In terms of the number of human lives and costs to healthcare providers, Texas stands out among states unwilling to expand Medicaid programs to more low-income adults nationwide.

"When Texans win, they win big. And when they lose, it's spectacular."– Robert T. Kiyosaki

If Kiyosaki is right, a looming healthcare-service affordability crisis could be catastrophic to the wellbeing of the Lone Star State's poor and uninsured population.

Several hundred thousand previously uninsured Texans gained health coverage through the PPACA exchange, but about 20% of the state's 26 million people remain uninsured, says Vivian Ho, PhD, a professor of economics at Rice University and professor of medicine at Baylor School of Medicine in Houston.

"There are at least a million lives at stake," she says. "The people without insurance who can't afford healthcare services is still alarmingly high."

Ho is co-author of a pair of reports released over the past month on the affordability of healthcare services and health insurance in Texas. In one report, survey data found that 14.7% fewer Texans had problems paying for their medical bills in 2015 compared to 2013. In the other, survey data found 69.1% of uninsured Texans cite high costs as the primary reason they do not have health insurance.

Unless Texas lawmakers expand Medicaid under provisions of the Patient Protection and Affordable Care Act (PPACA), the state's modest gain in healthcare-service affordability is destined for a disastrous reversal, Ho says. "This is an extraordinary missed opportunity for people to gain access to healthcare."

There are about 1 million adult Texans who would be eligible for health coverage through Medicaid expansion, she says. A roughly equal number have health insurance coverage through the PPACA exchange, but some of them were previously insured through other means.

"What we're talking about, is an even larger expansion of coverage than we have achieved through the ACA exchange." Ho says, "This is a large group that doesn't have healthcare insurance coverage and definitely needs it." With Medicaid expansion firmly obstructed in their Republican-controlled legislature, Texas healthcare providers are facing a double whammy from Washington.

Expiring Funds
The feds are edging closer to implementing deep cuts in the Disproportional Share Hospital (DSH) program that has offset the cost of uncompensated care over the past two decades at hospitals across the country. And the Healthcare Transformation and Quality Improvement 1115 Waiver, a five-year Medicaid program that has given Texas about $29 billion in federal funding to offset uncompensated care and to help providers pay for improvements in the delivery of healthcare services, is set to expire in the fall.

"A good portion of that money is going to help [low-income] adults get some kind of coverage. That's our Band-Aid," Ho says of the 1115 Waiver. "Where do people think these people are going to get care when they get sick? I'm worried about what's going to happen in three or four years."

She believes that if the waiver is not renewed, emergency rooms across Texas could be overwhelmed by poor men and women who will have nowhere else to go to seek medical attention when they need it.

This doomsday scenario is bigger than Texas, says Katherine Hempstead, health insurance program director at the Princeton, NJ-based Robert Wood Johnson Foundation:

"Texas is a little bit unique because it has a very high uninsured rate, so it has a lot of uncompensated care covered in its current Medicaid waiver. Florida is in a similar boat… But while Texas and Florida may be somewhat unique in terms of their size and their very high uninsured rates, hospitals in all states that have not yet expanded Medicaid are experiencing considerable fiscal stress.

In many of these states, hospital associations are leading expansion efforts and in many cases are willing to pay the state share through some kind of provider fee. Widespread financial distress and sometimes closings of hospitals in non-expansion states is another way to bring the message to politicians and the general public that failure to expand Medicaid can affect everyone's access to healthcare."

As of January, 31 states and the District of Columbia had expanded their Medicaid programs through provisions or waivers of the PPACA. The status of the struggle over Medicaid expansion in the remaining 19 battleground states continues.

Mounting Burdens
The collapse of the crude oil market, which is dealing a mighty blow to the Texas economy, will likely exasperate the state's healthcare affordability problems for at least the next two years, she says. "Now, we've had a loss of jobs, which means more people without health insurance, which puts an increased burden on the healthcare system."

That burden is already heavy at Southeast Texas Medical Associates (SETMA), a multi-specialty physician practice based in Beaumont.

"In anticipation of continued downward pressure on revenue, last June all SETMA partners had a 10% salary decrease," says James "Larry" Holly, MD, who serves as CEO of the physician practice. 

"Our budget for this year estimates a 1% shortfall in revenue, which may be compounded if revenue streams continue to weaken. Our plan is to decrease partners' salaries further before anyone else is asked to take a decrease. Even in the face of this pressure, we paid bonuses in December 2015 to our salaried employees and we have rejected suggestions to eliminate the matching 401(k) plan funds for SETMA employees. As of yet, we have not had to turn anyone down for care, and we continue to participate in the state Medicaid program and the Affordable Care Act [health] plans."

Lives really are at stake, Holly says.

The SETMA Foundation—funded by SETMA partners—assists patients in medication purchases and co-pays for specialists not found in SETMA. These patients are treated free by SETMA. Obviously, this is a stopgap, as the Foundation can help some patients a great deal and a great deal of patients some, but we can't solve the problem… The evidence is that this intervention has been life-saving for some [patients such as] the discovery of colon cancer, which can be cured by our paying the co-pay so the patient can have a colonoscopy."

Everything really is bigger in Texas, including the shameful political partisanship over expansion of Medicaid to provide healthcare coverage to more impoverished American adults.

A new Medicare payment system for physicians and other frontline providers is slated to launch in January 2019. Given the difficulties involved in crafting the new rules, federal officials have a busy three years ahead of them.

This is not going to be easy.

Last year's passage of the Medicare Access and Children's Health Insurance Program Reauthorization Act (MACRA) has set in motion a lengthy and likely arduous effort to replace Medicare's reviled Sustainable Growth Rate (SGR) formula for physician reimbursement.

MACRA has two essential elements: the Merit-Based Incentive Payment System (MIPS), which ties annual Medicare Physician Fee Schedule payments to value, and an incentive program to encourage physicians and other frontline healthcare workers to participate in Alternative Payment Models (APMs) that reimburse Medicare providers based on value of services rather than service volume.

The most daunting challenge facing the federal officials who are crafting the reimbursement rules for MACRA is accounting for the healthcare industry's variety of providers and the country's diverse economy, says Barbara McAneny, MD, FACP, CEO of the New Mexico Cancer Center in Albuquerque and member of the American Medical Association Board of Trustees.

"We need to figure out how we're going to take care of everybody, including the small-town doctor and the pathologist at a small community hospital. Pathologists become a commodity in the accountable-care-organization world, getting paid less and less, and then they give up," McAneny says.

While noting that almost any payment system would be better than the annual high-stakes battle in Congress over adjusting and reauthorizing SGR, the practicing oncologist says she fears officials at the Centers for Medicare & Medicaid Services (CMS) is creating a new Medicare reimbursement monstrosity. "What they should do is offer a menu of payment model options. We are facing a significant physician shortage in this country. … Therefore, we need to make sure we keep every physician as functional and financially sustainable as possible."

SGR Replacement Process Churning

CMS has taken several steps to lay the foundation for the MACRA ruling-making process.

On July 16, the Medicare Learning Network made a presentation to healthcare providers that gave a "general summary" about the MIPS and APM provisions of MACRA. In October, CMS released a Request for Information from the public about MACRA rule-making that generated more than 460 comments. Last month, CMS released a proposed Measure Development Plan (MDP) that seeks to revise and consolidate Medicare quality measures linked to physician reimbursement. The MDP, which is open to public comment through March 1, is designed to "leverage quality measure development as a key driver to further the aims of the CMS Quality Strategy: better care, smarter spending and healthier people," the document states.

The highlights of the statutory requirements of MACRA and the proposed rules to implement the SGR replacement legislation include:

• Beginning in 2019, CMS will apply a positive, negative, or neutral payment adjustment to each MIPS-eligible healthcare professional based on a composite performance score across at least four performance categories: quality, resource use, clinical practice improvement activities, and meaningful use of certified electronic health record (EHR) technology.
• MIPS will build upon existing quality measure sets from the Physician Quality Reporting System (PQRS), Value-based Payment Modifier (VM), and Medicare EHR Incentive Program for Eligible Professionals (EPs), commonly referred to as Meaningful Use. MACRA will sunset payment adjustments for PQRS, VM, and the EHR incentive program and establish MIPS.
• In 2019 and 2020, MIPS is set to apply to payments made to physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists. Beginning in 2021, CMS can expand the applicability of MIPS to other healthcare professionals, including certified nurse midwives, clinical social workers, clinical psychologists, physical therapists, and speech-language pathologists.
• Creation of a payment incentive program from 2019 to 2024 to encourage physicians to participate in APMs such as the Medicare Shared Saving Program.
• Technical guidance and assistance for small practices and practices in health professional shortage areas (HPSAs) to ease MIPS adoption. The proposed technical guidance and assistance would apply to physicians in practices of 15 or fewer professionals, with priority given to practices located in rural areas, HPSAs, and medically underserved areas, as well as practices with low composite scores.

Proposed MACRA Rules Drawing Criticism

Particularly in rural and medically underserved areas of the country, physicians and other frontline providers are going to need more than technical assistance to survive financially under the proposed rules for MACRA, McAneny says. "We're going to need to come up with some capital to redesign the healthcare delivery system."

Linking APM participation to a 5% annual lump-sum bonus for Medicare Physician Fee Schedule payments as proposed in July's Medicare Learning Network presentation on MACRA would not compensate small physician practices adequately for the investments required to redesign the way they deliver healthcare services, she says.

For small practices, financing is often an insurmountable obstacle that blocks participation in accountable care contracting arrangements such as the Medicare Shared Saving Program, according to McAneny. "The infrastructure to build an accountable care organization costs millions of dollars. Where is a little practice going to come up with that money?"

In its response to the CMS Request for Information document released in October, the Reston, VA-based American College of Radiology offers a laundry list of proposed changes to the MIPS and APM provisions of MACRA, including a call on CMS to reduce the administrative burden on physicians. "Administrative burdens must be limited and reporting tasks streamlined so that the delivery of patient-centered care is the principal focus in all clinical settings."

The reporting requirements under MACRA are a potentially fatal flaw for the new law, McAneny says. "The administrative burden from MIPS is going to be overwhelming. … It already costs 14 cents on the dollar [for a physician] to get paid. No other industry would put up with that."

MIPS may be fundamentally misguided, says Harold D. Miller, president and CEO at the Pittsburgh-based Center for Healthcare Quality and Payment Reform.

"MIPS is pay-for-performance on steroids, and there is a serious risk that it will do more harm than good. It is based on the flawed premise that physicians need 'incentives' to improve quality and control costs, despite years of evidence showing that P4P systems have little positive impact on quality or costs, and that they can have serious negative impacts on patients and physicians," he says. 

"The problem with P4P systems like MIPS isn't that the incentives aren't big enough; the problem is they penalize individual physicians for costs and aspects of quality they can't control, and they don't change the underlying fee-for-service payment system so that physicians have the flexibility and resources to actually redesign care in ways that will improve quality and reduce costs in the areas they can potentially improve. MIPS is a particularly bad structure because the only way a physician can get a higher payment is if some other physician gets a lower payment, when the goal should be to have every physician receiving the resources they need to improve care so that all patients can benefit,:"; says Miller.   

"In contrast," he says, "properly designed alternative payment models can create a true win-win-win: better care for patients, lower costs for payers, and physician practices that are financially viable. … They do that by fixing the problems in the underlying fee-for-service system to enable physicians to deliver care differently; and they hold physicians accountable, but only for aspects of costs and quality they can truly control."

Despite the difficulties of implementing MACRA, McAneny has a succinct response about whether she would prefer to reinstate SGR: "No. It's a new set of problems, but at least I know my practice is going to continue past January 1 of every year."

CMS officials provided several online links to information about MACRA, but they did not respond to requests for comment before this column's publication deadline.

The formation of value-base payment models is the latest front in an ongoing struggle over whether to risk-adjust healthcare service reimbursement for socio-economic status.

Who pays for the medical maladies that poverty inflicts or inflames?

As the healthcare industry begins a historic shift from payment for services based on volume to payment based on value, providers serving economically disadvantaged communities are bracing for an existential financial blow.

"Anyone who serves a disadvantaged population is going to go under," says Barbara McAneny, MD, chairperson of the American Medical Association's Board of Trustees.

Based in Albuquerque, the practicing oncologist serves patients across New Mexico. McAneny's Gallup clinic treats many patients who live in poverty on Native-American reservations. "People have to decide between paying co-pays and buying food. They know what they have to do, but don't have the resources to do it," she says. Most oncology patients from the reservations have comorbidities and delay care until their health conditions have degraded to acute stages, as opposed to oncology patients from affluent Albuquerque suburbs who tend to be fundamentally healthier, McAneny says.

"The difference is not something we can control."

She says physicians who serve economically disadvantaged communities are anticipating a Dickensian nightmare as the Centers for Medicare & Medicaid Services crafts replacement payment methodologies for the long-reviled Sustained Growth Rate formula. Under SGR repeal-and-replace legislation enacted earlier this year, CMS officials are designing new value-based payment mechanisms through the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APMs). Unless MIPS and APMs are risk-adjusted for socio-economic status, physician practices in disadvantaged inner-city neighborhoods and rural communities face crippling financial losses, McAneny says.

"They are just hanging on to stay alive now."

With Medicare and other major payers cautious about risk-adjusting value-based payment models for socioeconomic status, patients such as Tiny Tim's character in A Christmas Carol by Charles Dickens likely will be an unwelcomed sight hobbling into a hospital or physician practice in the early phases of the shift from volume to value.

Historical Precedent
The poor of 19th century London faced health-compromising living conditions similar to the hazards that the impoverished face in 21st century America, including exposure to environmental hazards, limited access to affordable healthcare services, and nutritional deficiencies.

The connection between poverty and increased risk for medical maladies is undeniable, says Otis Brawley, MD, chief medical officer of the Atlanta-based American Cancer Society and a top healthcare-disparity researcher. "The poor are more likely to live in impoverished areas. They are more likely to live down wind of factory exhaust, in smog-filled developments. There is even a correlation between living in crowded apartments with roach droppings and childhood asthma."

Consequently, "the poor are more likely to have cardiovascular disease, diabetes, cancer, asthma, and a number more acute diseases. Poverty is linked to increased risk of getting disease and being less able to deal with the consequences of the disease afterwards," he says.

But establishing and maintaining a high level of overall health is a longshot for impoverished Americans, Brawley says.

"Rather than saying poverty is causing a number of illnesses—and it is—let's focus on the fact that the middle and upper classes are more able to prevent these diseases… The poor are less likely to get healthcare services, both preventive counseling and effective treatment."

"If those services are available, the poor are less likely to be able to understand and follow what can be complex instructions. There are even studies to show that the impoverished are more likely to miss appointments and fail to adhere to therapies. This can be due to [family and other] obligations as well as logistical issues such as lack of transportation.

"The thing about poverty that perhaps most drives disease is lack of education," Brawley says. "About 30% of Americans with a high-school education or lower smoke tobacco. Among college graduates, it's less than 5%. Smoking is associated with a number of chronic diseases. The children of smokers are more likely to have asthma. Obesity is a far greater issue among the impoverished versus the middleclass. This is not to say it is not an issue for the middleclass, [rather] it's disproportionately bad among the poor." 

When designing MIPS and other value-based payment mechanisms, CMS and commercial health plans should take the additional costs of serving disadvantaged communities into account, Brawley argues.

"A successful healthcare system will have to recognize the additional challenges of getting care to the impoverished. These include the challenges of providing preventive care as well as treatment once a patient has been diagnosed. Some studies have suggested that the poor benefit more from patient navigation and counseling services. This involves personnel beyond the normal healthcare provider to spend time counseling the patient."

Risk-adjustment for socio-economic status should be part of value-driven payment models, says the CEO of Nashville-based DW Franklin Consulting Group, C. Timothy Gary, JD, MBA. "A value-based model can work, but it absolutely has to be adjusted for local demographics. [In disadvantaged communities,] you cannot count on the patients to have the support infrastructure in place; you cannot count on patients to follow the course of care. It's hard for them to get back to follow-up visits to their doctors. There's a shortage of physical-therapy facilities in these communities."

'An Entirely Different Mindset on the Costs'
Healthcare providers fear CMS and commercial payers will not risk-adjust value-based payment models broadly enough, including failure to account for the health-shattering impact of poverty, he says. "CMS tends to take a meat-cleaver approach when they need a scalpel… It's very similar to what we saw in the 1980s, when we moved to capitated payment rates. Providers went into deals without understanding the cost of care and the contributing factors to outlier cases… Doctors have a healthy degree of suspicion about the reimbursement models that are being crafted, and rightfully so."

Some patients, such as disabled, malnourished children like the Dickens character Tiny Tim, who grow up in grinding poverty, probably are not appropriate for participation in value-based payment models, Gary says.

"High-touch cases really don't fit into a risk-based model. There's an entirely different mindset on the costs," he says. "Higher-touch patients are a costly group that can drive costs… Providers will either eat the costs or avoid caring for that group of patients."

On Dec. 3, the Washington, DC-based National Quality Forum announced the roster of the nonprofit organization's 22-member Disparities Standing Committee. A "key focus" of the panel will be to review the findings of an ongoing two-year trial that is designed to determine whether quality metrics should be adjusted for socio-economic status and other demographic factors, according to a prepared statement from NQF. The committee is expected to make recommendations to the NQF board in 2017.

As Dickens illustrated in A Christmas Carol, accounting for the needs of the poor can be a matter of life or death, Gary says. "One way Scrooge goes, Tiny Tim lives. The other way Scrooge goes, Tiny Tim dies."