Pretty much everyone agrees that scrapping Medicare's sustainable growth-rate formula for paying doctors is a laudable goal.
But if Congress can actually pass a permanent doc fix this week—and that prospect remains decidedly up in the air—what exactly would be put in its place?
For starters, the legislation introduced in the House would provide for modest fee increases for all physicians. They would see a 0.5% bump in each of the next four years. Payment rates would then hold flat for six years. After that, they would again see annual 0.25% payment increases.
“These very small annual increases or freezes, which constitute reductions in payment rates in inflation-adjusted terms, belie a misperception that physicians aren't being asked to make some sacrifices in the proposal,” Paul Van de Water and Robert Greenstein wrote in an analysis of the deal for the left-leaning Center on Budget and Policy Priorities.
But the SGR repeal legislation also sets up a two-tier payment system that provides incentives for doctors to shift more of their practice into value-based payment models, including accountable care organizations, bundled-payment arrangements and medical homes.
In order to qualify for higher payments, a doctor would need to have at least 25% of Medicare revenue tied to such payment models by 2019. That threshold rises to 75% in 2023, although physicians could opt to tally all revenue sources, not just Medicare, to meet that threshold.
Dr. Lisa Bielamowicz, chief medical officer at the Advisory Board Co., expressed skepticism that a large number of physicians will be able to hit those metrics. “The thresholds are pretty high,” Bielamowicz said. “It is the rare ACO that has been able to get a third of their revenues at risk.”
For those physicians who do qualify for the alternative-payment system, they'll receive 5% bonuses from 2020 to 2024. After that their fees will increase 0.75% a year, three times the rate of growth for physicians in the traditional payment system.
“Is 5% big enough?” asked Van de Water, who supports the SGR repeal bill. “We've seen in the past that if incentives are too small doctors will say, 'Screw it, it's not worth it.' ”
But the SGR repeal bill also would create a new program—the Merit-based Incentive Payment System (MIPS)—to give doctors incentives to create the framework for moving into the value-based payment model. It incorporates current programs that penalize physicians for failing to report quality measures and failing to use electronic health records that comply with meaningful-use requirements. MIPS also incorporates the value-based payment system that was part of the Affordable Care Act, which rewards or penalizes providers depending on how they score.
Under the new system, penalties and incentives would range from -4% to 4% in 2018. Those rewards or penalties would range from -9% to 9% by 2021.
James Reschovsky, a senior fellow at Mathematica Policy Research, said the difficulty will be in coming up with a metric that makes sense for all providers. “There's just a lot of difficult, sticky issues involved,” Reschovsky said. “In principle it's a good idea. It will be hard to pull off.”
The push toward value-based payments for doctors is part of the broader push to move away from the traditional fee-for-service model, which many economists argue creates financial incentives to perform more services regardless of whether they lead to better patient outcomes. In January, HHS Secretary Sylvia Mathews Burwell set a goal of having 50% of Medicare spending outside of managed care in value-based payment models by 2018.
That trend is generally lauded by healthcare finance experts. But they say it will be difficult to align the incentives appropriately so that they reward the desired behavior without unduly punishing physician groups that have difficulty meeting the requirements, particularly small practices.
“This bill is a good next step,” Van de Water said. “We just need to recognize that there's going to be lots of challenges and we're not going to figure out a new payment system in a few years that's going to last forever. It's going to be an evolution.”