Laura Joszt

The controversial move to bundled payments is well underway at the Centers for Medicare and Medicaid Services (CMS).

In an effort to cut costs and get physicians to adhere closely to quality guidelines, aspects of the payment model known as “value-based care,” CMS today announced three new bundled payment models in cardiac care, an expansion on the Comprehensive Care for Joint Replacement Model (CCJR), and a highly anticipated new track in the Medicare Shared Savings Program (MSSP). Those who comply will be eligible for a 5% enhancement in reimbursement.

The cardiac payment model includes: the Acute Myocardial Infarction (AMI) Model; the Coronary Artery Bypass Graft (CABG) Model; and the Cardiac Rehabilitation Incentive Payment Model.

AMI and CABG will be implemented in 98 areas and rehabilitation model will be implemented in 90 geographic areas, half of which overlap with areas that were also selected for the AMI and CABG Models.

The CCJR is being expanded in the current CJR areas to include surgeries for hip and femur fractures.

The models will begin on July 1, 2017 and run until December 31, 2021, plus they count as participation in an Advanced APM under MACRA, which means clinicians qualify for a 5% incentive payment.   There are some who remain opposed to the mandatory nature of the bundled payment models for cardiac care and hip and knee replacement.

At the American College of Cardiology, President Richard Chazal, MD, said “this new path for cardiologists to participate in Advanced Alternative Payment models under MACRA’s Quality Payment Program is a challenging step. It is our sincere hope that the end result will be opportunities for coordinated care and improvement in quality, while also decreasing costs for patients with heart attack or who undergo bypass surgery.”

Tom Nickels, executive vice president of government relations and public policy of the American Hospital Association (AHA), called it “too much, too soon.” The pace of change leaves AHA concerned.   “While it is important to test new payment models, hospitals should not be forced to participate in complicated new programs if the government has not already proven that they will benefit the patients we serve,” he said. “We will continue to urge that any new bundled payment programs be of a voluntary nature.”  

 Another opponent? Representative Tom Price, R-Georgia, who is President-elect Donald J. Trump’s pick to run Health and Human Services. On September 29, Price and other members of Congress wrote to CMS Acting Administrator Andy Slavitt and Patrick Conway, MD, MSc, deputy administrator of innovation and quality and chief medical officer of CMS, that mandatory payment reform exceeds the authority of the Center for Medicare and Medicaid Innovation (CMMI).   “We insist CMMI stop experimenting with Americans’ health, and cease all current and future planned mandatory initiatives within the CMMI,” the letter said.   It seems likely that Price will scrap plans for the mandatory bundled payment models.   CMS also announced Track 1+, a new accountable care organization (ACO) model under MSSP. The new track has more limited downside risk than Tracks 2 and 3. The Track 1+ model qualifies participating ACOs for the Advanced APM path.

The changes also provide additional opportunities for providers to participate in the Medicare Access and CHIP Reauthorization Act (MACRA) under the Advanced Alternative Payment Model (APM) path, according to CMS.  

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Unfortunately, for physicians, high income doesn’t guarantee a comfortable, well-financed retirement. There are many considerations that go into creating a retirement savings plan to ensure investments can withstand a large market drop and money won’t run out all while maintaining a specific lifestyle.

Although, most people look forward to their retirement, saving for it can be stressful. People can easily get intimidated by the large nest egg they’ll need to build in order to live comfortably. And the more you earn pre-retirement, the more you’ll need to save if you want to continue living in the style you have become accustomed.

, a 45-year-old physician with annual income of $213,000 will need nearly $5.2 million to retire in style. Fidelity Investments recommends that physicians be prepared to replace 

. However, most people don’t realize they’ll need that much.

Even the wealthy are concerned about their retirement savings. 

 revealed that 38% of wealthy respondents said building their retirement investments was their top priority for 2014.

These common mistakes can derail retirement savings, so take heed.

The older you get, the less investment risk you should take right? Yes, but only to a certain extent. There is such a thing as too little risk when it comes to retirement investments. Retirees shouldn’t be able to solely live on their savings and Social Security, which means investment income will be necessary.

The general rule of thumb is that portfolio risk should gradually tilt more towards bonds as you age. However, 

 out that at age 65 you could still live another 30 years and your portfolio will need stocks to help your savings last as long as you do. Stocks will help you 

Diversifying allows you to stay invested in stocks without the risk of one investment tanking your portfolio. But every person has his or her own level of risk tolerance.

Instead of adhering too closely to the “rule of thumb,” choose the investments that are right for your stage in life, your retirement timeline, and your personal stomach for risk, 

. And each year, check the portfolio and made adjustments as needed.

7. Choosing short-term spending over long-term planning

Instant gratification is so much better than waiting for something. And yet giving in to those urges will deliver a strong blow to your retirement. Instead of upgrading to a nicer, bigger house, getting a second luxury car, or taking an expensive vacation, put that money into a retirement savings account. Especially if purchasing one of those items means compromising later.

Although it’s farther off in the future, saving for retirement should be the top priority, even over paying for college for your children. They have time on their side to pay off loans. But once you reach retirement age and realize you don’t have enough money, it’s tough, if not impossible, to catch up.

6. Not taking advantage of multiple retirement accounts

Physicians who make a lot of money and contribute the maximum amount to one retirement account might think they’re done. But the truth is, if you’ll need a couple million dollars to live the lifestyle of your retirement dreams, then more than one account is necessary.

While it’s great if your company offers a 401(k) (and even better if the employer matches contributions), this is not the only way to save for retirement. Once you’ve invested the amount your employer will match, consider opening an IRA or a Roth IRA so you can sock away a little extra money each year.

If you have a large salary and equally big expectations for retirement, then you need to max out contributions to as many accounts as possible. Don’t hold back.

Creating a plan is smart, but closely following that plan is imperative. One of the mistakes many people make when saving for retirement is simply guessing at what they’ll need instead of actually calculating it based on how long they might live and what sort of lifestyle they want, and then stress testing the plan against all sorts of market scenarios.

Your plan should direct you during a market downturn so you don’t panic, sell, and lose a ton of money. A plan will also prevent you from simply following the herd, investing in hot stocks after they’ve already risen and possibly taking on unnecessary risk.

People are emotional, especially when it comes to money, and a plan takes the emotion out of your investment decisions—as long as you can stick to it.

The unobservant investor could lose tens of thousands of dollars over the years to fees, and when it comes to retirement, that money could be crucial. PMD columnist and financial consultant Shirley Mueller, MD, has often written about the dangers of fees. Recently, she wrote about 

In fact, only recently participants in employer-sponsored plans didn’t actually know how much their plan cost or if their plan had any costs. The fees can really add up, though, and it means less money compounds over the years.

Paying 1% or 2% in fees might not sound like a lot, but 

 broke down just how crushingly expensive those fees can be in the long run. The chart below from 

 shows 2 options for 401(k)s: one with 0.08% fee and one with a 1.33% fee. In the example, the participant contributes $3,000 a year.

Although the second fund has just a 1.33% fee, it earns 

Even little fees can make a huge difference in your retirement savings.

When people change jobs they have a bad habit of cashing out their retirement plan, according to a 

. This is possibly the worst thing they could do, unfortunately.

When you leave a job, there are 3 options for your retirement account: take the money, keep it in the existing plan, or roll it into another tax-advantaged account. People who chose to take the money are not only forfeiting years of potential investment growth, they’re subjecting themselves to fees and penalties.

“Everyone’s personal financial situation is different and there are times when a person must have access to cash,” James MacDonald, president of Workplace Investing at Fidelity, said in a statement back in February. “However, we urge all investors—especially young savers with years of potential investment gains&mdash;to keep their 401(k) savings working for them in a tax-advantaged retirement account when changing jobs.”

If you take the money out before retirement, you pay federal and state taxes, 

, the money you saved over 5 years could take twice as long to replace.

Just a bad as cashing out the plan is borrowing from it, which some employers allow. Not only is the money that pays back a 401(k) loan taxed today, but the money is taxed again when you retire and withdraw it. And if you leave your employee and don’t pay back the loan in 90 days, the money is considered an early withdrawal, 

2. Underestimating how long you’ll live

Outliving savings is one of the biggest fears of pre-retirees. With people living longer and longer and healthcare costs getting more and more expensive, it’s a very real possibility. In fact, 54% of retirees and 63% of pre-retirees are worried about depleting their savings by outliving them, according to a 

A 65-year-old male has a 50% of living to age 85, while a 65-year-old woman has the same change of living to 88. A 65-year-old couple has a 50% change of at least one spouse living to the age of 

according to an actuarial life-expectancy table

. Will your retirement plan last that long?

Part of living longer is increased medical costs. Many pre-retirees underestimate just how much healthcare will cost during retirement and don’t plan accordingly. A whopping 84% of workers are unsure if they’ll be able to cover healthcare costs in retirement, 

according to the Fidelity Retirement Savings Assessment study

Fidelity estimated that the average couple could expect to spend roughly $220,000 in healthcare expenses in retirement—half of pre-retirees think they’ll only need $100,000 for a couple. According to Fidelity, for pre-retirees (ages 55 to 65), healthcare represents 7.6% of total expenditures, but after age 65 it will increase to 12.2%.

The worst thing you can do when preparing for retirement is to 

. Waiting to save is giving you a huge disadvantage right in the beginning. 

, they’re already starting out much later than the rest of the population. By the time they start working at age 32, other college graduates have been working for a decade and possibly saving for retirement for just as long. That means they have an extra 10 years’ worth of compounding in their favor.

Many people believe they can make up for lost time by saving more later, but because of compounding interest, the earlier you start, the faster that money grows later.

“If you wait, you are essentially robbing your retirement of its power,” 

perfectly explains the power of compounding

 with the example of 2 siblings. One saves $2,000 a year from the ages of 19 to 25. After that she stops contributing and lets the money compound at 10% until the age of 65. She has only contributed $14,000, but the account has $944,641 by the time she turns 65.

In contrast, her brother puts $2,000 away a year from the ages of 26 to 65. The money also compounds at 10%. His account holds $973,074 by the time he turns 65, but he has contributed $80,000 total.

Because the sister started so much earlier, she contributed far less to come to nearly the same result.

So what are you waiting for? Get started!

Common Retirement-Savings Mistakes

New York City may be the most popular tourist destination in the US (and among the most popular in the world), but few visitors likely take the time to venture outside of Manhattan to one of the other 4 boroughs that compose the city.

Just across the East River lies an up-and-coming tourist hot spot: Brooklyn. While Manhattan has the glitz of Times Square, the entertainment of Broadway, and the beauty of Central Park, Brooklyn is gaining traction because of its bars, restaurants, shopping, and views of the Manhattan skyline.

Physicians in particular might want to take a trip into Brooklyn, where they can peruse the unusual Morbid Anatomy Library. While the library has plenty of oddities, it also has artifacts relating to medical museums, anatomical art, the history of medicine, and death.

Morbid Anatomy has been open for 6 years in Brooklyn, but recently it received a facelift as it moved into a 3-floor, 4,200-square-foot building in the Gowanus. The new building officially opened June 28 to the public. Initially, the museum began as a website created by Joanna Ebenstein as a place to house her photos of medical museums. However, she found a location to house the Morbid Anatomy Library and a lecture series called Morbid Anatomy Presents.

“It never occurred to me that it would be of interest to anyone but myself,” she explains. “Interest in this material has definitely grown, recently.”

The lecture series has included guests from the Mütter Museum in Philadelphia, the National Library of Medicine in Bethesda, MD, and the New York Academy of Medicine. In addition to the lectures, the museum hosts workshops and classes, the most popular of which is the taxidermy class.

If the exhibits and artifacts within the Morbid Anatomy Library seem like they wouldn’t appeal to the public — consider again. In order to fund the larger space, Ebestein and Tracy Hurley Martin, chief executive officer and board chair of the library, took to Kickstarter to crowdfund the newly renovated museum. Not only did they reach their goal of $60,000, but they surpassed it to raise $76,013. Some people even donated $1,000 and more for special gifts, postcards from authors, and rare artwork.

The museum houses over 2,000 books, some of which are hard-to-find medical texts, and has space for temporary exhibitions among the permanent showcases. The first temporary collection is the Art of Mourning from Stanley B. Burns, MD, which includes folk art and traditional related to mourning. Visitors can find hand-colored mourning photographs, hair art shadowboxes and jewelry, memorial cards, death masks, and more. The exhibition will remain open until Dec. 4, 2014.

“The museum is dedicated to things that fall between the cracks,” Ebenstein says.

In the late 1800s Coney Island became an entertainment center for Brooklyn with carnival games and amusement park rides. Although the games and rides are typically only open through Labor Day, the beach and the boardwalk are open year-round.

The current amusement parks are Luna Park (the second iteration of the park) and Deno’s Wonder Wheel Amusement Park. Three rides at Coney Island are listed in the National Register of Historic Places: Wonder Wheel, a Ferris wheel opened in 1920 with both stationary cars and rocking cars that slide as the wheel turns; The Cyclone, built in 1927 and one of America’s oldest wooden coasters still in operation; and Parachute Jump, built at the 1939 New York World’s Fair and a Coney Island landmark, although it is has been closed since 1968.

But if rides and carnival games aren’t of interest, visitors can lie on the beach, go fishing on the pier, or grab a hot dog at the original Nathan’s restaurant, which was started in 1916 as a small hot dog stand. The Coney Island Nathan’s is also the location of annual Nathan’s Hot Dog Eating Contest. The current record is held by American Joey Chestnut who ate 69 Wonder Wheel hot dogs and buns in just 10 minutes.

If your palate is more refined than hot dogs, then Brooklyn is also a great place to get a steak. Peter Luger Steak House, located in Williamsburg, has been named New York City’s number one steakhouse for 30 years in a row by Zagat. However, the 125-year-old restaurant has prices to match its reputation, and reservations are strongly recommended.

Zagat warns that service is “gruff,” which is more than accurate. The waiters have often held the positions for years, rarely write down orders, and don’t bother bringing menus to the table unless they are requested.

While Zagat lists the price for Peter Luger’s as $83, that’s simply the cost of a porterhouse steak for 2. The restaurant doesn’t have an extensive menu, but what it serves it does well and the portions are large with most sides and appetizers enough for 2 people to share. The entrees are à la carte, so all sides are extra, but they are well worth it. Luger’s popular sides include its French fried potatoes and creamed spinach, while its well-known desserts are the Luger’s Special Holy Cow Hot Fudge Sunday and the pecan pie. All desserts are served with the restaurant’s famous homemade “schlag,” a thick whipped cream.

Diners should know to bring cash as the only credit card accepted at Luger’s is the restaurant’s own. If you forget, though, there’s an ATM outside next to the front door.

Don’t feel the need to spend a small fortune in order to get delicious food, though. There are plenty of other eateries that are both more casual and less expensive, including: Shalom Japan serving Jewish and Japanese food; gastropub Lachlan; BBQ at Fette Sau; Sweet Chick, known for its fried chicken; and old-timey Maison Premiere. Food trucks aplenty can be found in the streets peddling lobster, tacos, cupcakes, waffles, grilled cheese sandwiches, falafels and more. Or do as the locals and stop by Smorgasburg, a flea food market held at multiple Brooklyn locations, rain or shine.

Beyond Manhattan: The Borough of Brooklyn

The fine art of negotiating isn’t only fit for the board rooms and street vendors. People often don’t realize that they can negotiate their investments, and that if they aren’t doing so then they can be missing out on significant money.

When people don’t negotiate their investments, they allow outside parties to dictate what happens with the money, according to 

Negotiating Your Investments: Use Proven Negotiation Methods to Enrich Your Financial Life

“Americans are wasting billions of dollars on certain financial services that have no value,” Blum said in a statement. “For many individuals and families, that waste totals well into the millions. And it’s happening because most of us don’t recognize that investments are a series of negotiations. Investing is just as subject to negotiation methods as are buying a car, asking for a raise, or selling a franchise.”

According to Blum, people place too much trust in financial advisors without paying close enough attention to what advisors might be doing with the money they are given. Through negotiation, though, people can weed out unfair fees that will reduce the amount of money that could be added to savings.

Financial advisors and others on Wall Street are not looking to make their clients money, Blum pointed out; they’re looking to 

 client’s money, which is why they come up with hundreds of new investments every year.

“To protect your money, you must be knowledgeable about how the investment world works,” he said.

Here are some of the investor challenges that could be costing you money.

Money-related conflicts of interest that people may run into include commissions, fees, sales quotas, and pay-to-play schemes, according to Blum. But there are others to consider. For instance, time is a big barrier as financial advisors might want to spend less time with each client so they can bring in new clients and more revenue. The hurry to move onto a new client could affect how an advisor handles your money.

“The reality is most financial advisors’ interests are not well aligned with yours,” Blum said. “The incentives driving his behavior are likely to steer him away from the very best solutions for you. By the very nature of the system he works in, he has remarkably strong motivations to sell you things and ideas for his own advantage.”

Although conflicts of interest aren’t likely to disappear, it’s still important to pay attention that they are there and they could be affecting your money.

Stock prices can only change in the future because of surprises or unexpected events, neither of which can be predicted nor successfully acted on in advance. Financial advisors and brokers are always quick to remind that past performance does not guarantee future results. There is no way to actually know what the markets will do. So investors should be wary of people who claim they can predict the market.

“The bottom line is that an individual investor will have great difficulty doing better than the overall market by selecting individual stocks or bonds,” Blum explains. “Will some pickers be able to beat the market from time to time? Yes, but their success is primarily just a reflection of random chance. Anyone who tells you they can do it 

Investments that tie you in for the long term should be less desirable than short-term investments. People should be wary of agreements that impose exit fees or require significant notice before getting out.

“As an investor-negotiator, you must examine carefully how any proposed commitments will actually work,” Blum said. “It is your job to determine what will be advantageous and what might lead to disaster.”

He warned specifically against exit fees, which he called “penalties for trying to get your money back.” Some funds reduce the exit fee each year for, say, 6 years, when there finally is no fee for taking your money out of the fund.

While minor adjustments will be necessary as circumstances chance, trading too much incurs costs and taxes. Blum recommended looking at your portfolio as 

 instead of trading. Along with the costs of buying and selling a stock are trading commissions so that Wall Street can make a profit off you.

“Be careful to avoid all the ways that the industry has found to hide those charges,” Blum said. “Finally, you should never, ever pay a management or advisor fee to anyone who is in any way selling products or making any kind of commissions on the investments you make.”

Author | Laura Joszt

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