3 Impending Physician Fee Changes: Bundled Bills, ICD-10 Codes, or Cash-Only

The goal of CMS, ObamaCare’s payment vehicle, is to have half of physician fees in some form other than fee-for-service by 2018. The rationale is that when physicians charge for their individual services they perform more tests and procedures to bolster their income. By veering away from fee-for-service, the government hopes to save money while moving Medicare and private payers from paying a fee for each service – which encourages doctors to order unnecessary or even harmful tests and procedures. So the federal logic goes.

There are 3 basic options to achieve these savings.

One, by bundling bills. “ Medicare,” according to Ezekial Emanuel , Obama’s former chief medical advisor and a co-author, “should lump together physician services, hospital costs, tests , medical devices, drugs and rehabilitation services related to common ailments – such as broken hips, heart stents and cancer treatments – into a bundle. It would then pay a medical provider a discounted amount for the whole array of services.” The power of this idea, say the authors, is “scale.” This means Medicare could pay for these bundles all at once for every Medicare patient in every section of the country. The key word here is “discount.” In his article, Emanuel note a related ObamaCare strategy, Accountable Care Organizations, is “less than encouraging,” a way of saying that if one cost-saving strategy based on hospital and physician discounts fails, try another, controlled and centralized in Washington.

Two, a second thing going on is the conversion from an ICD-coding system to an ICD-10 which is to take place on October1, 2015. ICD-10 has been in the works for more than 20 years or so. It is widely used in other countries. Mandated use of the clinical U.S. version of ICD-10 is coming, on October 1 2015, CMS will mandate its use on that date, whether practices are ready or not, and whether it drives physicians or small independent practices into retirement or into the arms of larger practices or hospital employment or not.

The conversion from ICD-9 to ICD-10 has been delayed twice, but is now inevitable. The idea is to expand the number of codes from 14,000 in ICD-9 to 68,000 in ICD-10. In this conversion process, government agencies and private insurers could be much more specific about what they are being charged for. Many doctors are hopping mad over this conversion. It compels them to spend more time in collecting data, in installing systems to capture that data, in hiring extra personnel to assure the accuracy of the codes, and making them vulnerable to audits if mistakes are made. A July 1, 2015 interview with W. Jeff Terry MD, former president of the Alabama Medical Association and now an AMA delegate illustrates the height of physician anger. Terry says, “To think we can implement his huge undertaking all in one day is ridiculous.” He maintains it is also “ridiculous,” his favorite word, because of the expense of installing an EMR ($40,000 per physician) and the fact that coding has nothing to do with caring for the patient. Doctoring not documentation is what medicine should be all about. CMS has tried to soften the impact of ICD-coding by saying there will be no ICD-10 audits for a year. Other observers are telling doctors, stop complaining and begin training for ICD-10. Still others are developing software to make conversion simply by translating ICD-9 to ICD-10 codes.

Three, a final option for independent practitioners outside of the hospital setting is drop coding altogether and to convert of a cash-only, direct care practice. Somewhere between 5% to 15% of primary care practices, have shown an interest in doing this. But it is not easy for CMS prohibits these physicians from participating in Medicare and Medicaid programs. Still, physicians have converted to direct care claim their overhead is cut in half, and they can now spend time with patients rather than gathering data for the government and insurers.