In a sharply worded rebuke of a program intended to better link Medicare payments to quality care, a federal advisory committee called it "profoundly flawed" and recommended Congress scrap it "as soon as possible."
The recommendation, contained in the Medicare Payment Advisory Commission's 527-page annual report to Congress on March 15, came despite calls from groups including the American Hospital Association to give the Merit-based Incentive Payment System, or MIPS, established in 2015, more time to work.
However, the commission, known as MedPAC, said in the report that there is no point in waiting to scuttle the payment system for providers. MedPAC Executive Director James Mathews told reporters in a conference call that the commission spent two years examining ways to improve the system, "but we came to the conclusion there were certain fundamental flaws in the premise of MIPS so that it could not be improved."
The House Ways and Means Subcommittee on Health, meanwhile, announced that it will hold a hearing March 21 to see how the 2015 Medicare Access and CHIP Reauthorization Act, or MACRA, is working. Mathews said he is not currently scheduled to testify about the MedPAC recommendations.
Payment reform recommended
In the wide-ranging report, MedPAC also urged Congress to reform the financially troubled Medicare program's payments for services provided after an acute illness, saying the current system drives up costs by encouraging already profitable post-acute services such as skilled nursing care and home healthcare to extend treatments and tack on additional charges.
"The cost of inaction is mounting," the MedPAC report said.
The recommendations come as the Centers for Medicare and Medicaid Services, which runs Medicare, prepares to begin receiving stakeholder comments on payment changes in March or April.
The commission has long been critical of MIPS, a component of changes Congress made in MACRA to try to reduce Medicare costs and shift payments to clinicians away from traditional fee-for-service reimbursement, which has been criticized for rewarding volume instead of quality.
Under a new Quality Payment Program, clinicians were given the choice of being paid under an advanced alternative reimbursement model, through which they could receive bonuses for better care and be penalized for poor treatment.
Providers could also stay under a fee-for-service model under MIPS but would face additional reporting requirements and would have their payments increased or reduced based on how they scored under four criteria: quality, use of electronic health records, making improvements to their practices and costs.
The commission said it looked at potential changes to MIPS short of abandoning the program but decided it is "fundamentally flawed."
The report said the program allows providers to decide the measures that affect their payments, which leads to a fundamentally unfair system because clinicians are judged on different measures.
In addition, more than half of clinicians do not have enough cases to measure their performance in a statistically significant way, so they are exempted from the reporting requirements and pay adjustments anyway.
Despite the reporting burden, the commission concluded that the measures provide "a meaningful assessment of a clinician's performance," Mathews said on the call.
More broadly, the report said, judging each provider individually "treats quality of care as isolated and siloed, rather than what it generally is today — the result of the combined efforts of multiple clinicians."
Although short on details, MedPAC recommended Congress allow physicians to group themselves together and then be measured on factors such as how their patients fared.
But in a blog post March 14, Nancy Foster, the hospital association's vice president of quality and patient safety policy, called scrapping MIPS "not only premature but also misguided. Clinicians and hospitals will submit MIPS data for the first time this month. Instead of assuming the program is unworkable before clinicians submit any data, MedPAC should use data and experience from the field to inform any major changes."
MedPAC acknowledged the concern but said in its report that there is no point in waiting and that "time is of the essence" to get rid of it.
Searching for cost savings
Meanwhile, the report noted that according to estimates from Medicare's board of trustees, the fund that pays for Medicare Part A services, including inpatient hospital stays, skilled nursing facilities and hospice care, will be insolvent in 2026 unless the payroll tax is increased immediately by 18% or spending is immediately reduced by 13%.
Searching for savings, MedPAC recommended freezing or reducing Medicare payments for some post-acute services.
MedPAC, for example, proposed cutting reimbursements for home healthcare by 5%, saying Medicare payments are expected to exceed costs by 14.4%. Profits have averaged 16.4% between 2001 and 2015, partly because the agencies have reduced the number of home visits a patient receives, the report noted.
The commission also recommended a 5% decrease for inpatient rehabilitation services, saying Medicare payments exceeded the costs at operating free-standing facilities by 40.9% and at hospital-housed facilities by 19.3% in 2016. Encompass Health Corp. and HCA Healthcare Inc. are among companies that provide rehabilitation care.
MedPAC also recommended freezing payments to skilled nursing facilities for two years, saying their profits in 2016 averaged 11.4% — the 17th year in a row that average margins were in the double digits. Genesis Healthcare Inc. is among companies that operate skilled nursing facilities.
