“The overarching theme of this bill is value-based health care; it’s paying for outcomes rather than paying for volume,” Dr. Barber stated. “The bill is far from perfect, but it has some elements that make it easier to swallow. It’s certainly better than a 24 percent pay cut.”


Published 4/1/2014
Elizabeth Fassbender

Adapting to Healthcare Reform

What to expect and what to do about it

This year will be a sentinel year of change for orthopaedic surgeons and their practices. Not only must AAOS members be prepared to address a proliferation of technological advances, they may also be faced with real payment reform and the growing pressures of having to provide more care to more people for less cost. Helping orthopaedic practices prepare to meet the changing realities of healthcare reform was the topic of a special symposium held during the AAOS 2014 Annual Meeting.

According to Joshua J. Jacobs, MD, past president of the American Association of Orthopaedic Surgeons (AAOS), the following issues are especially problematic:

  • The introduction of new payment models
  • The changes in procedure values by the Centers for Medicare & Medicaid Services (CMS)
  • Retention of the in-office ancillary services exemption
  • Implementation of the ICD-10 coding system
  • Repeal of the sustainable growth rate (SGR) formula for Medicare payments

“A number of things will be coming down the pike over the next few months, and the message I want to leave you with is that the AAOS is doing its very best to give you what you need to prepare,” said Dr. Jacobs.

SGR fix is questionable…
Thomas C. Barber, MD,
chair of the Council on Advocacy, provided an overview of the issues surrounding the repeal and replacement of the SGR formula. Since 2003, the SGR formula has generated increasingly larger proposed cuts to physician payments, and Congress has responded by enacting legislative “patches” to prevent them while simultaneously promising a permanent solution.

Earlier this year, after months of intense negotiations, H.R. 4015/S. 2000, “The SGR Repeal and Medicare Provider Payment Modernization Act of 2014,” was finally introduced. Although the status of the SGR is changing daily, Dr. Barber discussed the current legislative proposal and how it would affect physicians.

Thomas C. Barber, MD


Although Dr. Barber insisted that politicians don’t want to see that potential payment cut enacted, he noted that trying to find a way to pay for the offset has been difficult. “It’s a sad state of affairs,” he admitted, that the bicameral, bipartisan efforts to draft the legislation are not being mirrored in proposals to pay for the bill.

“The challenge is that we have to find pay-fors. If we are going to pay $130 billion to get rid of the SGR, what is going to pay for that? Congressional offices have to find the money in the rest of the budget so that the doc fix can happen,” said Dr. Barber.

Even as he spoke, word came out that the House had passed a pay-for that many, Dr. Barber included, have described as a “poison pill.” “Essentially, they are tying it to a 5-year delay in the individual mandate. So that’s another attack on Obamacare, which in and of itself is not necessarily a problem, but it means that the legislation will be dead on arrival in the Senate,” Dr. Barber explained. “This is a challenge to us to get this bill through in a bipartisan fashion.”

But ICD-10 is final
Although the fate of the SGR this year is questionable, the timeline for implementation of ICD-10 is firm, insisted M. Bradford Henley, MD, MBA. “What you need to do now is educate yourself and your staff on ICD-10,” he told the audience. “You need to evaluate and update your current documents and processes in preparation for it. You also need to ensure that both your back office and your front office processes are compatible and comply with ICD-10—and that includes your electronic medical records and your practice management systems.”

According to Dr. Henley, ICD-10 will have an impact on all areas of a practice, but physicians will be especially affected in the areas of documentation and coding. Therefore, in anticipation of the Oct. 1 implementation date for ICD-10, Dr. Henley recommended that physicians step up their documentation.

He also recommended that audience members look into the Code-X product from AAOS to help ease the transition to ICD-10. “Code-X is an incredible tool that will help you find the right code,” said Dr. Henley. “What and how you document will be key to appropriate compensation.”

The impact of exchanges
According to Alexandra E. Page, MD, the introduction of health insurance marketplaces and exchanges created a “changed paradigm for insurance and healthcare payments,” which will affect both physicians and patients. She specifically noted the paradigm shift to a retail, consumer-driven market where individuals are becoming more actively involved in making their own healthcare decisions.

“There are many new concepts and surprises for patients,” Dr. Page said. “It’s important for physicians to recognize that many of the newly insured are experiencing health care in a totally different way.” For example, Dr. Page explained that, on the marketplace side, many individuals formerly had employer insurance, while others have never been insured and have “no idea what they are doing.” Patients who obtained coverage through the exchanges may be totally surprised to learn that they now have high deductibles and high copayments to meet out-of-pocket.

Dr. Page encouraged audience members to develop some awareness of and responses to patients’ price sensitivity and their interest in transparency. Finally, she recommended physicians prepare for any price negotiations; confirm eligibility, particularly for marketplace patients; and examine point-of-service collections.

Bundled payments
Peggy L. Naas, MD, MBA,
spoke on bundled payments, which she described as a single, predetermined payment covering “all services” tied to an “episode of care.” In addition to touching on the history of bundled payments, Dr. Naas also addressed whether this could be seen as opportunity for orthopaedic surgeons to “lean in” and lead.

The concept of bundled payments, Dr. Naas said, is intended to avoid fragmentation, to align the incentives of all of the sites of care, and to create joint accountability and shared financial risk. The model provides opportunities to increase the quality of care for patients, increase case volume, drive market share, and align incentives with physicians for other objectives. Although these payment models include some risks to participating physicians, understanding the risks and opportunities across the continuum will contribute to success.

“We have to succeed.… The situation that we’re in is not our fault, but it’s an opportunity for us as professionals to step up and fix problems with the current healthcare delivery system through many of the options that we’ve heard about today,” she said.

“Employed” physicians
Finally, Dr. Page discussed the employment of orthopaedic surgeons, what drives hospitals and health systems to employ, and whether employment is the future of medicine. “Employment can be many different things,” Dr. Page stated.

After taking a poll of how many in the room considered themselves to be employed, Dr. Page explained some of the different options that may be under that rubric. She also described some of the factors that drive physicians and hospitals to employ and how employment has evolved. “Now what we’re seeing is that it is more the emerging physicians who are going into these models,” Dr. Page said. But there is “always going to remain a role for private practice.”

Elizabeth Fassbender is the communications specialist in the AAOS office of government relations. She can be reached at fassbender@aaos.org