Controversial Medicare Payment Reforms May Hit a Wall at Trump’s HHS

Controversial Medicare Payment Reforms May Hit a Wall at Trump’s HHS


President Trump promised repeatedly during the campaign to crack down on government waste, fraud and abuse, and the $590 billion a year Medicare program is a good place to start.

After years of losing tens of billions of dollars through Medicare fraud by doctors, nurses and patients, the Obama administration two years ago launched an aggressive effort by the Justice Department, the FBI, inspectors general and the Department of Health and Human Services to crack down on fraudulent billings and activity and recover billions of dollars.

Related: Crackdown on Medicare Fraud Is Producing Some Impressive Results

The Obama administration and congressional Republicans and Democrats took added steps in 2015 that potentially could discourage overbilling and other fraudulent activities by changing the way doctors are reimbursed for their services. The Medicare Access and CHIP Reauthorization Act (MACRA) was designed to shift the medical system away from tradition “fee-for-service” and towards rewarding the quality of service in a bid to save hundreds of billions in the coming decades.

But while the Obama administration took an important step last October by issuing the proposed new regulations to implement the law, they could be stopped in their tracks under the new Republican leadership at HHS.

Former Rep. Tom Price of Georgia, the new HHS secretary, is a sharp critic of the move to a “value-based” system of payments to physicians and argues that they could seriously undermine the traditional doctor-patient relationship.

Price, a retired orthopedic surgeon, wrote in a letter to CMS last fall that the final MACRA rule “deserves careful scrutiny in light of the serious concerns’ that he and other members of the Congressional Doctors Caucus had raised.

Related: Doctors and Nurses Charged in Massive $900 Million Medicare Fraud

“We are deeply concerned about how this rule could affect the patient-doctor relationship, and I look forward to carefully reviewing it in the coming days to determine whether the Administration has addressed those concerns and put the interests of patients first,” Price wrote at the time.

Now Price, a Tea Party conservative and arch foe of Obama-era policies, controls the rulemaking at CMS. Although the new Trump administration has yet to make any pronouncement about MARC, it is very likely there will be significant and wholesale changes made to the proposed rule – if it is not blocked altogether.

new policy brief by the Robert Wood Johnson Foundation issued Monday found the medical world sharply divided over the new rules and suggests that the debate could drag on for months, if not years.

“This shift is potentially transformational but presents a serious implementation and logistical challenges,” the new report stated. “Not all doctors embrace the change, and the philosophical and economic underpinnings of value-based payment--and the mechanisms to achieve it--continue to be vigorously debated.”

Related: Audit Uncovers $124.7 B of Overpayments and Fraud in Medicare and Medicaid

MACRA is one of many regulatory and rulemaking controversies that fly under the public’s radar and yet could have a monumental impact on the way the medical profession and health care industry do business in the future. In 2015 Medicare paid physicians and other clinicians around $130 billion, or a fifth of total Medicare spending. So the stakes in changing the system of reimbursing doctors and hospitals cannot be exaggerated.

Healthcare reformists for years have complained about Medicare’s fee-for-service payment system that allows hospitals, doctors, and other healthcare providers to seek reimbursement from the government for every test, examination, and treatment they provide to the elderly.

That approach has generated a blizzard of paperwork and incentive to doctors to run up the volume of their charges – even when it can mean ordering unnecessary tests or treatment – to maximize their income.  Doctors have long complained about the inadequacy of Medicare reimbursement for their services, and find virtue in maximizing treatment.

But those practices drive up the government’s Medicare costs and encourage fraud and other gaming of the system.

Related: 8 Big Changes Under Tom Price’s Obamacare Replacement Plan

The Obama administration and a bipartisan majority in Congress opted in April 2015 for an alternative to fee for service that based payment on “based on performance metrics, patient experience, patient outcomes, and public health improvements,” according to the Robert Wood Johnson study. Doctors and other health care providers would no longer be allowed to operate “untethered from accountability,” the report said.

The report spans the many years of debate and trial and error and highlights many of the arguments raised both for and against the new approach.

Here are three of the most compelling arguments for and against MACRA, based on the new report:

The Pros

  • The new approach is consistent with a move in the private sector and government over the past decade toward a “value-based payment” that rewards quality of service and results rather than taking a more piecemeal approach regardless of the clinical need or the appropriateness of those services.

Related: The 10 States With the Worst Medicare Waste

That “inappropriate” or excessive care is common within the Medicare program and greatly adds to the health care costs of the government, businesses, and families.

  • The current fee-for-service system dates to 1992 and is based on a complex coded formula that estimates the amount of work required of physicians to perform hundreds of different services The CMS administers the fee system, but it is based on calculations provided by the American Medical Association (AMA).

    Some critics including the Government Accountability Office (GAO) and the Medicare Payment Advisory Commission have complained that this approach “deputizes” the medical profession to set the price list – essentially allowing the fox to guard the hen house.
  • There is flexibility in the new approach that will give the medical profession – especially small practices -- plenty of time to adjust. To make sure the reforms aren’t overly burdensome, CMS has adopted an approach that sets 2017 and 2018 as “transition” years and that allows doctors and clinicians to “pick the pace” at which they gradually shift to the new system.

The Cons

  • While the change potentially is transformational, it poses serious implementation and logistical challenges. Many doctors including HHS secretary Price have bridled at changing a reimbursement system that has served them and their patients well for years.

  • The new system is hopelessly complicated and involves the choice of two different tracks. One is called the Merit-Based Incentive Payment System, or “MIPS.” The other is called the Alternative Payment Model, or “APM,” and offers more financial incentives.

  • Some critics complain that MACRA is designed to push doctors who practice on their own or in small groups into larger groups and other payment models. Many prefer their current arrangements while others take issue with the whole notion of changing or incentivizing doctor behavior through performance measurements and financial incentives.

Related: Doctors and Nurses Charged in Massive $900 Million Medicare Fraud

Doctors who bill Medicare more than $30,000 a year and provide care for more than 100 Medicare patients annually can opt for either program. Clinicians who take part in MIPS will be scored on an overall 1-100 scale consisting of four performance categories: quality of care, practice improvement, advancing care information and cost or resource use.

APMs can apply to a specific clinical condition, a care episode, or a whole population – if you can follow that. The goal of the law and the final rules is to have APMs, over time, encompass entire populations. CMS estimates that 70,000 to 120,000 clinicians in 2017, and 125,000-250,000 in 2018 will join advanced APMs and qualify for a 5 percent incentive payment and a more generous annual fee increase. But many doctors are confused about exactly how the system will work.

Skeptics insist there isn’t conclusive proof that this approach yields improvements in care or general public health.