CBO’s Estimated Cost Of Freezing Medicare Physician Pay Edges Up Again

The goals CMS set Monday (Jan. 26) for moving providers to alternative pay models and value-based payments make it all the more important for physicians that Congress pass Medicare physician pay reform, provider lobbyists said, because Congress can pay doctors extra for simply participating in alternative pay models and CMS cannot.

Last year’s bipartisan Sustainable Growth Rate bill called for paying bonuses to providers participating in new pay models. Republicans and Democrats could not agree on how to pay for that bill. Last week, the House Energy & Commerce Committee held a two-day hearing that focused on Medicare reforms that could pay for the bill, but the two parties remain far apart on offsets.

“This announcement is an invitation to the dance for Congress,” Avalere Health CEO Dan Mendelson said.

CMS for the first time on Monday (Jan. 26) set specific goals for moving providers to alternative pay models and value-based payments. HHS aims to tie 30 percent of fee-for-service Medicare payments to alternative payment models, such as accountable care organizations (ACOs) or bundled-pay arrangements, by the end of 2016, and it plans to tie half of Medicare reimbursement to these models by the end of 2018. HHS also set a goal of tying 85 percent of traditional Medicare payments to quality or value by 2016 and 90 percent by 2018 through such programs as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction.

Provider lobbyists said those goals are ambitious, but several provider groups issued public statements in support of CMS’ announcement.

CMS gets part way to its goals with existing initiatives. For example, all nursing homes will be included in Medicare’s Value Based Purchasing program by fiscal 2019. The last SGR patch, the Protecting Access to Medicare Act of 2014, put that requirement in place.

However, Mendelson said there is only so much CMS can do without help from Congress, which is why the announcement raises the stakes for legislative intervention. Although agency officials might technically be able to run demonstrations that increase Medicare spending — CMS once ran a star ratings demonstration that paid bonuses to more Medicare Advantage plans than otherwise would have received them — the agency is under pressure to save money with demonstrations. CMS officials can neither increase pay for providers that participate in alternative pay models nor can it penalize providers to force them into ACOs or bundled pay arrangements. If providers want to remain in fee-for-service Medicare and they have valid claims, there is nothing CMS can do, he said.

The SGR deal that both parties and chambers agreed to last year calls for paying annual 5 percent bonuses to providers who receive a significant percentage of their income from alternative pay models, with penalties for missing quality and cost targets. Those bonuses would be available between 2018 and 2023.

Piper Su, vice president of The Advisory Board Company’s health policy division, said CMS’ announcement shows that agency officials are willing to create a more progressive path for providers that want to be more accountable and take on greater financial risk, while also creating less aggressive paths for hesitant providers. That might include, for example, creating additional ACO models or bringing more practices into the Transforming Clinical Practice Initiative.

Su said another important aspect of the announcement is that CMS is trying to align its alternative pay models with the commercial market. Providers don’t want to transform their practices for just one payer, even a payer the size of Medicare. Providers want incentives to be the same for all their patients, regardless of who their insurance company is. Similarly, Mendelson said he was impressed by the number of private plan representatives involved in the announcement. The goals CMS set for alternative pay models and value-based payments do not include managed care.

“In some ways, managed care is the end game,” Mendelson said.

See the original article on the Inside Health Policy website.