With end of ‘doc fix’, effort to craft a new payment system underway

The end of the annual “doc fix” last year was one of the medical community’s most celebrated moments on Capitol Hill in recent memory.

Groups from the American Medical Association to the Federation of American Hospitals touted the legislation as the end of an era of uncertainty, and former Speaker John Boehner (R-Ohio) has called it one of his legacy’s greatest achievements.

But the end of Congress’s recurring, two-decade fight over the sustainable growth rate, or SGR, does not mean that the government’s scramble over physician payments is over.

{mosads}The legislation that repealed the SRG aims to establish a new payment system for doctors that rewards quality instead of quantity. It will be another kind of complicated formula, but one that the Obama administration believes will improve patient outcomes over the long run.

That law — the Medicare Access and CHIP Reauthorization Act of 2015, or MACRA — provides five years’ worth of increases in Medicare payments to doctors. It also comes with a complex set of instructions for federal health officials to work with the medical community to reshape a healthcare system that can function without yearly limits on that spending.

“There’s still a long way to go on this. There’s going to be a lot of work ahead of us,” Rep. Michael Burgess (R-Texas), one of the leading voices on the SGR over the last decade, said in an interview with The Hill. As a member of the Republican Doctors Caucus, he was also closely involved with the legislation that finally eliminated it.

The new system of payments — intended to incentivize alternative payment systems — will not go into effect until 2020, but the five years of rulemaking and vetting by stakeholder groups has already begun.

The push for value-based payments, instead of the current “fee-for-service” system, has been driven by both the Obama administration and years of lobbying by patient groups.

A big challenge for the administration as it looks to incentivize the pay-for-performance system is figuring out how to measure performance. Those determinations will be made as part of a nearly five-year process outlined under MACRA.

In summer 2016, the administration will finalize new rules on quality reporting and payment policies. The policy will “substantially change the status quo for Medicare’s physician reimbursement,” as Susan DeVore, the president and CEO of healthcare firm Premier, predicted in Health Affairs.

Much of the negotiating on what qualifies as an alternative payment model will be done by a panel of experts created by the administration. That board, called the Physician-Focused Payment Model Advisory Committee, met for the first time on Feb. 1.

One of the biggest challenges ahead for that panel will likely be alternative payment models for specialty groups.

“Right now, people are talking about physician-focused [alternative payment models] like mythical unicorns that don’t exist in real world,” the AMA’s Sandy Marks said after the panel’s first meeting.

The group will begin vetting proposals for the types of payment models that would qualified as value-based, to be completed by 2017.

Federal health officials have vowed to include input from all stakeholders, from patient and provider groups to specialty associations.

“The decisions are not just defaulted to the Secretary; the medical community writ large can have their voices heard on this, patient groups can have their voices heard on this,” Burgess said.

Some of these alternative payment models are already being used and tested. Bundled payments, for example, make hospitals accountable for treatment costs, as well as the costs of the doctor performing that treatment and any medical costs that may arise after the procedure.

Health officials are hoping to test the bundled payment model for knee and hip surgeries in dozens of U.S. cities in the next year, one of its first big national tests.

While hospitals have been shifting toward alternative payment models under the Affordable Care Act, it will be new for physicians.

There are some concerns that a five-year window is not enough time for the national healthcare system to shift into a new delivery model. Some groups are already calling for a delay of the rule.

Former Centers for Medicare and Medicaid Services Administrator Mark McClellan warned last year that changing doctor payment systems will be a larger task than many are currently expecting given the lack of available research on alternative payment models.

“Although there is promising evidence for many payment reforms now, no specific alternative payment models have been identified that could clearly reduce costs while improving quality across the nation,” McClellan, director of the Health Care Innovation and Value Initiative at the Brookings Institution, wrote in the Journal of the American Medical Association.

This article is a part of the From Volume to Value series sponsored by Astellas. To read more articles in the series, visit

Tags Boehner John Boehner Michael Burgess Volume to Value

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