New BPC Recommendations on Alternative Payment Models Will Improve Quality and Value of Care

Washington, D.C. – As Congress considers reforms to the way physicians are paid through Medicare, known as the Sustainable Growth Rate (SGR), the Bipartisan Policy Center (BPC) has released a series of recommendations that could help move America’s health care delivery system away from fee-for-service to a more organized system of care.

The recommendations are part of two new white papers, Transitioning to Organized Systems of Care: Near-Term Recommendations to Improve Accountable Care Organizations in Medicare and Transitioning to Organized Systems of Care: Medical Homes, Payment Bundles, and the Role of Fee-for-Service. Both papers were released Wednesday by Dr. Alice Rivlin, Co-Chair of BPC’s Delivery System Reform Initiative, during an Energy and Commerce Health Subcommittee hearing.

“Last year’s tri-committee bill to replace SGR and reform physician Medicare payment represents an important bipartisan step toward transitioning from fee-for-service payment to new payment models that reward value, improve health outcomes and patient experience and reduce costs,” said BPC Health Policy Director Katherine Hayes. “We support taking the legislation a step further and emphasizing that the more risk a provider takes on, the higher the updates to provider payment rates.” BPC believes there should be a five percent difference in fee-schedule rates between fee-for-service and two-sided risk APMs.

BPC’s recommendations were discussed in more detail at an event today with Congressman Diane Black (R-TN), Deputy Administrator for Innovation and Quality & CMS Chief Medical Officer Dr. Patrick Conway, Chief Medical Officer & Chief Integration Officer for MissionPoint Health Partners Dr. Jordan Asher, BPC Senior Advisor Sheila Burke, Director of Clinical Learning and Innovation for the Alliance of Community Health Plans Lynne Cuppernull and Chief Research Officer for The Advisory Board Company Chas Roades.

BPC’s initiative tackles the most pressing challenges to accelerating the transition of higher-value, more coordinated systems of health care payment and delivery with specific and measurable recommendations, including:

Medicare Provider Payment Rates:

Congress should establish higher updates for health care providers participating in Alternative Payment Models (APMs) beginning in 2018, with the highest updates going to providers participating in two-sided–risk APMs.

Apply payment “differentials” between those participating in regular Medicare fee-for-service and those who take on more accountability and risk to all Medicare providers, not just physicians.

Bundled Payments:

Use bundled payments as a means of incentivizing and bringing specialists into Accountable Care Organizations (ACOs), enhancing provider experience in partnering with other providers and sharing risk.

Patient-Centered Medical Homes:

Encourage the transition to organized systems of care by making patient-centered medical homes available nationwide and counting them as APMs, specifically promising models such as the Comprehensive Primary Care Initiative.

Accountable Care Organizations:

Strengthen ACOs by replacing the current practice of attributing patients and calculating spending benchmarks using historical expenditures with prospective targets that give a clearer picture of the actual patients the ACO will serve during the measurement period.

Reduce the number of quality measures and focus instead on creating a core set of meaningful measures that focus on patient health outcomes.

Provide these new systems with tools to better engage patients and providers in care coordination.

Set expectations that all ACOs should eventually accept two-sided risk and create a viable pathway to taking on risk for spending and outcomes.

“Providers who remain in fee-for-service would get the lowest in reimbursement updates,” said Hayes about the BPC recommendations. “Participants in patient-centered medical homes and other one-sided risk models would receive a little more. And those providers who join two-sided risk ACOs, which have the highest risks, would get the highest payment rate updates.”

BPC’s Delivery System Reform Initiative is led by former Senate Majority Leaders Tom Daschle and Bill Frist, former White House and Congressional Budget Office Director Dr. Alice Rivlin and former Ways and Means Committee Ranking Member Jim McCrery.

“We hope our recommendations assist policymakers as they move our delivery system closer to the goals of improved quality of care at lower cost for all patients,” Hayes added.