Reconciliation Provisions Undermine Progress to Value-Based Care
The “doc fix” provision of the reconciliation package announced by Energy and CommercenRepublicans on Sunday night would shift incentives away from value-based care toward a fragmented fee-for-service system. Specifically, the bill would remove the differential conversion factor update (favorable update to value-based care clinicians) and does not include any APM bonus. The effect of this is a cut to Medicare physicians and their patients participating in two-sided risk arrangements. Worse yet, the cut is used to infuse money into the fee-for-service system without requiring any behavior change.
Background: Decade-long Bipartisan Commitment to Value-Based Care Movement
The Medicare Access and CHIP Reauthorization Act (MACRA) created two separate incentives for participating in accountable care. One was a flat 5% bonus, which subsequently was renewed for several years but expired at the end of 2024. The second was a differential conversion factor, starting in 2026, which allowed clinicians in advanced alternative payment models (generally two- sided risk arrangements) to receive a higher conversion factor update than clinicians remaining in fee-for-service in traditional Medicare.
Congress adopted this two-part incentive structure on a broad, bipartisan basis in 2015. Since then, APM adoption has increased and APMs have shown increasing ability to save money and improve care over time. Today, about half of traditional Medicare beneficiaries participate in an APM.
Ask: Ensure that Physician Fee Schedule Provisions maintain Value-based Care Incentives
Republicans can address this problem by either extending the Advanced APM bonus for five years at 3.53% or by incorporating a differential MEI update in the reconciliation package, or by taking other action to ensure that there is a favorable update for clinicians participating in accountable care.
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