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'Doc Fix' Deal Would Provide 0.5 Percent Payment Updates over Five Years

By Emily Ethridge, CQ Roll Call

February 6, 2014 -- Three committees have reached a bipartisan agreement on the policy parameters of a bill to replace how Medicare pays physicians—but they have not yet resolved the very difficult question of how to pay for that replacement.

The deal reached by the Senate Finance Committee, House Energy and Commerce Committee, and House Ways and Means Committee represents a major step forward in replacing Medicare's current payment formula, the sustainable growth rate. The measure combines elements of three bill versions (S 1871 and two versions of HR 2810) that the committees—two controlled by Republicans and one by Democrats—approved last year.

Lawmakers reached their goal of coming to a policy agreement before Senate Finance Chairman Max Baucus, D-Mont., became ambassador to China. If they can manage to get the bill cleared by both chambers by March 31, they will avoid having to pass another "doc fix" to avert the scheduled 24 percent cut in payment rates.

The policy deal also continues a recent trend of lawmakers reaching bipartisan agreements on big legislative lifts, including the farm bill (HR 2642) and an omnibus fiscal 2014 appropriations measure (PL 113-76).

The negotiated deal would provide for annual payment updates for physicians of 0.5 percent over five years. Providers could also get bonuses by participating in an improved-quality program in Medicare's traditional fee-for-service system or in alternative payment models.
But the deal is also notable for what it does not include. The bill does not address payment provisions known as Medicare "extenders," which are often renewed every year and were included in the Senate Finance Committee bill.

And lawmakers have not yet discussed how to pay for the agreed-upon bill. Rep. John Fleming, R-La., said lawmakers would look for about $130 billion in offsets for the measure, and he expected most of them would come from the health care sector.

"We still have to figure out how to pay for it, and I am under no illusions about how difficult that may be," said Rep. Joe Pitts, R-Pa., in a statement. "We are going to do our best. We've already done more than most people thought was possible."

California Democrat Henry A. Waxman, ranking Democrat on the Energy and Commerce Committee, said he felt that the successful negotiations set a good precedent for continued agreement during the offset discussion. "We worked this out—now let's work out everything else," he said.

Rep. Charles Boustany Jr., R-La., said the bill was a combination of the best elements of all the committee-passed measures. He also said he wanted at least a five-year period of stable payments to help providers transition to the new system.

Fleming, who, like Boustany, is a member of the GOP Doctors Caucus, said members would study the negotiated deal over the weekend and meet about it the following week.

"I like it better than where we started. I don't know if we've reached the threshold yet, because I haven't read it all yet," he said when asked if he could support the proposal.

The bill would give providers a 0.5 percent annual update for 2014 through 2018, and then maintain the 2018 rates through 2023. In 2024 and after, providers in certain APMs, or alternative payment models, would get annual updates of 1 percent, and all other providers would get annual updates of 0.5 percent.

Starting in 2018, providers' payments would be adjusted based on a new Merit-Based Incentive Payment System, which combines and modifies current quality performance incentive programs.

Providers would receive a score from 0 to 100 based on their performance in four categories: quality, resource use, meaningful use of electronic health records and clinical practice improvement activities. Providers would also get credit for improving from one year to the next in the quality and resource use categories.

Payments would be based on where the provider's performance score falls in a performance threshold. Providers with composite scores above the threshold would get positive payment updates, and those with scores below would get negative adjustments. Negative and positive updates would be capped each year.

Professional groups and stakeholders would get to weigh in annually on which quality measures should be used in the next MIPS performance period.

"We've kind of altered the language so it's not pitting physicians against physicians. It's basically physicians against quality standards," said Boustany of the provision.

Providers that participate in eligible APMs would be exempt from the MIPS. They would receive a 5 percent bonus if they receive a significant portion of their revenue from an alternative payment model or a patient-centered medical home. Providers would have to receive at least 25 percent of their Medicare revenue through an APM in 2018 and 2019, and that percentage would increase over time.

Providers could also get the bonus if they get a significant percentage of their APM revenue combined through Medicare and other payers, which would allow them to get the bonus even if Medicare APM options do not exist in their area.

The bill would establish a Technical Advisory Committee that would review and recommend physician-developed APMs.

In addition, the bill contains several provisions to expand the use of Medicare data, including the online posting of quality and utilization data so patients can make better-informed decisions.

The bill would let the Department of Health and Human Services collect information from providers and suppliers to help with accurate valuation of service-level payments in the fee schedule, and provide $2 million annually for providers who submit the requested information.

It would allow qualified entities to provide analysis and underlying data to providers for quality improvement, and allow qualified clinical data registries to buy claims data for quality improvement and patient safety purposes.

Ardis Hoven, president of the American Medical Association, praised the deal and called on lawmakers to move a replacement bill quickly.
"Continuing the cycle of short-term patches by merely addressing the 2014 cut that is imminent on April 1 without solving the underlying problem would be fiscally irresponsible and further undermine the Medicare program," Hoven said in a statement.

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