCO), spoke with Evidence-Based Oncology on the sustainable growth rate (SGR). Created to compute cuts in physician reimbursements, the SGR was established to contribute to long-term savings from healthcare providers. The SGR formula results in progressively larger reductions each year in fees that Medicare pays its physician providers.

In this interview, Dr Lichter address suggested proposals to fix the SGR, such as the use of leftover war funds and ASCO’s Quality Oncology Practice Initiative (QOPI), which is used as a tool to measure quality and performance as part of the basis for physician payment reform.

EBO:

How do you think Congress will deal with the proposal to use leftover war funds to repeal the SGR?

Dr Lichter:

There are many proposals floating around about how one might deal with the SGR. We see information that suggests that there are enough funds that can be recovered from the winding down of military conflicts to cover the SGR fix, and permanently erase it. We certainly hope that is the case. The problem with patches is 2-fold. Number 1, it is the classic kickthe- can-down-the-road. Every time the SGR is patched, when that patch runs out, the cost of the permanent fix has gone up because the additional costs simply accumulate. In the middle of the last decade the cost of replacing or covering the SGR formula was $49 billion. It is now close to $300 billion. If it’s patched for another year or two it’s going to start to get into the $350 and $400 billion range. Eventually, it could become such a costly item that it can almost never be fixed. The second thing about a patch is that it creates uncertainty in the medical community. Physicians need to make plans. They may need to buy equipment, such as new technology, or electronic health records. They may need to hire staff or expand their offices, or do a whole variety of things related to caring for their patients. When one does not know whether payments from Medicare are going to be suspended again, as they have been several times in the past couple of years, and cash flow into the practice is going to stop, and so on and so forth, physicians are extremely reluctant to make long-term plans for running their practices appropriately, and that is extremely detrimental to the practice of medicine and to the care of patients. So, we hope that Congress can create a permanent fix and allow this flawed system, which everybody agrees has to go, to go. Let’s get it done and let’s get it over with.

EBO:

If it were up to you, how would you go about scrapping SGR?

Dr Lichter:

That’s the $64,000 question, isn’t it? If people knew for sure what to replace it with, it’s possible that it would have been replaced a long time ago. I can tell you my own feeling is that no one is smart enough to sit down and write a solution that when applied in the field across hundreds of thousands of physicians and millions and millions of patients will work perfectly. Our sense is that we have the Center for Medicare and Medicaid Innovation, and we need to come up with multiple programs and run a series of well-constructed pilot tests, and then bring the things that work forward and incorporate them, and take the things that don’t work and either fix them or throw them out. To some extent this is what CMS [Center for Medicare & Medicaid Services] did as they moved toward ACOs [accountable care organizations]. They ran pilots with large physician group practices managing a population of patients and sharing cost savings based on their ability to reduce the rate of rise of healthcare costs in this population. They figured out what worked and how to do it and that allowed them to move more confidently into a largescale rollout of ACOs. The same thing needs to apply here, we need to run the pilots that allow us to say how should we use bundled payments, how should we use episode-based care, how might various capitation systems work, what will be the impact of ACOs, and how does that get folded in? Our sense is to allow physicians the certainty of knowing that the SGR is done, and allow us to work with CMS in a series of well-crafted pilot projects, and build the next generation of physician reimbursement strategies based on good solid data.

EBO:

ASCO has proposed implementing its QOPI as a solution. What came of that initiative?

Dr Lichter:

We are talking broadly to people on the Hill and inside CMS about the concepts surrounding quality and performance measurement as part of the basis for physician payment reform. I say that in the following way, if one assumes that physician payment reform needs to be coupled with appropriate cost savings inside the Medicare system so the system doesn’t completely go bankrupt, then we must know if we’re going to be making those types of choices, that the quality of care is not being compromised. Just as we would want to monitor whether too much is being done and funds are being wasted, we need to monitor whether too little is being done and care is being inappropriately withheld, and that’s done through a robust quality monitoring system that’s accurate, that’s real time, that’s validated, and that physicians believe in. Not just in oncology, this really applies across medicine. To monitor oncology quality is very complex. Cancer is a hundred different diseases, and each of those diseases begins to parse out into dozens of subtypes of disease based on the stage of disease, and the age of the patient, and the genomic profile of the cancer. You can’t have a handful of performance measures in oncology and monitor oncology quality. We believe that ASCO and the profession need to be at the center of this and want to work with Congress and with CMS to couple our experience and expertise and quality monitoring, and to make sure that any solution we put into place not only is cost-effective, but allows patients to receive the very highest quality care.

EBO:

I would think oncology would be particularly impacted of almost all of the other specialties or therapeutic areas.

Dr Lichter:

It is in some respects because of multiplicity of diseases, and subsets of diseases, and subsubsets of diseases. It is in some respects the most complicated area for quality monitoring that there is, and we know it can be done. Our QOPI now has over 100 measures. We are adding more, and based on that foundation we can build a quality monitoring system that is extremely robust. We also have the opportunity to build off the incentives that the government has put forward for physicians to move onto electronic health records, and the ability for us to craft a quality monitoring system that’s seamless and works behind the scenes electronically, and supports physicians making the very best decisions on behalf of their patients, and allows patients to have access to information that helps them make informed choices. All of these things are possible if we can work together toward a common goal.

EBO:

Under the SGR formula, physicians almost seem forced to participate in the fee-for-service system to avoid losing money. This seems to counteract the financial incentives offered to physicians who choose to participate in streamlining their services under health reform. What are your thoughts?

Dr Lichter:

The current Medicare payment methodology is fee-for-service, and fee-for-service is a system that is very common, almost universal, for how professionals build their service. Attorneys charge fees, architects charge fees, accountants charge fees, and physicians charge fees. What has happened over time is that the number of things physicians can do and the number of patients and the number of medical conditions that we can now affect has just grown and grown and grown. If the amount of funding to pay the fees is finite and to some extent the number of things we can do keeps growing and growing, then the fee for each unit of service needs to be cut. That’s essentially, in very broad brush strokes, how the SGR dug the hole that we’re in. It’s unlikely that there’s a modification of a classic fee-for-service system that will work. We get into this situation where physicians do more and more and keep running faster and faster to stay in place, and that doesn’t work well. If you try to control costs inside a fee-for-service system the examples are numerous that, in fact, physicians or hospitals or healthcare organizations actually lose money. You do fewer things, you build fewer fees, and funding goes down. So we have to create a system where the ability to practice high-quality care that is cost-effective doesn’t put you out of business, but in fact is rewarded with the appropriate incentives.

The other thing that happens in an SGR system, of course, is that it is 1 figure for the entire country. So, you lump physicians who are working very hard and successfully at cost control in with groups of providers who are less skilled at that. So, the people who are making adjustments are not getting rewarded. They’re getting hammered just as physicians and providers who are doing less well. A system needs to be created where there is some level of individual identification and individual responsibility. Say, if you’re doing well and achieving appropriate goals, we’re going to recognize you as an individual or healthcare system, or a practice, and single you out and not group you in with 750,000 other physicians. If it were easy it would have been done. You cannot talk to a single person involved in this in any way who says this is a good system and keep it going. Nobody wants to continue this. It’s just a question of finding the will to fix it, the funds to abolish it, and to have the plans to study and pilot and experiment as we find the right solution. It would be a shame to throw out the SGR system and put in its place something that turns out to be just as bad or worse. We can’t afford to make another serious miscalculation this time around. We have to find the right path here.

EBO:

Looking at quality of care in the realm of the broken Medicare payment system for oncology patients, it seems like this would be a really rough road to go down. Can you talk to the impact on patients?

Dr Lichter:

Certainly if the SGR is not fixed and the cuts go forward, 27.5% now and you know, next year 30% or more, and so on and so forth, it is not thinkable as to the impact that that would be in an oncology practice. Approximately 60% to 65% of all cancer cases occur in patients older than 65 years. Medicare is the single largest provider of oncology care in the country. If reimbursement rates were pushed off the side of a mountain because we couldn’t solve the SGR, it would devastate oncology care. I don’t know what would happen because certainly practices could not reasonably afford to provide that care.

We are extremely willing and anxious to be part of the solution to this problem. We are in this together, and want to work together not only as an oncology field, but as a member of the larger community, of medicine and specialty societies, to solve this problem. I am certain it can be done. We just need to roll up our sleeves and do it.Author Affiliation: American Society of Clinical Oncology, Alexandria, VA.

Funding Source: None.

Author Disclosure: The author reports no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

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