The Trump Administration has proposed major changes in the way Medicare pays doctors, as well in the ways hospitals disclose prices. Among the immediate adjustments: The government would pay more for some procedures such as kidney dialysis and less for others such as hip and knee replacements.

It would also make major revisions to an ambitious new payment model that was intended to encourage doctors to focus on the quality of care rather than the volume of procedures. Critics say that key elements of those new rules would discourage physicians from participating in the new program and slow the movement to quality-based care.

Cutting costs for new knees

The proposed 1,473 page rule from the Centers for Medicare and Medicaid Services (you can read it here), addresses two broad issues: 2019 payment rates for Medicare providers and more fundamental changes in the way the Trump Administration wants to compensate doctors, hospitals, and nursing homes.

To start with the immediate changes in payment rates, CMS believes that it is paying too much for a number of common procedures for older adults and wants to reduce its fees. They include: total hip and knee replacements, colonoscopies where lesions are removed, certain CAT scans of the head, and electrocardiograms.

CMS would also make two changes that reduce two fees related to cancer treatment. It would cut in half the current 6 percent fee that doctors get for administering drugs in their offices, and it would reduce payments oncologists get for evaluating and managing complex cancer cases (known as E&M).

A modest payment for e-visits

At the same time, CMS is proposing to increase its payments for kidney dialysis. And, for the first time, it would pay doctors for e-visits, though the rate–$14—isn’t likely to do much to encourage the practice.  By contrast, Medicare pays physicians an average of $92 for a traditional routine office visit.

The big changes, however, apply to a fundamental redesign in the way Medicare pays physicians. In 2015, Congress revised that payment system in a law called The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Its goal: to gradually replace the traditional model where Medicare paid physicians by the procedure with one where docs are paid based on value, including quality outcomes for patients.

The law gave physicians the option of participating in two different models. Advanced Alternative Payment Models (APMs) offered them new financial incentives for participating in Accountable Care Organizations and similar risk-based programs, meeting quality standards, and reaching patient outcome goals.

A new payment model

The second option, called the Merit-based Incentive Payment System (MIPS), does not require physicians to redesign their practices into ACO-like models, but offers modest financial rewards for achieving quality and outcome goals and imposes penalties for falling short. Most physicians participating in the new payment models have chosen MIPs.

The original law phased-in the changes to give doctors time to adjust.  To implement the payment plan, the Obama Administration proposed a long list of quality goals that physicians would have to meet to receive financial rewards.

The new rules would make a number of changes to the MIPS program. They’d simplify and streamline the quality measures, in an effort to make it easier for physicians to comply. CMS estimates that in 2019, about 1.5 million doctors, or about 42 percent of physicians who take Medicare, will participate in one of the two programs.

Cutting the reward money

But small physician practices and even larger groups with few Medicare patients may opt out of the new payment system.  CMS is also said it wants to experiment with excluding physicians in Medicare Advantage managed care plans from MIPs participation.

As a result, reports the online journal Modern Healthcare, the amount of money available to reward physicians is shrinking. It cites estimates from the physician trade group AMGA (formerly The American Medical Group Assn) that while doctors were eligible for $833 million in MIPS incentive payments in 2019, the new rules could reduce those payments to $118 million in 2020. Thus, MIPS participants can expect a maximum pay increase of just 2%, much less than the 7% first envisioned by MACRA.

The new rules also require greater price transparency for hospitals. They’d be required to post prices on the Web and CMS said it is seeking additional ways to make patients more aware of what a hospital stay costs.

It is hard to know what all of this will mean for patients. Doctors will push back hard on the proposed payment reductions, and some may get scaled back. Moving to a value-based payment system could, in theory, benefit patients who would receive better, instead of more, treatment. But the new rules may have the practical effect of slowing, rather than enhancing, that transformation.