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The problem with the new Medicare law, in one chart


Congress passed a law last week that overhauls Medicare to pay doctors more when they deliver better care — or at least, that's how it's being sold.

President Obama described the new law that way — it "encourages payments based on quality," he said — shortly before signing it.

Except not all experts are convinced the law will do this: Topher Spiro at the Center for American Progress makes a pretty compelling case that, at least in the short term, the new bill will move away from paying doctors for the value they provide.

A bit of background on the current law, and how the doc fix bill changes it, is necessary here. Right now there are three separate programs that tether a set percentage of payments to doctors based on whether they do a good or bad job. You can read more about them at the bottom of this post, but here's the short version: these are programs that pay doctors more when they hit certain quality metrics and get better at using electronic records.

Take the incentives from these three programs together, as Spiro did, and you get 8 percent of doctors' reimbursements "at risk," depending on how doctors do on hitting metrics by 2018.

The permanent doc fix will sunset these three incentive programs in 2018 and roll them into one big incentive program: the Merit-Based Incentive Payment System, or MIPS. MIPS (aside from having a delightful acronym) will use a wide array of metrics to measure doctor quality. And that program, which begins in 2019, starts off with only 4 percent of doctor payments at risk.

That number will go up over time, as you can see in the chart below, but doesn't get back up over 8 percent until 2022.

Now, this is just the MIPS program. There is also a second, more aggressive program that doctors have a choice to join: the Alternative Payment Model (APM). Under this program, a whole group of doctors band together and take a lump sum of money to care for a certain group of patients. If they can provide the care for less — and hit certain quality metrics — they get to keep some of the leftover cash. The hope is that these models will force doctors to be vigilant against wasteful care, since doctors have a financial incentive to spend less than their lump sum amount.

Spiro makes the case that the APM side of the Medicare reform bill really is a step forward — if that program is designed well, and gets lot of doctors to sign up, it really could move the needle on value-based payments.

But if doctors stick with the MIPS program, Spiro has a compelling case that this new reform bill would have Medicare taking a step backward.