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MedPAC Suggests Raising Bar for Alternative Doctor Pay Programs

By Kerry Young, CQ Roll Call

June 15, 2016 -- Medicare should seek proof that doctors who get incentive payments under a new reimbursement plan actually provide more value to the federal health system, an advisory panel said. Failing to do so could enshrine policies that reward physicians for merely being willing to participate in alternative payment models, said the Medicare Payment Advisory Commission (MedPAC).

MedPAC commissioners called for tougher standards for alternative reimbursement programs for doctors as part of its annual June report to Congress released on Wednesday. This year's report reflects a broad drive to move toward more competitive payment models for the approximately $600-billion-a-year program for seniors and people with disabilities. MedPAC offered specific suggestions for initiatives already underway and ideas for possible future changes to Medicare, such as putting the traditional fee-for-service and insurer-run Advantage plans into direct competition with each other for customers.

While not always heeded, MedPAC's work is closely studied by lawmakers and Centers for Medicare and Medicaid Services officials. In the report, the panel stressed the potential long-term effects of missteps in implementing the overhaul of doctors' pay (PL 114-10) enacted last year. Medicare officials are in the midst of deciding which existing test programs may qualify as so-called eligible alternative payment entities (EAPEs). MedPAC urged an emphasis on linking the incentive pay for these EAPEs to proof that they either improved the quality of care or reduced costs or both. They should not be allowed to gain additional revenue from a mere willingness to participate in a program such as an advanced model of an accountable care organization, according to MedPAC.

"If the defining criteria for EAPEs are broad and do not require improved performance, it might be very difficult to roll them back if they are unsuccessful—with consequences for the sustainability of the Medicare trust funds," MedPAC said.

MedPAC acknowledged that its view departs from the overhaul law, which allows for incentive pay irrespective of performance.

MedPAC aids Congress and lawmakers in the myriad policy decisions involved in carrying out even broadly supported mandates, such as the drive to link doctors' pay to judgments about the quality of care provided.

In the June report, the panel also confirmed that it would be possible to move toward a more unified approach to paying for post-acute care after a hospital stay, a roughly $60 billion annual expense for Medicare. This complies with a mandate set in a law known as the IMPACT Act (PL 113-185), which had House Ways and Means Chairman Kevin Brady, R-Texas, among its chief backers. Lawmakers want to be able to compare the quality of service provided in four settings: skilled nursing homes, inpatient rehabilitation facilities, long-term care hospitals and services provided in patients' homes. The information could underpin a future payment overhaul.

MedPAC also floated ideas for giving people enrolled in Medicare a stake in selecting whether to choose the traditional fee-for-service version of the program or opt for an insurer-run Advantage plan.

"Currently, beneficiaries do not have a strong incentive to make this choice based on which model provides the highest value in their market," MedPAC said. "Medicare could seek to encourage beneficiaries to choose the more efficient (high quality, low cost) model, thereby reinforcing incentives that encourage providers and plans to provide care more efficiently."

One suggested approach would be to have people pay some of the cost if they pick the approach deemed more expensive in their region, whether that's the fee-for-service option or an Advantage plan.

"By having all systems compete, beneficiaries in each market can choose which system provides them the best value," MedPAC said. "However, some beneficiaries would likely have to pay more than they do now for their existing coverage."

The report also offered suggestions for preserving access to emergency care in rural areas. These include giving isolated rural hospitals the option of converting to an outpatient-only mode, which would aid those with declining numbers of inpatient admissions. And it looked broadly at how Medicare could expand use of telehealth services in the future. But the group suggested that until more is known about the efficacy and costs of telehealth, other payment models that shift some of the risks of covering patients onto insurers or medical providers may be more appropriate programs to expand. Those models include Medicare Advantage, bundled payments, and accountable care organizations.

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