Will Medicare Physician Fee Schedule Changes Drive Value-Based Care?

The proposed changes in the Medicare Physician Fee Schedule (PFS) for calendar year (CY) 2023 may offer incentives for provider groups to consider alternative payment models. Still, the policies will likely require more apparent benefits to significantly impact the shift to value-based care.

The CY 2023 PFS proposed rule included changes to the Medicare Shared Savings Program (MSSP) and a conversion factor decrease—two updates that are unlikely to have a blanket effect on accountable care organization (ACO) participation, according to Jake Harper and Felicia Alexander, healthcare attorneys with Morgan Lewis.

While the proposed changes may not have an overwhelming effect on the shift to value-based care, the policies support the trend of CMS initiatives that incentivize participation in alternative payment models, the attorneys told RevCycleIntelligence.

In particular, the proposed adjustments to the MSSP, Medicare’s largest ACO program, may pique provider interest.

The rule introduced proposals to provide advanced shared savings payments to certain new ACOs that focus on rural and other underserved populations. In addition, CMS has proposed allowing new ACOs to participate in an upside-only risk-sharing model for a longer period before taking on downside risk.

“That said, while these changes may remove perceived barriers to participation in the MSSP, it remains unclear whether these proposals will be enough to drive a meaningful number of new providers to establish ACOs or simply push those that were already considering ACO establishment to take the plunge,” Harper and Alexander explained.

The programmatic changes will not necessarily prompt newcomers to consider MSSP participation if it wasn’t already on their radar, the attorneys continued.

CMS may need to employ a strategy that uses both reward and punishment to encourage involvement in risk-bearing agreements.

“More widespread participation in MSSP and other value-based arrangements may require clearer benefits for participants and disincentives for non-participants,” Harper and Alexander said.

The proposed $1.53 decrease in the conversion factor for CY 2023 will have similar effects on providers and their decisions surrounding value-based care.

Physician groups have been vocal about their opposition to the cuts, as the proposed decrease would result in lower Medicare reimbursement per encounter on a fee-for-service basis. Organizations have stated that the decrease fails to account for rising inflation and pandemic-related challenges.

“To the [extent] the conversion factor remains as is despite the outcry, it is unlikely that decreased reimbursement alone may tip the scales in favor of value-based payment models for some providers,” Harper and Alexander noted.

“For providers that were already considering value-based payment models, however, it’s possible that the proposed conversion factor decrease will be another push in the direction of value-based payment models.”

While the attorneys view the proposed reimbursement cuts and the increased support for ACOs as only tangentially related aspects of the PFS, they pointed out a potential relationship between them.

“Generally speaking, providers that are well set up to participate in ACOs, including higher quality metrics, better understanding of patient outcomes, and resource/referral utilization, may fare better than those that are not, if the decreased conversion factor ultimately takes effect,” Harper and Alexander shared.

However, given the backlash from providers, whether CMS will finalize the proposed conversion factor decrease remains to be seen.

“Given that CMS references statutory obligations to decrease the conversion factor, it is possible that provider groups and representative associations will be pushing for Congress to act to avoid this, particularly with the current economic environment,” the attorneys added.

Harper and Alexander believe a successful transition to value-based care depends on multiple factors.

“It’s not so much individual CMS policies that hold the greatest potential for encouraging the shift to value-based care, but rather the changing landscape as a whole,” they explained.

For example, the Quality Reporting Program and other quality and cost evaluation metrics have offered incentives for efficient care and disincentives for care that does not measure up to quality standards.

In addition, CMS has helped promote lower acuity primary and preventive care services through virtual check-ins and hospital at-home programs, Harper and Alexander mentioned.

CMS and the HHS Office of Inspector General (OIG) have updated the federal Anti-Kickback Statute and Stark Law to provide fraud and abuse protections for value-based arrangements among providers through its Regulatory Sprint to Coordinated Care initiative.

The attorneys noted that increased telehealth flexibility from CMS and Congress could also impact the adoption of value-based care models.

“All in all, we’re seeing a sea change toward value-based payment models as the constant drumbeat from the federal government,” they said.