Anthem Lobbying Hard to Slash TKA, THA Pay

It’s possible that sometime early in 2019, about 1,000 randomly selected surgeons who perform total knee arthroplasty (TKA) and/or total hip arthroplasty (THA) will receive a potentially dense and time-consuming survey from the American Academy of Orthopaedic Surgeons (AAOS), and that another 1,000 or so will receive the same survey from the American Association of Hip and Knee Surgeons (AAHKS).

If this survey is sent, it’s not one to ignore. It could determine how much TKA and THA surgeons are paid, not just by Medicare, but by many or all other payers, for TKA and THA procedures starting in 2021.

More likely, there will be no survey.

That won’t mean that there is no problem. “AAOS and other societies with procedures on the CMS list from the 2019 MPFS* final rule have indicated to the RUC (AMA’s Relative Value Scale Update Committee) that the societies do not believe the identified procedures require surveys,” said William Creevy, M.D., the AAOS RUC advisor, in response to our query.

* MPFS = Medicare Physician Fee Schedule, referred to hereinafter as the “PFS.”

Why are THA and TKA payments under threat?

The answer, in a word, is: “Anthem.”

As we previously reported, the Centers for Medicare and Medicaid Services (CMS) decided to review seven Current Procedural Terminology (CPT) codes, including 27130 (TKA) and 27447 (THA) for whether their Relative Value Units (RVUs) are too high. The seven procedures below, taken from page 169 of the 2,379-page PDF version of the final rule for the 2019 PFS, are:

• 27130 Total hip arthroplasty
• 27447 Total knee arthroplasty
• 43239 Egd biopsy single/multiple
• 45385 Colonoscopy w/lesion removal
• 70450 CT head w/o contrast
• 93000 Electrocardiogram complete
• 93306 TTE [transthoracic echocardiogram]w/doppler complete

CMS said it was acting on an anonymous “public” comment posted to the Federal Registerunder a Medicare rule which allows the public to submit views at any time on Medicare.

“Anonymous”, it turns out, is Anthony Mader, Vice President, Public Policy for Anthem.

Anthem Declares a Price War

“Anthem believes there is systematic overvaluation of work for the Berenson-Eggers Type of Service (BETOS) categories of Major Procedures, Other Procedures, Test Interpretations, and Imaging Interpretations” (that is, specialists’ RVUs), says Mader’s letter.

Put simply: Anthem wants CMS to cut reimbursements for these seven codes, then slash and burn through the RVUs for specialist codes across the entire PFS.

The entire letter is available online.

Anthem ignored three requests for an interview, then said, after our fourth email, “We aren’t commenting beyond what was stated publicly in our letter.”

Anthem’s Goal: Drop Medicaid, Obamacare Patients, Buy Into Medicare Advantage (MA)

Anthem is a very profitable insurance juggernaut.

It reported a $1.1 billion windfall on the Trump tax cuts, according to Healthcare Finance News. In 2018, its profits soared 27% over 2017—and 2017’s profits were 55% higher than 2016’s—which is the logical result of raising premiums, shedding Medicaid and Obamacare patients from its rolls, and buying Medicare Advantage (MA) companies.

On December 21, 2017, Anthem acquired HealthSun, which it described as “one of the fastest-growing integrated Medicare Advantage health plans and health care delivery networks in Florida.” On February 15, it bought America’s 1st Choice, another for-profit Florida/South Carolina MA company. It plans to continue expanding its MA business. See “Anthem profits skyrocket 234%,” in the February 1, 2018 issue of Healthcare Finance News.

How Medicare Advantage (MA) Purchases and Provider Pay Cuts Dovetail

What do acquisitions of MA companies have to do with slashing specialist and imaging RVUs?

Everything.

MA companies receive a fixed amount of money per enrollee per year, typically 2% to 14% more than spending per patient for traditional Medicare, according to a study by the Leonard D. Schaeffer Center for Health Policy & Economics at the University of Southern California, published July 10, 2017 in JAMA Internal Medicine.

With fixed revenue per enrollee, if Anthem can persuade CMS to slash payments to specialists, some of those RVU reductions to specialists flow straight to its bottom line.

Here are the details:

1. Like an HMO [health management organization], an MA insurer signs up providers to its networks. Payments to those providers are contractually fixed, typically at 91% to 102% of the traditional Medicare rate, according to the USC study. Unless there is a contract term allowing for changes, reimbursements to in-network specialists would not be affected by a reduced RVU for the duration of the agreement, which is typically three years.However, at the next contract negotiation, the MA plan could use the reduced RVU as leverage to cut the contractual pay of its in-network specialists. Typically, providers in rural areas, or geographic areas where an MA dominates, are most vulnerable to take-it-or-leave-it contracts, according to a February 10, 2018 Modern Healthcarearticle, “Medicare Advantage plans underpay rural providers. Is that a problem?”

2. In contrast, out-of-network providers would be hit immediately. Under a Medicare rule, MA plans must pay out-of-network physicians the traditional Medicare RVU rate. If specialist RVUs were cut, MAs could reduce payments as soon as the cuts were to go into effect. See the rule at “42 CFR 422.214 – Special rules for services furnished by noncontract providers,” Commercial insurance is more complex but is often tied to Medicare rates of pay.
3. Another twist: patient advocates want to reduce specialists’ RVUs because they believe high RVUs for specialists contribute to the shortage of primary care physicians.

However, it’s unlikely that reducing specialist RVUs (and thereby raising primary care pay in the budget-neutral RVU system) would help boost primary care for MA enrollees. The way the MA payment scheme is set up, they have strong financial incentives to maintain shortages of in-network primary care physicians.

Long waits for appointments mean delayed care or patients giving up trying to get an appointment, saving the MA money. Given that financial incentive, it seems unlikely that MAs would hire more primary care physicians or raise their pay.

Are Anthem’s assertions true? How can anyone tell?

Here are three factual issues with Anthem’s sweeping claims about postoperative care:

1. There is no significant evidence to back up the claim that surgeons (or other providers in the practice) don’t perform follow-up visits covered by 10-day and 90-day CPT codes.In the past, CMS never required any reporting on postoperative visits. Then, Congress told CMS in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) to find out more about postoperative visits. It was not until July 2017 that CMS began requiring reporting on postoperative visits for 10–day and 90-day CPT codes. That requirement was imposed on only nine states. As far as we can tell, nothing has been published so far from this data-gathering.

2. As most surgeons know, it is common that within a hospital, ambulatory surgery center, or other surgery-performing business entity, postoperative care is rendered by a hospitalist or other provider within the CPT code.
3. Also, CMS has an option under which the patient may receive post-op care from another business entity provider under the code.

CMS has a CPT billing code modifier under which the surgeon can choose to bill for the pre-surgical visit and the surgery only. Then, another organization, under an agreement with the surgery performer, bills under the same CPT code for the same patient with a different modifier for the postoperative care. Thus, the surgery could be performed at a hospital, and the post-op care could be done by a physician practice, each taking part of the payment. This is quite common.

Given the fact that no records were required, anyone asserting that post-op care was not rendered within the 90-day surgery CPT code would have to check for post-surgery visits by each surgery patient to other caregivers than the surgeon, including caregivers at other corporate entities, and then determine whether they were correctly billed.

Taken together, these sets of facts mean that no one has a substantial body of facts to back up Anthem’s accusation.

The other complaint is that surgeries don’t take as long as the time calculated into RVUs. The Urban Institute study cited by Anthem observed and measured the time taken in operating rooms to do the surgical procedures at only one hospital and used data from electronic health records in two others.

This study gathered a lot of data from those three. However, their surgeons might be faster on the average than most, or their cases might be less surgically complex. It’s a tiny sample—three hospitals out of 5,534 (American Hospital Association statistic). In addition, the surgical teams in the studied hospitals might have been speedier than normal because they knew they were being watched.

Why is CMS hiding the Anthem letter?

CMS seems to have ignored all prior complaints going back to at least 2013 about allegedly inflated RVUs until Anthem wrote its letter. Consider this additional evidence:

1. CMS didn’t cite the 2016 Urban Institute study (which CMS itself commissioned); it cited only Anthem’s February 2018 letter as its reason for reviewing the seven CPT codes.
2. CMS specifically brushed aside other patient-advocacy groups’ and individuals’ comments, choosing to act only on the Anthem letter.
3. CMS referred to that letter only as a letter from the “public,” even though it was written by a big national insurance company which stands to profit handsomely from reducing RVU payments. Why?
4. CMS seemed to have deliberately made the Anthem letter difficult to find. (AAHKS was apparently unable to find it when it referred to the letter as the “anonymous submitter.”) CMS didn’t post the URL of the Anthem submission in the final rule. In fact, if Anthem’s letter is still in the Federal Registerpublic submissions docket where it was posted in February, we couldn’t find it in two searches totaling about two hours. If it is not still there, why not?
5. CMS did post a link to the letter, on a CMS web page which is not only obscure but is written in language which is extremely vague as to what it’s about—and the letter triggering the review is the very last of 25 links at the bottom of the page. Not only is this letter the last of 25 links, but nothing in the page or in the URL at the bottom hints either that it’s the decision trigger or that it comes from Anthem.

Perhaps it is just a series of coincidences, but it appears from all this that CMS was trying to characterize Anthem, a 400-pound gorilla among MA insurers, as just some 400-pound guy on his bed. Here’s the page with the letter in the 25th link at the bottom; would you have found this page, or then found the Anthem letter once you reached it?

How much of a pay cut for orthopedic doctors are we talking about?

If I’m reading CMS data correctly, then for TKA, the total RVU (ignoring small geographic and other adjustments) is 39.12. A total RVU includes office costs, malpractice costs, and the “work RVU” for the work done by the surgeon on the patient. The 2018 conversion factor (dollar value of one RVU) is $35.996. The work RVU is 20.72. So, $35.996 x 20.72 comes to total surgeon pay of $745.84 for the evaluation, surgery, and the post-op visits in the 90 days after surgery.

The CMS table indicates that the work RVU is divided into 10% for pre-surgery, 69% for the surgery, and 21% for those patient visits in the 90-day post-op period. That calculates to $156.63 in payments for postoperative care to the surgeon (or others paid under the CPT code).

Suppose CMS were to conclude that allfollow-up in that 90 days was not being done under the code (which seems highly unlikely). Then, theoretically, the surgical practice (or hospital) surgeons would be at risk of losing $156.63 (21% of $745.84).

In addition, if CMS were to agree with Anthem that the typical time for the surgery itself is less than the time embedded in current RVUs, then that 69% of the work RVU might also be reduced. To pull a number out of the air: a 10% reduction in that part of the work RVU would take $51.42 from the surgeon.

Even if CMS were to make much smaller reductions in the work RVUs for TKA and THA, the longer-term effect on orthopedics could be much larger because Anthem wants CMS to review every surgical code.

To see these codes and details in a table, go to this URL, click the agreement, input 27447 into the CPT code field, and choose “all” under “type of information.”

Would CMS grant Anthem an RVU windfall?

Yet another question: If specialist RVUs are reduced, would CMS simply let Anthem and other MA plans keep that windfall, or would CMS commensurately cut their flat payments in order to pull those savings into the government’s coffers?

Presumably, over the long run, the federal government would want to capture those savings. However, in order to act, CMS needs to first understand an issue (which might require action from a Congress which has so far been very MA-friendly), then collect data. Once CMS has data, rulemaking moves at a glacial pace. If CMS cuts specialists’ RVUs, MA insurers might see several years of windfall profits at the expense of surgeons before CMS were to catch up.

Is Anthem alone in this?

Apparently, yes, for now.

However, once other insurance companies, especially those with MA plans, get a whiff of the potential profit to be made, chances are that they’ll jump into the fray. There is an initial comment period ending December 31.  This comment period might reveal other insurance companies joining the attack.