New Medicare rules pay docs based on outcomes

The White House last week changed the way government health insurers pay doctors, shifting from the fee-for-service model in favor of an outcomes-based system.

The so-called “doc fix” law, passed by Congress in 2015, was drafted in March 2015 by then-House speaker Rep. John Boehner (R-Ohio) and minority leader Rep. Nancy Pelosi (D-Calif.) in rare moment of bipartisanship. The Senate voted 92-8 to approve the bill in April of last year.

The new regulations replace a 1990s-era policy linking Medicare reimbursement to economic growth with a formula focused on patients’ outcomes. Congress repeatedly implemented temporary “doc fix” measures to prevent an unanticipated consequence – pay cuts for physicians, including a potential +21% cut as of April 15, 2015 – until taking action last year to change the system.

The new system has 2 tracks doctors can choose to determine how they’ll get paid through Medicare. The 1st, the Merit-based Incentive Payment System, acknowledges doctors that meet outcome targets under a range of standards and pays them accordingly. Doctors can show they provided high-quality care by sending in practice-specific data about things like cost and improvement activities. On the MIPS track, if doctors don’t meet the standards, they receive a pay cut.

The 2nd track, the Alternative Payment Model, offers added incentives and allows doctors to earn more for taking on risk related to patient outcomes. A doctor can earn a 5% incentive payment for participating in an APM if they receive 25% of their Medicare Part B payments through an APM or see 20% of their Medicare patients through an APM.

Senate Finance Committee chairman Orrin Hatch (R-Utah) praised the Obama administration and the Centers for Medicare & Medicaid Services for making the change.

“It demonstrates CMS’s continued commitment to working with American healthcare providers and reflects the shared goal of allowing doctors and medical centers to shift to the new payment system by participating in the reforms at their own pace,” Hatch said, referring to the need for flexibility as doctors as adjust to the new system.

The American Medical Assn. also praised CMS for working with doctors to address concerns about implementing the new rules, according to The Hill.

“Our initial review indicates that CMS has been responsive to many of the concerns raised by the AMA,” the doctors group said.

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