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MedPAC Discusses the Future of ACOs, GME Reform, and Upcoming Changes to Medicare Payment Policies

November 8, 2013—The Nov. 7-8 meeting of the Medicare Payment Advisory Commission (MedPAC) covered a robust agenda to make up for a missed meeting during the partial government shutdown.  Topics covered included strategic questions such as how to align payment programs and quality reporting, future directions for ACO programs, proposals related to updates for physician and hospital payments, and a discussion of graduate medical education (GME) reform.

The meeting commenced with a session on whether to recommend synchronizing Medicare policy across different delivery system s including fee-for-service (FFS), Medicare Advantage (MA), and accountable care organizations (ACOs).  Key issues raised were how these systems relate to each other, whether they are equal in terms of what beneficiaries receive in care, and how to assess value.  Commissioners agreed that Medicare should find a way to structure and synchronize policy in a way that does not reward inefficient use of resources.

MedPAC staff next highlighted concerns with the Centers for Medicare and Medicaid Services (CMS)’ current approach to quality measurement, and included proposals for future quality measure sets and alternatives to assess quality across MA, ACO, and FFS delivery systems. The commissioners discussed reducing the overall number of publicly reported measures to a smaller set of population-based outcome measures, preferring those that utilize claims and MA encounter data. Commissioners repeated longstanding concerns with the lack of actionable data, the lack of coordination across payers, and the need for greater harmonization among measures.

MedPAC staff also presented on potential policy directions for the second phase of ACOs, focusing on three key policy issues: 1) Should two-sided risk models be required and if so when?; 2) How should baselines and benchmarks be set?; and  3) How should we address attribution and leakage issues?

There was consensus that the ACO program must be attractive to encourage participation. Conversely, if there is the desire to move providers into ACOs, the Medicare fee-for-service system must become less attractive. Commissioners were in favor of two-sided risk for ACO participants, but most commissioners felt there needed to be some sort of transition.  Commissioners were strongly in favor of incentivizing beneficiary engagement in ACOs through strategies including sharing savings with patients, reducing cost sharing, or reducing premiums for those beneficiaries that utilize providers within the ACO network.

Mary Wheatley, AAMC director, quality and physician payment policies, made public comment highlighting academic medical centers’ leadership in participating in both the Pioneer and Medicare Shared Savings Program (MSSP) ACOs, the necessity of training residents and students to practice in these new delivery models, and that an important measure of success for the ACO programs includes the participation of teaching hospitals and physicians.

Repealing the sustainable growth rate (SGR) formula was another important and timely issue the commissioners covered during the meeting.  In an effort to prevent slowing any legislative efforts, the commissioners reached a consensus to reiterate MedPAC's previously published principles: Repeal of SGR is urgent; Preserve beneficiary access; Rebalance payments for primary care and other specialties; and Encourage movement toward reformed delivery systems. 

Based on the discussion, MedPAC will not include recommendations for offsets in the March report. 

The commissioners also considered additional prior recommendations they could re-run in the March report.  These include: establishing an HHS panel on misvalued services, improving payment accuracy and appropriate use of ancillary services, and reforming payment for graduate medical education (GME). 

With respect to GME, the commissioners discussed whether to restate proposals to make GME payments contingent on meeting certain standards and competencies including for team-based care, care coordination, and shared-decision-making.  MedPAC Chair Glenn M. Hackbarth, J.D., expressed a particular interest in GME, explicitly recognizing the importance of this issue at a point when medical schools are producing an increasing number of graduates, while Medicare-funded residency positions have been frozen since 1997. 

He suggested that he sees an opportunity to support an increase in Medicare funded residency positions, but it would have to be paired with changes in Medicare policy, such as requiring GME accountability.  Commissioners agreed that MedPAC needs to spend more time on this issue and would not be able to complete an appropriate level of analysis in time to include GME proposals in the March report.

The meeting concluded with a session providing background on beneficiary access to hospital care and near-term changes to Medicare payment policies in preparation for the commission's work to begin next month on a hospital payment update recommendation.  Research presented during this session indicated that payments are expected to grow more slowly than costs in 2015, access to Medicare beneficiaries will be strong, Medicare inpatient volume has been declining as outpatient volume has increased, the expected update for 2015 under current law is 2.1 percent, and negative margins are expected even for efficient providers.

The commission also expressed a general view that the Medicaid days plus Medicare SSI days are a poor proxy for uncompensated care for the purpose of distributing the new Medicare DSH Uncompensated Care payments.


Allison M. Cohen, J.D., LL.M.
Senior Policy and Regulatory Specialist
Telephone: 202-862-6085

Jane Eilbacher
Policy and Regulatory Specialist
Telephone: 202-828-0896

Scott Wetzel, M.P.P.
Lead, Quality Reporting
Telephone: 202-828-0495


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806