Are You Ready for October 1, 2015?

Be prepared for what’s down the road.

By Alpha Lillstrom and Jerry Connolly
September 9, 2015

The Board-adopted PPS 2015 Advocacy Priorities includes the following goal:

Monitor and respond to ICD-10 implementation in a timely fashion with minimum disruption.

The International Classification of Disease, 9th Edition (ICD-9), has been in use in the U.S. since 1998. The United Nations World Health Organization (WHO) began working on the tenth edition of the International Classification of Diseases (ICD-10) coding system over 30 years ago in 1983 and adopted the new classification system in 1994. Countries began adopting the new coding systems as early as 1998, Canada in 2000, and here in the United States the transition to ICD-10 was mandated by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) . The Department of Health and Human Services published the Final Rule requiring the replacement of ICD-9 with ICD-10 in January 2009 , setting the compliance date for October 1, 2013. After many delays and postponements we have now arrived. After 37 years using ICD-9, the day of ICD-10 implementation is just around the corner.

While the transition was inevitable, the date of implementation has been challenged and delayed until very recently. There have been strong lobbying efforts on both sides of the debate. The American Medical Association (AMA) long opposed the transition citing the difficulties, costs, and priorities of electronic medical record implementation and urging the industry to wait for ICD-11. Meanwhile, a number of insurance, pharmaceutical, and health care facilities supporting the transition joined forces as “The Coalition for ICD-10.” The coalition encouraged health care providers to contact their members of Congress requesting that ICD-10 be implemented as planned, arguing that ICD-10 implementation delays have been disruptive and costly across U.S. health care, as well as detrimental to health care delivery innovation, payment reform, public health, and health care spending. The Center for Medicare and Medicaid Services (CMS) has estimated that the one-year delay from 2013–2014 cost the health care industry up to $6.5 billion. In early July, the AMA finally offered public support for the transition, citing recent CMS accommodations and responsiveness to their concerns.

Private Practice Physical Therapists’ Use of Locum Tenens Takes a Big Step

By Alpha Lillstrom and Jerry Connolly
August 8, 2015

This year Senators Charles Grassley (R-IA) and Robert Casey (D-PA) as well as Representatives Gus Bilirakis (R-FL) and Ben Ray Luján (D-NM) reintroduced the Prevent Interruptions to Therapy Act of 2015 (H.R.556/S.313) to authorize physical therapists to use the existing locum tenens provision of the Medicare statute so that their patients could be seen by a qualified substitute provider when the practice owner needed to be away for a short time. Adding physical therapists to this provision would allow the practice to bill and be paid for the care provided by the locum tenens therapist while helping to ensure that Medicare patients could continue their care without interruption during their physical therapist’s absence.

Simply put, this bill is a low-cost technical fix that would add physical therapists to the list of providers allowed to utilize locum tenens arrangements under Medicare (when all other conditions are met and within their same authorized scope of practice).

As Private Practice Section (PPS) members know from personal experience, there are times when a physical therapist practice owner must be away for a short time due to circumstances such as an illness, family emergency, professional development, jury duty, or the like. Under current law, physicians, osteopaths, dental surgeons, podiatrists, optometrists, and chiropractors can navigate these absences easily by entering into a locum tenens arrangement with a qualified substitute provider. Under these arrangements, the regular provider (the practice) bills and receives payments under Medicare Part B for the locum tenens professional’s services as if they had performed the services themselves. The locum tenens provider is compensated directly by the regular provider’s practice.

These arrangements are common, benefitting patients and providers alike. In rural areas especially, a locum tenens provider can serve patients who would either have to interrupt care or travel considerable distance to another provider. By hiring a qualified locum tenens provider, the regular therapist is able to ensure that there is no lapse in patient care and their Medicare patients’ appointments do not need to be canceled. Interruptions to a physical therapy treatment plan are known to impede a patient’s progress.

Even though physical therapists have practices similar to the other professions cited above, physical therapists are currently not allowed to use locum tenens because the Medicare law explicitly lists those professions to which this provision applies. Consequently, this policy flaw cannot be remedied through regulation—it must be corrected statutorily.

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In December 2014, the PPS Government Affairs Committee and Board of Directors once again identified the passage of the locum tenens bill as a top legislative priority for the Section. In February 2015, we were joined by the American Physical Therapy Association (APTA) in hosting a Key Contact fly-in to advocate for the repeal of the sustainable growth rate (SGR) formula used to determine Medicare payment, a long-term remedy for the Medicare beneficiary therapy cap and support for the locum tenens legislation. Approximately 75 PPS members answered this call and flew in to Washington to lobby their senators and representatives. In June, APTA conducted a Hill Day where nearly 1,000 APTA members (112 of whom were PPS members) went to Capitol Hill asking their legislators to support issues of importance to the practice of physical therapy including the technical fix to the locum tenens provision (H.R.556/S.313). As of July 1st, 58 House members have cosponsored the bill and we have 25 cosponsors in the Senate. There were sizeable jumps in the number of legislators cosponsoring H.R.556 (22 added since June 4) and S.313 (13 added since June 4) following each of the physical therapy- (PT) sponsored Hill Days (see sidebar). All of you who participated in person or by contacting your members of Congress by phone or email are to be commended and should be very proud of your efforts. Your engagement has had a significant impact and has given this bill the much-needed support required to stay on the path to becoming law.

In May, the Senate Finance Committee began planning a package of low-cost, noncontroversial bills to debate in committee and bring to a vote. The sponsors of S.313 (Grassley and Casey) submitted the bill for consideration. Your lobbyists called on PPS members who have a senator on the Finance Committee to urge their senator to include S. 313 in this batch of bills to be “marked up.” It worked! The bill was included in the 12-item package.

We have long maintained that adding physical therapists (PTs) to the list of locum tenens providers carries no additional cost to the Medicare program because these patients are already accounted for in the Medicare system. In other words, this is not an authorization of new treatment or therapy that otherwise would not have been already requested, referred for, or initiated. However, in the process of determining the official cost for the bill, the Congressional Budget Office (CBO) raised questions about the utilization of locum tenens arrangements under current law. Despite our assertion that including physical therapists in the existing law would not result in increased utilization (and could possibly save money by expediting and not prolonging care), CBO decided the locum tenens bill had a “score” (CBO lingo for cost), which was just above the threshold for qualifying as low-cost for purposes of the Finance Committee’s planned mark-up. In order to make sure it still qualified under the budgetary restrictions established by the Committee, the bill’s sponsors worked with Senators Bob Menendez (D-NJ) and Tom Carper (D-DE) to limit the bill’s applicability to physical therapists practicing in Health Professional Shortage Areas (HPSAs), Medically Underserved Areas (MUAs), and rural areas (defined as non-Metropolitan Statistical Areas [non-MSA]) areas.

During the June 25 mark-up, Finance Committee Chairman Orrin Hatch (R-UT), ranking member Ron Wyden (D-OR), and Senators Grassley, Casey, and Menendez each spoke clearly about the importance of physical therapy as a profession as well as the importance of ensuring Medicare beneficiaries have access to physical therapy. The modified version of The Prevent Interruptions to Physical Therapy Act of 2015 passed the Senate Finance Committee unanimously on a voice vote. We are thrilled, and PPS members should be proud, that this milestone has been reached.

We were disappointed by the geographic limitations placed on the policy at this juncture. However, given the political and logistical reality, PPS leadership recognized that agreeing to those changes was the only way to keep the bill on the committee’s mark-up agenda. Nevertheless, we remain committed to restoring the policy to nationwide application as the need for locum tenens is not a rural versus urban issue. At its core, the need for locum tenens in physical therapy is a beneficiary issue, not about location but rather the size of the practice at which the Medicare patient chooses to receive treatment. It is incomplete policy to allow the rural (non-MSAs), MUAs, or HPSA-located practices to use locum tenens while a similarly sized practice located elsewhere is not allowed to do so—the impact on individual patients and providers is the same regardless of geographic location or population density. For example, with this restriction in place, a private practice physical therapist located in a metropolitan area who is a single parent would not be able to hire a qualified substitute when out of the office attending to a sick child, while someone in a rural area could do so and assure that the Medicare patient’s care was not interrupted.

Because we feel strongly that geographic and provider-density restrictions will leave out many private practice physical therapists with small practices in more populated areas, PPS is committed to working with Senators Grassley and Casey as well as the Finance Committee leadership and staff to urge CBO to revise its score. While this is no simple task, its achievement would enable us to restore nationwide applicability to the legislation in the Senate.

To this end, we have worked with Grassley and Casey to challenge the CBO cost estimate associated with this technical correction. Reportedly, part of the projection was based on an assumption of the development of a locum tenens “cottage industry” and the implication that this has occurred with physicians under current law. With our input, Grassley and Casey have sent a letter to the Centers for Medicare and Medicaid Services (CMS) asking for (1) any evidence that locum tenens, as used by participating Medicare practitioners under current law has resulted in an increase in utilization of services; (2) data supporting the supposition of the development of a locum tenens “cottage industry”; (3) any evidence of waste, fraud, or abuse in conjunction with using a locum tenens practitioner or if the agency has sufficient authority to properly respond should that take place; as well as (4) any evidence that benefits are not being used because physical therapists are not allowed to use locum tenens. Hopefully, the CMS response will enable us to challenge CBO’s scoring methodology and work to restore the scope of the Senate bill to all physical therapists.

Across the Capitol in the lower chamber, HR556 remains unrestricted and has nationwide application. We are working with committee staff to identify an opportunity to move this bill in an expedited manner similar to what was done in the Senate.

As mentioned, this legislation would not have achieved this attention and level of success had it not been for the willing and responsive engagement of PPS members. As we head into the August recess, we ask for your involvement once again, as this is the optimal time to reach out to your member of Congress while he or she is home to meet with constituents during the summer work period. There are many ways to engage your representative or senators to increase their understanding of physical therapy and its substantial contributions to patients—as well as the role you play in the community as a small business owner and employer. The best way to make this impression is to invite them to visit your practice. Reach out to their local office, introduce yourself to their staff, and offer to host both the legislator and/or staff for a clinic visit. Also inquire about town hall meetings or other public events so that you, your colleagues, and perhaps even some of your patients can attend. The member of Congress works for you and needs to learn from you, the expert, about how the policies they vote on affect you and your patients. Bringing the message “home” can have a profound impact on how they evaluate policy when back at their desks in Washington, D.C.

As is evidenced by the above-described progress on this one piece of legislation, your involvement can make a difference. Keep up the great work!

Take a look at when your member of Congress signed on as a sponsor of the Prevent Interruptions in Physical Therapy Act (HR556/S313). You can see a clear pattern of when PPS members were on the Hill and reaching out to their representatives and senators asking for their support. If your member is not already a cosponsor, reach out today: find your representative here and find your senator here. Screen Shot 2015-08-04 at 2.09.46 PM


Alpha Lillstrom is a registered federal lobbyist working with Connolly Strategies & Initiatives, which has been retained by PPS. An attorney by training, she provides guidance to companies, nonprofit organizations, and political campaigns. For six years, she served as Senior Policy Advisor and Counsel for Health, Judiciary, and Education issues for Senator Jon Tester (Montana), advising and contributing to the development of the Affordable Care Act, as well as working on issues of election law, privacy, government transparency, and accountability. Alpha has also directed Voter Protection efforts for Senators Bob Casey, Al Franken, Russ Feingold, and Mark Begich. She was Senator Franken’s Policy Director during his first campaign and was hand-picked to be the Recount Director for his eventual 312-vote win in 2009.


Jerome Connolly, PT, CAE, is a registered federal lobbyist whose firm, Connolly Strategies & Initiatives, has been retained by PPS. A physical therapist by training, he is a former private practitioner who throughout his career has served in leadership roles of PPS and APTA. Connolly also served as APTA’s Senior Vice President for Health Policy from 1995–2001.

More Health Legislation to Come


Is our grassroots program ready?

By Jerome Connolly, PT, CAE
July 7, 2015

Compliments of the Physical Therapy Political Action Committee (PT-PAC), your lobbyist was afforded the opportunity on June 2 to have dinner with Rep. Paul Ryan (R-WI), chairman of the House Ways and Means Committee. For over an hour the chairman engaged in a discussion of a wide range of topics from trade to tax reform. Rep. Ryan shared his philosophy, goals, and strategies as a leader of the conservative movement, the Republican vice presidential nominee in 2012, and chairman of the powerful panel that oversees almost every issue—including Medicare—in the House of Representatives.

The chairman was demonstrably proud that Congress accomplished the reform of the flawed sustainable growth rate (SGR) Medicare payment formula in April, but he openly continues to harbor aspirations for reforming the entire Medicare benefit. He sincerely believes the program as it is currently structured is not sustainable. He is convinced that it can only be saved by converting the entitlement to a premium support plan.

This is not new. Private Practice Section (PPS) members will recall that as chairman of the House Budget Committee, Ryan twice proposed spending plans that would replace the traditional Medicare benefit with a voucher system. To offset the cost, Ryan’s 2015 budget would have taken $140 billion from the SGR (provider payments), and another $110 billion in general Medicare cuts.1 Today, as a consequence of the successful repeal of the SGR in April, such savings would be hard to find.

But now Chairman Ryan says converting Medicare to a premium support plan will pay for itself by increasing competition, improving quality, and giving the beneficiary the choice of the type of insurance coverage purchased on the private market.

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This emphasis on private insurance would further empower health insurers that were situated strategically and considerably emboldened by the Affordable Care Act (ACA), which has resulted in record earnings reports of the nation’s largest insurers since the enactment of Obamacare. To wit: The five biggest insurers in the country are heading into a more stable future after their first quarter earnings reports show that they all are in good financial health in the post-reform market.2

  • Aetna reported that it made $777 million in net profit and $15.09 billion in revenue, an 8 percent increase from last year.
  • Anthem saw a 4.3 percent increase in enrollment (reaching about 38.5 total million members), particularly from its Medicaid plans’ 25 percent jump in enrollment to 5.6 million people in the first quarter. The company achieved a better-than-expected first quarter profit of about $865 million.
  • Cigna’s revenues reached $9.5 billion, an increase of 11 percent from the same time last year, which reflected a growth in premiums and fees.
  • Humana said its revenue rose 18 percent to $13.8 billion.
  • UnitedHealth posted revenue of $36 billion and net income of $1.41 billion in the first quarter, amounting to a 13 percent year-over-year growth. The nation’s largest insurer also added 1.6 million members in the past year.

These are the same insurers who are proposing double-digit rate hikes for 2016.3

Chairman Ryan’s Medicare reform proposal would replace Medicare’s guarantee of health coverage with a flat premium-support payment, or voucher, that beneficiaries would use to purchase either private health insurance or a form of traditional fee-for-service Medicare. (It would also raise the age of eligibility for Medicare from 65 to 67.)

Despite promoting this idea for several years, Ryan has provided few specifications for his premium-support proposal. However, his staff says that he is considering the “average-bid” model described in a recent Congressional Budget Office (CBO) report.4 Under this illustrative option, the value of the premium-support payment in a given region would be based on a weighted average of bids made by participating private plans and traditional Medicare in that region. (The bids would represent the amount that a plan would require to provide Medicare to a beneficiary of average health.) Beneficiaries who chose a plan with an average bid would pay only the standard Medicare premium. Those who chose a plan with an above-average bid would have to pay a premium that was higher by the full amount of the difference.

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The proposal’s impact on individual beneficiaries would differ depending on whether traditional Medicare or private plans cost less in their region, but it would disadvantage beneficiaries in at least two ways. First, in many regions, traditional Medicare would cost more than the premium-support voucher, so beneficiaries who chose to enroll in traditional Medicare would have to pay higher premiums than under current law. Second, beneficiaries who enrolled in a private plan would not receive the federally subsidized supplemental benefits that enrollees in private Medicare Advantage plans receive under current law.5

Chairman Ryan says that his premium-support proposal would not affect people aged 56 and older in 2014. But this claim is unlikely to be completely true since traditional Medicare would tend to attract a less healthy pool of enrollees (adverse selection), while private plans would attract healthier patients. The Medicare Advantage program provides a current example of this phenomenon. Although the proposal calls for “risk-adjusting” payments to health plans—that is, adjusting them to reflect their enrollees’ health status—the risk-adjustment process is highly imperfect and captures only part of the cost differences across plans that stem from differences in enrollees’ health.1

The process of legislating, according to Chairman Ryan, will essentially cease in Congress when the presidential political campaigns get going in earnest (some would argue they already are) so there is a limited legislative window. However, the GOP vice presidential nominee said he expects the Republican presidential candidate to be selected no later than May 2016 due to changes the Republican National Committee (RNC) has made to front-load the primary elections process. This means that little if any substantive legislation will get passed once Congress recesses for the holidays at the end of this year. Whatever does pass prior to that still must gain the approval of the current occupant of the Oval Office.

While Ryan is realistic, he is also determined to use the legislative process in every way possible to help the GOP win the White House in 2016, thus enabling one-party control of the legislative and executive branches. Once this occurs, he will be positioned to attain his goal of “voucherizing” Medicare.

In addition to Medicare reform, Chairman Ryan will attack other health care issues throughout the remainder of the year including bolstering the health savings account program, which he says was eviscerated by the ACA. Two other ACA provisions on Ryan’s radar for repeal include the medical device tax and the Independent Payment Advisory Board (IPAB); provisions that were included as a way to help pay for the health reform legislation. Moreover, he is also interested in reforming the post–acute care market by introducing bundled payment.

Given Ryan’s health policy priorities and our as yet unaddressed PPS priorities that include locum tenens, opting out of Medicare, and the therapy cap, it is clear that there is considerable cause for vigilance and engagement for the remainder of 2015.

Your PPS lobby team is leading the staunch effort on locum tenens and opt-out and participating with the American Physical Therapy Association (APTA)-led Therapy Cap Coalition in positioning the therapy cap repeal for the optimal political outcome.

However, a full PPS membership effort will be needed to accomplish our legislative goals and that brings me to the strength and effectiveness of our PPS grassroots mechanism.

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Your advocacy team was pleased with the responsive engagement many PPS members demonstrated in response to our numerous grassroots alerts on the SGR and therapy cap legislation in April. A similar membership-wide effort will be necessary again this year if we are to succeed.

While we can be justifiably proud that we have grown a large Key Contact program, it must be pointed out that we still lack Key Contacts for important target legislators (see sidebar). Therefore, it is critical that we quickly take determined strides to broaden and strengthen the PPS Key Contact program through which a PPS member acts as a trusted resource and PPS ambassador to a specific member of Congress.

In the Senate alone, a dozen critical legislators do not yet have a PPS member constituent committed to serve as a resource, an educator, and a relationship builder. These vacancies include four senators (Coats, Nelson, Stabenow, Warner) on the important Finance Committee and four members of the Health Education Labor and Pensions (HELP) Committee (Collins, Kirk, Murkowski, Sanders). Separately, three members of Senate leadership (Barrasso, Klobuchar, Wicker) are also without a PPS Key Contact.

In April, we fell two votes short of passing an amendment on the Senate floor that would have fully repealed the therapy cap. Sure, we can be proud of coming so close, but at the same time we should be disappointed. Two changed votes could have permanently eliminated an adverse and discriminatory policy that has been dogging our profession and our patients for nearly two decades. Yet we lack strong constituent relationships with twelve critical senators.

If we had had those strong relationships, which can be established and nurtured through an effective Key Contact program, would the outcome in the Senate have been different? We will never know for sure. However, what I do know from my vantage point of working in congressional relations for over 20 years is that without such connections, the chance of optimal outcome on such a vote is diminished if not obliterated.

On June 4, APTA coordinated a physical therapist Hill Day preparing and ushering nearly a thousand APTA members to Capitol Hill for a rally and for visits with their members of Congress. The previous evening, in her remarks opening the APTA Annual Conference (“NEXT”), legendary tennis professional Billy Jean King stated: “Every single one of you is an influencer.”

PPS has established a Key Contact Task Force charged with the mission of recruiting and training PPS members to become effective Key Contacts. For your patients, your profession, and your practices, please step forward and let’s fill our Key Contact vacancies with eager and enthusiastic private practice physical therapy advocates. Please contact task force chair Kathleen Picard ( and tell her you are willing to do your part.

“Every single one of you is an influencer!”


1. Van de Water P, Medicare in Ryan’s 2015 Budget, Center on Budget and Policy Priorities, April 8, 2014.

2. Insurers Navigate Health Overhaul to Rising Profits, Associated Press, April 29, 2015.

3. Nesper M, Insurers propose double-digit rate hikes, Employee Benefit News, June 3, 2015.

4. Congressional Budget Office, A Premium Support System for Medicare: Analysis of Illustrative Options, September 2013.

5. Congressional Budget Office, A Premium Support System for Medicare, pp. 4-5.


Jerome Connolly, PT, CAE, is a registered federal lobbyist whose firm, Connolly Strategies & Initiatives, has been retained by PPS. A physical therapist by training, he is a former private practitioner who throughout his career has served in leadership roles of PPS and APTA. Connolly also served as APTA’s Senior Vice President for Health Policy from 1995–2001.

SGR Repeal Signals Accelerated Move to Value-Based Payment

By Jerome Connolly, PT, CAE
June 6, 2015

On April 14, the Senate passed The Medicare Access and CHIP Reauthorization Act of 2015 (H.R. 2) by a vote of 92 to 8 thus repealing and replacing the flawed sustainable growth rate (SGR) formula and averting the 21 percent reduction in provider payments that was scheduled to take effect in April. The legislation, which originated in the House and passed that chamber with an astounding 392 “yea” votes, was signed by the president and is now law. The measure extends the therapy cap exceptions process through December 31, 2017. An amendment in the Senate to fully repeal the cap fell two votes shy of the necessary 60-vote threshold. However, the underlying legislation does contain provisions for more targeted (and palatable) manual medical review vis-à-vis the therapy cap.

Obviously, much work remains for the Private Practice Section (PPS) in the advocacy arena and despite these favorable SGR and therapy cap developments we will continue to aggressively pursue our legislative priorities that include locum tenens and opt-out. But more activity on the therapy cap may still be possible this Congress. One senator (Dean Heller, R-NV) who opposed the therapy cap repeal amendment offered by Senators Ben Cardin (D-MD) and David Vitter (R-LA), indicated he did so only after receiving assurance from his leadership Majority Leader Mitch McConnell (KY) and Finance Committee Chairman Orrin Hatch (UT) that there would be another opportunity this year to advance and work on full repeal of the cap.

Since the spring congressional recess occurred between the House and Senate consideration of the Medicare bill, the PPS advocacy team took advantage of the two-week hiatus and worked diligently with the American Physical Therapy Association (APTA), the Therapy Cap Coalition, and our locum tenens allies to urge the Senate to delay, amend, and then pass H.R. 2. Numerous grassroots alerts—both broad and targeted—were issued and PPS members responded diligently. However, with the senators not being in Washington, decisions could not be made on how the bill would be handled procedurally, and whether or not any given senator would be willing to push for consideration of amendments. In addition, a decision had to be reached as to whether any given amendment, if offered, would require budgetary offsets.

Ultimately, the leadership allowed six amendments, and the Cardin/Vitter amendment to fully repeal the therapy cap was one of them. All six amendments were defeated but therapy cap repeal was the one that came closest to passage. The “postmortem” analysis determined that this was a purely political vote and not necessarily one that accurately reflects any given senator’s position on the policy. Nevertheless, reaching 58 affirmative votes in such a political climate is no insignificant feat. A close look at the yeas and nays reveals no member of the Republican leadership voted for the amendment. Likewise, no Republican chairman of a major committee voted “aye” and only one Republican member of the Senate Finance Committee (Sen. Richard Burr-NC) voted for the amendment. All Democrats with the exception of Sen. Joe Manchin (WV) voted in favor of the amendment. (See Senate Roll Call Vote Tally, p.25.)

The repeal of the SGR formula is also an enormous accomplishment as it was responsible for the frequent (nearly annual) threats of double-digit cuts in our Medicare payment rates. The new law replaces the SGR with an approach focused on rewarding high-performing providers while supporting alternative payment models such as accountable care organizations and patient-centered medical homes.1 As such, it represents a dramatic shift in Medicare reimbursement philosophy and pragmatics as it places an emphasis on value through the establishment of a merit-based incentive payment system (MIPS).

The regular threatened cuts to fees under the SGR will be replaced by modest annual updates allowing fees to increase by 0.5 percent this month (June) and each year from 2016 through 2019, after which they will remain at the 2019 level through 2025. But “high-performing providers and providers participating in alternative payment models” will have the opportunity for additional payments.2

Beginning in 2019, the MIPS will replace three previous incentive programs (physician quality reporting system [PQRS], meaningful use of electronic medical records, and the value-based modifier) with a combined value-based payment program that assesses the performance of each eligible provider based on quality, resource use, clinical practice improvement activities, and meaningful use of certified electronic health record technology.2

This is an open, clear statement of Congress’s intent to accelerate the move of the basis of Medicare reimbursement from volume to value. The legislation calls for a new payment plan that eventually bases physician payments on their participation in value or incentive-based payment models. The SGR replacement reinforces the need for health care organizations to have a strategy in place to address the shift away from the fee-for-service payment model.3

The Secretary of Health and Human Services (HHS) will have substantial flexibility—within guidelines—to specify the quality measures to be used in determining the MIPS payment adjustment and to update the measures list as appropriate. The Secretary also will be responsible for developing the methodology for assessing the performance of each provider and the formula for calculating payment adjustments, as well as setting the threshold for bonus payments for exceptional performance. While physical therapy was not specifically mentioned in the statute, there is direction that all non physician providers will be included through the regulatory process through the provision that empowers the Secretary to decide whether and which other categories of health care professionals would be eligible for the MIPS after the first two years.

Providers who participate in alternative payment models can receive extra payments, such as shared savings for accountable care organizations or patient-centered medical homes. In addition, a 5 percent bonus would be available each year from 2019 through 2024 for those physicians who receive a substantial portion (at least 25 percent) of their revenues through those models. Providers who choose to participate in the MIPS would be subject to positive or negative payment adjustments based on their performance, with $500 million in funding each year from 2019 through 2024 to provide an additional adjustment for providers with exceptional performance.1

Beginning in 2026, fees would increase by 0.75 percent each year for providers who participate in an alternative payment model and 0.25 percent per year for those who do not. All providers not participating in alternative payment models will be subject to the MIPS beginning that year.1

All this obviously means that much critical work lies ahead in the regulatory arena that will impact our Medicare reimbursement rates as private practitioners.

Given CMS and congressional history, it is clear that the MIPS will be predicated on quality and outcomes. Physical therapy is well positioned for this new era as functional outcomes measures abound in our profession. Conversely, the care of medical doctors generally is not as conducive to measuring the effects of care, which is why physicians are currently emphasizing process measures; that is, whether or not something was done, rather than the ultimate result (outcome) of their care on the patient.

Consequently, there is a level of angst within the physician community about the new payment method, even though the American Medical Association strongly endorsed H.R. 2. Some specialty societies are clearly concerned and some believe this is a dramatic step into the unknown. “American Society of Plastic Surgeons is greatly concerned about the impact H.R. 2 will have on patient care and maintains its conviction that the Act is not in the best interest of patients, access to care, nor the quality of patient care delivered by all medical specialties.”4

Under the new reimbursement schema, Medicare will pay doctors based on how well they do their jobs, but it is hazy on how the government will accomplish this. “I am very skeptical of this,” Urban Institute Fellow Robert Berenson, M.D., was quoted as saying. “It is really absurd that we do not have any measures for most doctors that can place a value on their performance.”5

Blair Childs, senior vice president of Premier Inc., a large provider alliance, was unequivocal about what the repeal means for their industry. “It’s a new era,” he said. Though his organization has been deeply involved in pursing alternative payment models such as accountable care organizations (ACOs), “I do think a lot of the physician organizations have not been as engaged in this area,” he added. “This is a wake-up call and it is going to have big implications for health care in this country.”6

The plan represents one of the biggest steps yet from the government to actively accelerate the transition from the traditional fee-for-service model to value-based care. Some experts such as Paul Keckley, managing director at the Navigant Center for Healthcare Research and Policy Analysis, believe this will significantly “raise the stakes for clinically integrated networks of physicians, allied health professionals and their business partners to take on payer-sponsored risk.”7

To refine and implement a value-based system, health care leaders and the government must take several steps, including standardizing the definition of value, developing payment models geared toward positive outcomes, and aligning stakeholder interest.8

Meanwhile, and separate from the SGR legislation, HHS has embarked on a fundamental reform of how it pays providers for treating Medicare patients in the coming years. The intent, according to HHS officials, is to cut down on the volume of unnecessary procedures while improving patient outcomes.

“Those models will depend on how well providers care for their patients, instead of how much care they provide,” HHS Secretary Sylvia Mathews Burwell said at a January press conference in Washington.9

For the first time, her agency is “setting clear goals—and establishing a clear timeline—for moving from volume to value in Medicare payments.” In doing so, CMS will tie 30 percent of all fee-for-service (FFS) payments to providers to quality initiatives through alternative payment models—particularly ACOs and bundled payments—by 2016. It will rise to 50 percent by 2018. According to HHS, about 20 percent of Medicare FFS payments are through new payment models.10

PPS members can be relieved that we no longer have to worry about Medicare cuts that caused the frequent legislative SGR “fire drills.” However, we cannot understate the importance of the shift to value-based payments, a method that is sure to gather momentum now that it is recognized by the major federal payer.11


1. H.R. 2: The Medicare Access and CHIP Reauthorization Act of 2015.

2. Guterman S, With SGR Repeal, Now We Can Proceed with Medicare Payment Reform, The Commonwealth Fund Blog, April 15, 2015.

3. Ellison A, SGR replacement reinforces move toward value-based care, Becker’s Hospital CFO, April 16, 2015.

4., accessed April 23, 2015.

5. Budryk Z, Is the proposed SGR fix too vague to work?, Deficit hawks question savings while healthcare experts call for better-defined quality measures, Vox. April 7, 2015.

6. Small L, What the SGR repeal means for value-based payment models, Providers, payers weigh in about “doc fix” replacement’s ‘wake-up call’ to industry, Fierce Healthcare, April 15, 2015.

7. Keckley P, The SGR fix: what does it mean for hospitals and health systems?, April 6, 2015, Hospital and Health Networks Daily, AHA Publications.

8. Szczerba R, The Medicare ‘Doc Fix’ Bill: How Do We Pay For Value-Based Care?, Forbes, April 7, 2015.

9. Millman J, The Obama administration wants to dramatically change how doctors are paid, Washington Post, January 26, 2015.

10. Burwell Statement, Progress Towards Achieving Better Care, Smarter Spending, Healthier People,, January 26, 2015.

11. Japsen B, Anthem Blue Cross’ $38 Billion Move From Fee-For-Service Medicine, Forbes, January 29, 2015.


Jerome Connolly, PT, CAE, is a registered federal lobbyist whose firm, Connolly Strategies & Initiatives, has been retained by PPS. A physical therapist by training, he is a former private practitioner who throughout his career has served in leadership roles of PPS and APTA. Connolly also served as APTA’s Senior Vice President for Health Policy from 1995–2001.

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Medicare, the Budget, and Our Exec

By Jerome Connolly, PT, CAE
May 5, 2015

I was hoping to dedicate this column to a summary of the successful passage of Medicare legislation that would have fully repealed and reformed both the Medicare therapy cap and the sustainable growth rate (SGR) formula used to calculate our payments—but alas, as of this writing, Congress has not quite finished the job.

The House of Representatives did pass H.R. 2 on March 26 and the bill does include a repeal and replacement for the dysfunctional SGR formula. After transmitting the bill to the Senate, the House recessed for a two-week spring break. Meanwhile, the Senate was engaged in a marathon debate on a budget resolution (the first in years, but more on that later), and could not act on the SGR bill before it also recessed. Actually, there was time for a voice vote, but with three Republican senators objecting, the unanimous consent required for such a maneuver was not present.

So, the Senate left Washington despite the March 31 expiration date of the current SGR waiver and Medicare reimbursement level. Of course, the therapy caps exception process, which always travels with the SGR, also expired at the end of March, so our patients as well as our payments were jeopardized by this action (or lack thereof).

But the House did not include full repeal of the therapy cap in H.R. 2, opting instead to extend the exceptions process through 2017. The decision to separate these two policies that have traveled in tandem since their inception in the same law in 1997 was disappointing to say the least. It also was somewhat mystifying that the House would take care of a physician payment problem but neglect to ensure that patients most in need of rehabilitation therapy were not protected.

When Congress left the job unfinished, we worked aggressively during the recess to urge the Senate to fix the House mistake and include full repeal of the therapy cap in the SGR bill. Our message: Repealing the cap is a full solution that was vetted by and agreed to in the Senate last year. As stakeholders, we have also improved the exceptions process with manual medical review, agreed to report functional limitations, and by doing so lowered the budgetary cost of full repeal. We have acted in good faith, doing everything Congress asked of us. But the House turned its back on beneficiaries this year when they developed the package without Senate input and without including the therapy cap repeal.

Currently, we are activating grassroots and forging a comprehensive stakeholder assault on the Senate emphasizing the importance of therapy cap full repeal to our nation’s seniors. And to underscore the therapy cap as a beneficiary issue, we have been delighted to enlist the support of American Association of Retired Persons (AARP) and its 33 million member grassroots organization. Together we are calling on the Senate to amend H.R. 2 by repealing the beneficiary therapy cap along with the physician payment formula (SGR). It may turn out to be a futile attempt as the Senate may eschew amendments as it will have only about 36 hours to act after reconvening. Otherwise, Medicare claims processing and reimbursements will be severely disrupted. Nevertheless, we intend to make our position known and to advocate on behalf of our Medicare patients. And even if this is not the time the cap is fully repealed, we will not rest until it is.

Federal Budget
As mentioned above, the 114th Congress has decided to consider a nonbinding budget resolution, and separate bills were passed by each chamber before the spring recess. This is the first time in six years such a budget bill has been adopted by Congress and was made possible by the Republican takeover of the Senate in the November 2014 elections. Even though the measure does not carry the force of law nor require the president’s signature, it is an important statement for the Republican-controlled Congress and will be held up by the GOP as evidence they are capable of governing, an important demonstration in advance of the 2016 elections, which they hope will award them control of both the executive and legislative branches of government. The GOP’s first months in control of both chambers of Congress were marked by high-profile stumbles and a near-shutdown of the Homeland Security Department.

But translating a budget resolution into an actual budget is a much more difficult endeavor that requires the adoption of spending bills that do have the force of law, if and when they are signed by the president. Congress has until October 1 to accomplish this task, as that date marks the beginning of the 2016 fiscal year.

This budget resolution is merely a blueprint, but it can be enormously valuable in the Republican-controlled Senate where it can be used as framework for Budget Reconciliation, a process by which adoption of an actual budget that reduces the deficit can be approved with a simple majority, not the 60 votes required for most legislation.

This, of course, means the Republicans could avoid the leverage of the filibuster and push through the budget on a party-line vote without Democratic help. Readers may recall that this is the same parliamentary maneuver used by the Democrats in 2010 to push the Affordable Care Act (ACA) over the finish line. It could be considered ironic but fitting that the Republicans would use the same procedure to put repeal of Obamacare on the president’s desk, embedded in an overall deficit-reducing budget. It is difficult to envision any circumstance under which President Obama would sign such a bill into law, but it would doubtless put him in a difficult position, which, of course, is the object of the exercise for Republicans.

Farewell to PPS Executive Director
It has been a positive, productive process working with Laurie Kendall-Ellis over the past five years and I want to add my best wishes to the voices of many as she moves on to lead a larger health care organization in Washington.

In my view, Laurie’s unique background and skillset as a physical therapist, a private practice owner, a Private Practice Section (PPS) and American Physical Therapy Association (APTA) member, and a professional association executive, served the Section well at its stage of organizational development. Among her many notable achievements belong the three PPS Washington Advocacy Conferences—a new endeavor for the Section and a Laurie Kendall-Ellis brainchild—each more successful than the last.

Laurie’s presence, participation, and professionalism were of significant assistance to me as the PPS lobbyist and I know to the entire Section as well. To Laurie, I extend my gratitude and congratulations.


Jerome Connolly, PT, CAE, is a registered federal lobbyist whose firm, Connolly Strategies & Initiatives, has been retained by PPS. A physical therapist by training, he is a former private practitioner who throughout his career has served in leadership roles of PPS and APTA. Connolly also served as APTA’s Senior Vice President for Health Policy from 1995–2001.

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