Senate Finance Committee releases white paper on Medicare payment reform

Senate Finance Committee releases white paper on Medicare payment reform

The Senate Finance Committee has released a white paper titled Bolstering Chronic Care through Physician Payment: Current Challenges and Policy Options in Medicare Part B. This paper comes on the heels of the April 11 hearing “Bolstering Chronic Care through Medicare Physician Reimbursement” and furthers many of the topics discussed during the hearing. While the paper does not make specific policy recommendations, it explains the policy issues the committee has identified and its views on possible solutions.

This robust paper begins by exploring the background of the Medicare Physician Fee Schedule (PFS), including an overview of the PFS, its rate-setting methodology, the relative value units (RVU) system, and the PFS conversion factor (CF). It successfully integrates the various factors influencing physician reimbursement and sets the stage for exploring future changes in how providers are compensated for treating chronic conditions such as asthma.

The main portion of the white paper looks ahead to the policy challenges in treating chronic conditions and explores potential reforms to address these hurdles. It lists questions related to a wide range of policy proposals under consideration, which fall into several main categories:

  • Alternative Payment Models – Recommendations point towards more effectively incentivizing participation in alternative payment models and rethinking MIPS and its associated burdensome reporting requirements.
  • Improving Primary and Chronic Care – This includes ideas to more effectively manage chronic conditions in the primary care setting. One proposal being considered is creating a hybrid payment model in fee-for-service (FFS) that would allow for a per-beneficiary, per-month (PBPM) payment provided in advance to independent primary care physicians. According to the paper, this would reduce administrative burden while more appropriately compensating primary care.

The Advocacy Council will closely monitor to what extent Congress shifts the incentives for treating chronic care to primary care physicians. In advocating to lawmakers, the Advocacy Council emphasizes the specialized training and experience allergists possess in treating chronic conditions like asthma. Allergists’ expertise is often essential, as treatment in primary care settings may not fully address the complexities of these conditions. It is crucial to highlight the unique qualifications allergists bring to managing allergies and asthma, ensuring that patients receive the best possible care. The Advocacy Council will also use this opportunity to promote the alternative payment model the College developed to manage asthma in collaboration with primary care providers.

  • Telehealth – The white paper discusses the importance of ensuring Medicare beneficiaries have continued access to telehealth. Congress is expected to extend Covid-era telehealth guidance for two years.
  • Changes to the calculation of the Medicare Physician Fee Schedule Conversion Factor – The white paper discusses ideas such as more closely monitoring CF fluctuations and constraints, addressing payment update adequacy and sustainability, and the struggles of being limited to budget neutral adjustments to the CF.

Changes to the CF is a particular area with lots of room for change. Physician reimbursement is being substantially outpaced by inflation and according to the paper, there is a risk that more physicians will stop accepting Medicare in the near future. This concern is echoed strongly by allergists. Many stakeholders have proposed an adjustment schedule for the PFS payments that accounts for shifts in cost inputs over time. Furthermore, there is limited flexibility to increase the CF due to budget neutrality. As the paper explains:

“The PFS statute requires CMS to make budget neutrality adjustments for policy updates that the agency’s actuaries project will result in outlay changes exceeding a statutory threshold of $20 million in a calendar year. Congress has never increased this threshold, which receives no automatic updates under current law.”

As a starting point for addressing these problems, the paper suggests that there could be room to increase the $20 million annual threshold. Some members of Congress agree as the House has introduced H.R. 6371 “The Provider Reimbursement Stability Act of 2023,” which would raise the annual threshold to $50 million. The College’s Advocacy Council advocated in support of this bill during our Strike Force on Capitol Hill earlier this month.

A related issue raised by the white paper is that physician reimbursement is being substantially outpaced by inflation. To address this problem, the Advocacy Council has also prioritized garnering support for H.R. 2474, the Strengthening Medicare for Patients and Providers Act, which would permanently tie annual Medicare reimbursement updates with the Medicare Economic Index (MEI). The passage of this legislation would ensure that physician reimbursement keeps up with rapid inflation. The Advocacy Council was pleased to see this issue included in the white paper.

The paper also describes challenges to increasing Medicare payments. In addition to the cost to the government, increasing Medicare reimbursements to physicians will also increase beneficiary cost-sharing amounts. Cost considerations will make it more difficult for Congress to embrace large reimbursement increases to physicians.

Overall, this paper is the most comprehensive outline of Medicare reimbursement reforms to come from a Congressional committee in many years. It is not yet clear if any of these recommendations will be included in legislation to be considered by the Senate this year.

The College’s advocacy centers on improving the physician reimbursement process. We will continue to advocate for a permanent fix to the CF to ensure allergists are compensated fairly and do not have to go through continued challenges resulting from Medicare payment cuts.