MedPAC debates what form a Medicare without fee-for-service payment might take

Calculator that says "Medicare" on it on top of money, next to bottle of pills
MedPAC intends to home in on value-based payment in the coming months. (Getty Images/liveslow)

MedPAC plans to focus heavily on value-based payment in the coming months, and at its meeting Thursday the commissioners weighed what a Medicare without fee-for-service might look like. 

Eric Rollins, a principal policy analyst for the Medicare Payment Advisory Commission, outlined several scenarios that could unfold if volume-based payments are further phased out or eliminated entirely. 

These models are based on what’s worked and what hasn’t today in accountable care organizations (ACOs) and Medicare Advantage (MA), he said. Both programs have challenges that will need to be addressed if they become the foundation for further work on value-based care. For example, the government actually pays slightly more in MA, he said, and ACO savings have been sluggish—though that is showing signs of changing.

“The performance of both programs has been mixed, and they need to be improved before they can realize the potential benefits of value-based payments,” Rollins said. 

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The four possible scenarios Rollins outlined are: 

  1. Fee-for-service Medicare continues to exist, but policymakers focus on reforms within the program and continue to promote MA and accountable care organizations—essentially the status quo for the program today.
  2. Medicare requires that all providers currently participating in the traditional program move into ACOs—to earn any fee-for-service payments, a provider must join an ACO.
  3. Medicare stops paying providers directly, and instead allows MA plans and ACOs to pay participating providers. The Centers for Medicare & Medicaid Services (CMS) would continue to set a fee schedule.
  4. MA plans and ACOs pay providers themselves, and there is no fee-for-service fee schedule set by CMS. 

Each of these scenarios have their own strengths and weaknesses, Rollins said, though the latter two options would be the most complex for the system to implement. The third and fourth scenarios would essentially transform ACOs into capitated health plans, and some commissioners expressed concern that they may not be equipped for that change. 

“A model where you move all the payments to provider’s system could be really challenging—it's a core competency they don’t necessarily have,” Commissioner Warner Thomas, CEO of Ochsner Health System, said. 

RELATED: MedPAC weighs bundled payments for post-acute care 

These scenarios also stick to Medicare Parts A and B and thus don’t tackle another central cost driver: prescription drugs, the commissioners noted. 

Commissioner Paul Ginsburg, Ph.D., director of the USC-Brookings Schaeffer Initiative on Public Policy, said these concerns indicate the panel should perhaps pump the brakes on tossing volume-based payments wholesale and focus on improving ACOs and getting aggressive on drugs, lest the debate ring “hollow.” 

“I have a concern that discussing ‘scenarios’ at this point is really premature,” he said. 

Though MedPAC did not take formal action on any of the possibilities, the debate aims to lay the groundwork for future policy recommendations on value-based care, Commission Chair Francis Crosson, M.D., said. 

“This is the beginning of an anticipated stream of work on expanding the use of value-based payment in Medicare,” he said.