The US Government Accountability Office (GAO) suggests that easing participation barriers in Advanced Alternative Payment Models (APMs) for rural physicians could promote value-based care and control rising Medicare spending. Medicare payments to physicians constitute a substantial portion of the expenses, amounting to $93 billion in 2021. The GAO reports revealed that while most Medicare physicians engage in the Merit-based Incentive Payment System (MIPS) or Advanced APMs, rural providers face challenges transitioning to APMs due to financial, technological, and staffing constraints. The reports also discussed geographical factors affecting physician payment adjustments and the impact of removing the work GPCI adjustment.
The US Government Accountability Office (GAO) has highlighted the need to reduce obstacles hindering physicians in rural areas from participating in Advanced Alternative Payment Models (APMs). This action, they suggest, could foster value-based care and help manage the escalating Medicare expenses. In recent years, both Medicare enrollment and expenditures have been on the rise, underlining the urgency of cost control. Notably, Medicare payments to physicians constitute a significant portion of these expenses, accounting for approximately 18 percent. In 2021 alone, Medicare disbursed $93 billion to 1.3 million physicians and providers.
Encouraging healthcare providers to deliver high-quality, efficient care not only enhances patient satisfaction but also holds the potential to curtail Medicare spending.
The GAO conducted a series of reports in October 2021, November 2021, and February 2022. These reports delved into topics such as the Merit-based Incentive Payment System (MIPS), Advanced APMs, and geographical adjustments to physician payments.
Within the Quality Payment Program framework, most Medicare physicians must engage in either MIPS or an Advanced APM. Under MIPS, providers receive payment adjustments based on their performance scores, which can be positive, neutral, or negative.
The October 2021 report revealed that between 2017 and 2019, a staggering 93 percent of providers participating in MIPS qualified for positive payment adjustments, with the highest adjustments reaching 1.88 percent. Provider groups appreciated exemptions in performance categories and low-volume thresholds, as these exemptions eased their participation. However, challenges arose due to insufficient performance feedback, the questionable impact of some reporting measures, and a limited return on investment.
Advanced APMs encourage providers to share financial rewards and risks in caring for Medicare beneficiaries. Providers who meet specific payment or patient count thresholds receive incentive payments.
The November 2021 report uncovered disparities, indicating that fewer providers in rural or health professional shortage areas participated in Advanced APMs in 2019. Specifically, only 12 percent of eligible providers in these regions took part, compared to 15 percent in other areas. Nevertheless, rural providers who performed well in 2017 saw 88 percent of them earning a 5 percent incentive payment, with this figure rising to 92 percent in 2018.
Yet, rural, shortage, or underserved area providers reported encountering challenges when transitioning to APMs. These difficulties encompassed financial resource constraints and risk management issues. Some providers struggled with the upfront costs involved in transitioning from a fee-for-service payment system to APMs, while others were apprehensive about assuming financial risks.
Data and health information technology proved to be additional barriers. Providers lacked the data analytics necessary to evaluate their performance in an APM and the certified Electronic Health Record (EHR) technology required for Advanced APMs.
Furthermore, rural providers, already grappling with administrative burdens and limited staff, often lacked the staffing resources and capabilities essential for transitioning to an APM. Additionally, geographic restrictions, participant limitations, and model design presented further challenges for rural providers.
The report acknowledged that the Centers for Medicare & Medicaid Services (CMS) had implemented models offering upfront funding, technical support, and other components to assist providers in rural and underserved areas in their transition to APMs.
Beyond the Quality Payment Program, geographical factors played a role in physician payment adjustments. The Geographic Practice Cost Indices (GPCI) adapted physician payments to reflect regional disparities in the costs of running a medical practice, with the physician work GPCI modifying payments based on physician labor costs.
The February 2022 report found that the work of GPCI effectively accounted for geographic variations in physician payments in 90 out of 119 localities. However, in 14 localities, the work GPCI value fell below the necessary level to accurately reflect geographic variation, while in 15 localities, it exceeded the required level. Removing the work GPCI adjustment would result in a reduction of overall physician payments by $438.7 million, equivalent to 0.7 percent of all physician payments in traditional Medicare in 2018. Most localities would experience less than a 2 percent decrease in payments if the work GPCI adjustment were eliminated.