Public Meeting of the Medicare Payment Advisory Commission (Medpac)
November 7, 2013
From the transcript:
MR. [GLENN] HACKBARTH [CHAIR, MEDICARE PAYMENT ADVISORY COMMISSION]: Okay. It is time to begin….
Our first topic today is synchronizing Medicare policy across the options that Medicare beneficiaries will face in the future….[Medpac staff] Julie [Lee] is going to lead the way on this topic. Julie, it is all yours.
DR. LEE: Good morning. In recent months, the Commission has been thinking about the relationship between … ACOs, Medicare Advantage plans, and traditional fee-for-service….
In the past, the Commission has expressed a general desire to “move away from fee-for-service.” In today’s presentation, we want to clarify what you mean by “moving away” and by “synchronizing” Medicare policy across delivery systems…. [pp 3-4]
The title of this presentation says, “Synchronizing Medicare policy across delivery systems,” but we haven’t defined what we mean by “synchronizing.” Does it mean payment neutrality across delivery systems? In other words, would Medicare pay the same amount for the same beneficiary whether she gets her Medicare through fee-for-service, ACO, or MA? …. Alternatively, if not neutrality, does synchronizing mean moving toward one system over another? For instance, would Medicare policy create incentives to move away from traditional fee-for-service? If so, what would that entail? ….[pp 13-14]
DR. [MICHAEL] CHERNEW [VICE CHAIR]: My view is that we have to start with fiscal neutrality…. [p 62]
DR. CHERNEW: I’ve heard … broad consensus [from other commission members] around the notion of some type of fiscal neutrality…. [p 72]
[MEDPAC STAFF] MS. [KATELYN] SMALLEY: … CMS reported [ACO Pioneer] program savings of about 0.5 percent…. The ACOs we spoke with confirmed that the cost of running the ACO was about one to two percent….[p 164]
MR. HACKBARTH: If your ultimate goal is to try to move everybody
or a high percentage of care delivery into this new [ACO] model,
then I think … you’ve got to have a clear, explicit strategy for how you’re going to make fee-for-service increasingly uncomfortable. [p 222]
By Kip Sullivan
The Medicare Payment Advisory Commission (Medpac) has set an impossible task for itself. Even though the traditional fee-for-service (FFS) Medicare program is indisputably less expensive than the Medicare Advantage (MA) program and probably less expensive than the new ACO pilot programs, the commission wants to move doctors and patients out of the FFS program and into the MA and ACO programs while still maintaining “fiscal neutrality,” that is, while paying the same amount per beneficiary regardless of whether the beneficiary is enrolled in the FFS, MA, or ACO program.
Medpac has been weaving the intellectual trap it now finds itself in for many years. On the one hand, Medpac has been urging Congress for decades to honor the rule of fiscal neutrality in deciding how much to pay MA plans vis a vis the FFS program and, specifically, to stop paying MA plans more per beneficiary than it pays for FFS beneficiaries. As the excerpts above indicate, there appears to be a consensus among commission members to make fiscal neutrality a fundamental criterion in deciding how much to pay ACOs as well.
On the other hand, over the last decade Medpac has taken the position that Medicare’s FFS program encourages unnecessary services and must either be shrunk (“moved away from”) or transformed from a “volume-based” program to a “value-based” program by somehow subjecting doctors to the managed care methods – the financial incentives, report cards and third-party oversight – used by MA insurers and ACOs.
The statements by commissioners Chernew and Hackbarth, quoted above, capture the tension created by Medpac’s conflicting goals. Dr. Chernew notes a consensus among commission members that Medicare should not pay more per beneficiary to the ACO program than it pays to the FFS program, but Mr. Hackbarth, a former HMO executive, argues that unless Medpac is prepared to recommend making doctors in the FFS program “uncomfortable,” that is, make them suffer financially for staying in the FFS program, doctors won’t migrate into ACOs.
To sum up Medpac’s dilemma: They want to “move away from the FFS program” and “toward” the ACO and MA programs, and they know they can’t do that unless they starve the FFS program and fatten the ACO and MA programs, but they don’t want to starve FFS and fatten the ACO and MA programs because that would violate fiscal neutrality.
To those who are unfamiliar with the groupthink that currently dominates the debate about the American health care crisis, this dilemma seems unnecessary, even nonsensical. It would seem that Medpac has it backwards – that Medpac should support “moving away from the MA and ACO programs” and “toward” the FFS program unless and until the MA and ACO programs can demonstrate they cost no more than the FFS program. If Medpac were to adopt this goal, it could also honor the fiscal neutrality rule. That is, Medpac could simply recommend fiscal neutrality and know that fiscal neutrality would bankrupt all or most MA insurers, and would probably bankrupt all or most ACOs, and thereby “move Medicare toward” the FFS program.
But Medpac gives no sign of taking that position despite decades of evidence indicating MA insurers are less efficient than FFS providers, and a small but growing body of evidence that ACOs are also less efficient than FFS providers. As the excerpt above indicates, Katelyn Smalley, a member of the Medpac staff, reported to the commission that the latest results from the Pioneer ACO program indicate ACOs raise rather than lower health care spending. Ms. Smalley said CMS reported last summer that the 32 ACOs participating in the Pioneer ACO pilot cut total spending by Medicare by half a percent but expenditures by the ACOs rose by one to two percent. Neither Ms. Smalley nor any commission member pointed out the obvious: While Medicare may have saved a half percent, the health care system as a whole suffered an increase in total spending on the order of half to one-and-a-half percent.
Medpac appears to suffer from a split personality. One personality has the integrity to follow the evidence wherever it leads. It is this personality which constantly calls on Congress to stop overpaying MA plans. But Medpac’s other personality suffers from two delusions that afflict much of the US health policy establishment: (1)the delusion that volume, not price and the administrative waste which contributes to high prices, is the main cause of the US health care crisis; and (2) the delusion that the managed care tools pioneered by HMOs will someday demonstrate their ability to reduce volume and thereby lower medical costs more than the managed care tools themselves cost.
Medpac is an influential voice in the US health policy wars. We must hope that Medpac will soon recognize that the evidence does not support an endless experiment with managed care and that what America really needs is to move Medicare “toward” a true single-payer system, not just for the elderly and the disabled but for all Americans.