'A sugar high on fee-for-service’

While CMS could improve its payment policies and information sharing, those changes are unlikely to make much of a difference so long as it’s easy for providers to make money through fee-for-service reimbursement.

“The way health systems are compensating employees is heavily driven by the way they make money,” said Dr. Amol Navathe, associate director of the Center for Health Incentives and Behavioral Economics at the University of Pennsylvania’s Perelman School of Medicine. He’s also a member of the Medicare Payment Advisory Commission.

Congress must make fee-for-service medicine less attractive than risk-bearing payment models for value-based care to succeed, experts said. CMS cannot go it alone.

“Don’t blame value-based care for not being effective when you keep giving people a sugar high on fee-for-service,” said Dr. Mai Pham, a consultant who formerly served as CMS’ chief innovation officer.

CMS released its proposed 2022 physician fee schedule last month. And provider groups are gearing up for a rerun of the battle over this year’s fee schedule, which originally financed a pay raise for primary-care providers by cutting payments to specialists. After a sustained lobbying effort, Congress intervened with an across-the-board 3.75% pay increase for calendar 2021 at the cost of $3 billion to taxpayers. 

The payment boost enabled Medicare to pay more for office visits and avoid larger cuts for specialists. But they were only possible because Congress decided to increase Medicare spending rather than adhering to the program’s budget-neutrality requirement.

“Lawmakers are punting here because it takes political fortitude to squeeze fee-for-service. CMS has demonstrated that it’s willing to go there, but it gets no political protection. Often, Congress is the one that steps in and undoes payment decreases,” Pham said.

In addition to getting in the way of cuts to Medicare fee-for-service payments, Congress has also short-circuited providers’ incentives for joining value-based payment models with more risk. A recent Health Affairs blog post argues that Congress could fix the problem by retooling the Medicare Access and CHIP
Reauthorization Act—MACRA—to give participants greater financial rewards for taking on more risk.

“Simplifying the payment incentives so that providers understand their path to the greatest payment increases is also an important objective that supports both more participation and more success in risk-bearing models,” the post said.