WASHINGTON -- How prepared is the Medicare Payment Advisory Commission (MedPAC) to scrap traditional fee-for-service (FFS) payment altogether and rely solely on value-based arrangements?
This was the question put before the commission, the government's principal advisory panel on Medicare payment issues, on Thursday. And the answer came back: not yet, but we're thinking about it.
To date, more than half of all Medicare beneficiaries are enrolled in Medicare Advantage or Accountable Care Organizations (ACOs), noted MedPAC's technical staff.
ACOs, by design, are intended to control overall costs, but savings have been "modest." ACOs garnered about 1%-2% savings in 2016 after 4 years of operation, noted MedPAC's briefing documents.
New Options for Medicare
Eric Rollins, MPP, a principal policy analyst for MedPAC, presented the commission with several policy scenarios aimed at transitioning into value-based models:
- Scenario 1: Traditional FFS continues and incorporates reforms such as bundled payments, site-neutral payments and new quality incentives. Beneficiaries continue to receive their choice of "any willing provider."
- Scenario 2: Traditional FFS option is removed. Providers must join ACOs to be eligible for FFS payments and Medicare assigns all FFS beneficiaries to ACOs. The Centers for Medicare and Medicaid Services (CMS) pays claims for ACOs using FFS rates. Beneficiaries retain the option to enroll in Medicare Advantage (MA) plans.
- Scenario 3: Traditional FFS option is removed. MA plans and ACOs pay providers for all services, but CMS continues to release the FFS fee schedule. "ACOs effectively become capitated health plans," according to MedPAC briefing documents.
- Scenario 4: Total elimination of FFS program. CMS would not maintain the FFS fee schedule. MA plans and ACOs pay providers for all services.
During his presentation, Rollins, pointed out that Scenario 2 could lead to higher spending in certain areas in order to ensure universal access to ACOs.
Rollins also said that under Scenario 3, calculating the benchmarks and risk adjustment would be "major challenges" to implementing the MA and ACO programs. But premium support could be leveraged to determine benchmarks. A decision would need to be made on whether beneficiaries are assigned to a program or actively enrolled, he said.
Arguably the most radical option, Scenario 4 could potentially erode Medicare's purchasing power and enable providers to leverage market forces to drive up rates for MA plans and ACOs, Rollins said.
Differing Perspectives
Commissioner Warner Thomas, MBA, of Ochsner Health System in New Orleans, liked the idea of driving Medicare away from fee-for-service payments and towards MA plans and ACOs.
Both ACOs and organizations that work with MA plans are better coordinated and more proactive than the current FFS payment system, which is "fragmented" and "reactive," he said.
Specifically, Thomas supported Scenario 2, which rewards physicians for improving quality and reducing unnecessary utilization while encouraging hospitals to cut post-acute care utilization. That, in turn, would force post-acute care facilities to demonstrate quality or sacrifice referrals.
"To me it just puts the incentive in the right place," he said.
Scenarios 3 and 4, on the other hand, move all of the risk to the provider system. That will require competencies that most physicians and hospital systems currently lack, he said.
One key point of contention was the savings that a shift towards mandated ACOs might generate.
Commissioner David Grabowski, PhD, of Harvard ľֱ School in Boston, who also favored Scenario 2, had questions.
Much of the savings generated by ACOs to date have come from one-sided, physician-led ACO models (mostly Medicare Shared Savings ACOs), which cut down on post-acute care costs.
It's easy for physician-led ACOs to push back on post-acute care spending when those services remained outside an ACO but this becomes more challenging when the post-acute care provider is part of the ACO -- which would inevitably occur under such a model.
While such models could improve care coordination and quality, their potential to rein in costs is uncertain.
"The idea that we can take that 1%-2% savings that we saw in the and apply it here, we need to think a little bit more about."
But a representative of ACOs urged the commission not to focus on the groups' past performance.
"[W]hen we look back at ACOs getting up and running in 2013, that's a long road," said Allison Brennan, MPP, of the National Association of ACOs, during the meeting's public comment period. "So, when we talk about savings being small over the course of those first few years, it has to be put into context that this was a transition period as they were embarking on this journey. I think we will see greater savings over time as the program continues."
And Now For Something Different
Taking the idea of paying for value a step further, Commissioner Amy Bricker, RPh, of Express Scripts in St. Louis, argued for incorporating prescription drug payments into the commission's recommendation.
She suggested folding Medicare Part B and Part D payment reforms into the commission's plans for value based models -- borrowing strategies that have already proven effective in the commercial sector.
If a drug fails a patient, plans in the commercial sector can negotiate a refund from the manufacturer, she said. Commercial contracts with drug manufacturers might also base payment on outcomes such as whether a patient stayed on therapy or required additional therapies. For instance, when a hepatitis C patient needed to be retreated, that was funded mainly by the manufacturer, she said.
In Medicare, Bricker said, the manufacturer should "put value on the table" in a way that's reflective of the prices they set and the use of their products.
"There absolutely is a mechanism in the commercial market that I think we should take on in the regulated market," she said.
Slamming the Brakes
Commissioner Paul Ginsburg, PhD, of the Brookings Institution, supported Bricker's ideas but suggested that it was too soon to contemplate scenarios designed to drive all providers into ACOs, given that such models have demonstrated only "slight savings."
"We should be talking about significant changes in the models. We should be talking about better ACOs. We should be talking about doing something more aggressive on prescription drug as [Bricker] was talking about, because then we can have the discussion of scenarios and it wouldn't be so hollow," Ginsburg said.
Right now, as other MedPAC members noted, eliminating a fee-for-service option would inevitably trigger a backlash from Medicare patients.
"To me that issue is going to look very different, if in fact, we have more compelling alternatives to fee-for-service than we have today," Ginsburg said. He advocated discussion of "bolder options ... about how to move in this value direction more quickly."
MedPAC Chairman Jay Crosson, MD, of Los Altos, California, agreed that any recommendation to shift the balance between FFS Medicare and value based payment models would be "hollow" unless the commission can demonstrate not only that the plan is sound policy but that it benefits both the Medicare program and beneficiaries.
"That has to be patently obvious," he said