Medicare Payment Advisory Commission

Proposals Call for Better Primary Care Incentive Payments

March 08, 2017 02:54 pm Michael Laff Washington, D.C. –

Looking for ways to strengthen support for primary care under new value-based payment models, the Medicare Payment Advisory Commission (MedPAC) last week discussed how per-beneficiary payments and other incentives might give physicians more flexibility.

The Medicare Access and CHIP Reauthorization Act established the Quality Payment Program with two payment tracks: the Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (Advanced APMs). Much of the discussion at the March 2-3 MedPAC meeting focused on putting more emphasis on Advanced APMs(medpac.gov).

In reviewing both payment tracks, MedPAC staff said that MIPS, as it is currently designed, has hundreds of quality measures, many of which do not address quality of care. Physicians on this track need to report on only six of these measures, one of them an outcome measure.  

One proposal commissioners discussed would take $500 million from the annual budget that currently is allocated to payment adjustments for exceptional performers on the MIPS track from 2019 to 2024 and move it to incentives for Advanced APMs such as accountable care organizations (ACOs).  

Story Highlights
  • The Medicare Payment Advisory Commission explored ways to increase financial support for primary care through greater incentives and per-beneficiary payments at its March 2-3 meeting.
  • Commissioners said practices that transition to take on more risk need better support.
  • The commission also discussed ways to reduce Medicare Part B prescription drug costs, which reached $26 billion in 2015.  

"Maybe it's time we put our thumb on ACOs," said Brian DeBusk, Ph.D. "We need them to be successful and it's going to take some money. We should make it easier for them to meet their goals."

Another proposal would support primary care physicians who transition to an Advanced APM with greater risk by paying an upfront fee to help them hire a care coordinator or make infrastructure improvements. This payment would not be "new money"; rather, it would be financed through a 1 percent reduction in fee-for-service payments during the year but would be intended to give physicians greater flexibility.

Commissioners said practices that transition to take on more risk need more support, pointing out the success of practices that emphasize primary care case management.

Members of the commission also discussed restoring the $700 million allocated to annual payments under the Primary Care Incentive Program that Congress allowed to expire in 2015, albeit in a new form that would bolster the transition of primary care practices to value-based payment models.

One proposal calls for using that $700 million to fund a $28 per-beneficiary annual payment to primary care physicians, which MedPAC said would work out to $3,600 annually for the average physician. This payment would be made by reducing fees for all services other than primary care services by 1.3 percent, and would not affect costs to Medicare patients.

If the budget for incentives was increased to $1.5 billion, Medicare could increase this payment to $60 per beneficiary each year -- $7,800 -- and Medicare payments for nonprimary care services would be reduced by 2.8 percent.

MedPAC regularly recommends increased payments for primary care, and commissioners acknowledged that more can be done to support practices with incentives. Commissioners continued to point out that primary care services are underpriced in the Medicare physician fee schedule.

"The things we do for primary care are small," said Paul Ginsburg, Ph.D. "We need to keep looking for bigger things."

Commissioners also discussed ways to reduce Medicare Part B prescription drug costs(medpac.gov), which have increased 9 percent annually since 2009 to reach $26 billion in 2015.

Medicare payments currently are calculated based on the average sales price of a drug, which means they are tied to manufacturers' pricing decisions and there is no limit to how much a drug's price can increase each year. Commissioners discussed reducing this payment metric by 3 percent. One proposal would require manufacturers to give Medicare a discount when a drug price increase exceeds an inflation benchmark.

Medicare is prohibited by law from negotiating directly with pharmaceutical companies on price, but another option commissioners discussed was a "drug value program" that physicians and hospitals could join on a voluntary basis. Under this proposal, Medicare would hire outside vendors to negotiate drug prices with manufacturers and split savings with clinicians.

Related AAFP News Coverage
MedPAC Continues Call for Greater Primary Care Support
(4/12/2016)