MedPAC Recommends Upping Doc Pay, Especially for Those Who Treat Low-Income Patients

WASHINGTON — Members of the Medicare Payment Advisory Commission (MedPAC) on Thursday approved two draft recommendations for Congress aimed at increasing payments under the Medicare Physician Fee Schedule.

“I’m very supportive of this work,” said Cheryl Damberg, PhD, commission member and director of the RAND Center of Excellence on Health System Performance. “I do think that this Medicare safety-net payment add-on will be critically important, especially in promoting greater access for low-income populations.”

Damberg was responding to two draft recommendations presented by MedPAC staff members for inclusion in the commission’s upcoming March report to Congress. The first recommendation would update the 2023 Medicare base payment rate for physician and other health professional services by 50% of the projected increase in the Medicare Economic Index (MEI).

The second would add a payment not subject to beneficiary cost-sharing for services provided to low-income Medicare beneficiaries. The payments would equal a clinician’s allowed charges for these beneficiaries multiplied by 15% for primary care clinicians and 5% for non-primary care clinicians.

The recommendations, however, come with a cost; the increase to the base payment rate would cost approximately $750 million to $2 billion for 1 year and $5 billion to $10 billion for 5 years, while the safety-net recommendation totals more than $2 billion over the first year and more than $10 billion over 5 years, according to MedPAC staff.

Medicare spent nearly $93 billion on clinician services in 2021, and Congress often has to pass a last-minute “fix” to Medicare’s annual budget in order to stave off a mandated physician payment cut. In the most recent omnibus budget bill, Congress reduced the mandated cut in Medicare physician payment from the anticipated 4.5% to 2%.

The commission’s 17 members unanimously supported both recommendations, although with some reservations. “I’m not terribly happy with the ‘one half of MEI’ increase recommendation, even though it’s a bit higher than current law,” said Lawrence Casalino, MD, PhD, professor of public health at Weill Cornell Medicine in New York City. That’s because the increase would only adjust for half of the inflation rate, and it would only apply to practice costs, “which are only half of what physicians get in revenue. The other half is for physicians’ time, and we’re not really recommending any increase for that.”

Dana Gelb Safran, ScD, president and CEO of the National Quality Forum, said that she really liked the safety-net payment recommendation because “it reinforces incentives to create access for low-income beneficiaries — I think that’s just terribly, terribly important and I’m very glad to see us doing it.”

However, she added, “it is kind of doubling down on a fee-for-service mentality at a time that this commission has been trying to advance alternative payment models (APMs) … I [do] recognize that alternative payment models are in place with systems and not individual clinicians … It gives the physician organizations, to the extent that they’re part of a larger organization that’s doing APM contracting, at least no incentive to cherry-pick against — and perhaps the incentive to favor — low-income beneficiaries.”

Scott Sarran, MD, chief medical officer at MoreCare, a Medicare Advantage provider in the Chicago area, pointed out that “what we really want from primary care is excellent chronic disease management … and that, by definition, is a team sport. And that’s not compatible with how small primary care practices who get any material revenue stream from fee-for-service are paid.” The other problem, he said, is the administrative burden these practices face with “many of the well-intentioned programs currently in place to drive excellent chronic disease management, such as various ACO [accountable care organization] programs.”

Commission chair Michael Chernew, PhD, director of the Healthcare Markets and Regulation Lab at Harvard Medical School in Boston, reassured members that APMs were still a big focus at the commission. “We have worried a lot about the broad reform of the Physician Fee Schedule, and we are very much thinking about how we will engage in a much more comprehensive assessment of what we do going forward,” he said. “We are now working in an ‘update recommendation’ world, which is inherently in this fee-for-service space, but it is not that we actually are trying to in any way double down on fee-for-service.”

Amol Navathe, MD, PhD, associate director of the Center for Health Incentives and Behavioral Economics at the University of Pennsylvania’s Perelman School of Medicine in Philadelphia, praised the safety-net proposal for its emphasis on outpatient care.

Evidence suggests “that the pattern of care for low-income beneficiaries is actually quite different in that they receive a lot of specialty care in facilities as opposed to in the outpatient ambulatory setting,” he said. “And there’s also empirical evidence that suggests that outpatient engagement with primary care and specialists for things like [evaluation and management] visits, which are about chronic disease management, oftentimes do have a relationship with avoiding preventable hospitalizations and other care. So I think this is a major step forward to improve access for this type of care in the ambulatory setting.”