Congress' "doc fix" spurs value-based care concerns
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Physicians are divided over how the massive Republican budget bill moving through Congress would insulate doctors from future Medicare cuts without continuing financial incentives to provide better care through alternative payment models.
Why it matters: The "doc fix" championed by the American Medical Association, among other groups, would solve a long-standing complaint about the way Medicare pays physicians.
- But some physician groups worry it would maintain a system long criticized for tying pay to the volume of procedures delivered and the number of patients seen.
State of play: Physician practices that agree to be paid based on patient outcomes get bigger payouts in exchange for taking on the extra financial risk are in line, under current law, for a pay boost through a key adjustment called the conversion factor, starting next year.
- But the version of the GOP budget bill that passed the House of Representatives would instead create a single conversion factor for all physicians that's updated based on Medicare's measure of inflation.
- That would leave providers in the performance-based payment models getting higher payments than currently prescribed from 2026 through 2028, but lower payments than outlined in current law after that through 2035, according to an analysis from Berkeley Research Group viewed by Axios.
Primary care physicians and providers embracing value-based care worry that removing an incentive for participating in the models will set back efforts to move Medicare toward a more holistic payment system that's meant to improve patient care.
- "Signals matter in health care," said Shawn Martin, CEO of the American Academy of Family Physicians. "I think it's a signal [to physicians] of an entrenchment back in fee-for-service."
- The American College of Physicians, the trade group for internal medicine doctors, told lawmakers last month that it's concerned the policy as structured will disincentivize doctors' participation in value-based care.
- "It's being marketed as a long-term fix," said Mara McDermott, CEO of value-based care advocacy group Accountable for Health. "I don't read it that way. I read it as creating a new cliff."
Zoom out: Many provider groups are also concerned that the legislation doesn't fix the 2.83% cut to physicians' Medicare payment that took effect in January.
- The American College of Surgeons in a May statement praised lawmakers for recognizing that Medicare physician payments have to be adjusted for inflation, but that the legislation's provision "is not sufficient to make up for the 2025 cut, and more work is needed."
The other side: The AMA wrote to House leadership last month that it "strongly supports" the provision to consolidate into one conversion factor and tie updates to inflation starting in 2026.
- Reductions made to the conversion factor over the past half-decade to keep the physician fee schedule budget neutral have made private practice financially impossible for many doctors, the AMA said.
- "It is absolutely vital that this issue be addressed," the letter to House leaders said.
The AMA disagrees that the provision would discourage participation in alternative payment models, it told Axios in an email.
- Although payment updates to alternative payment model physicians starting in 2029 would be lower than current law provides, those doctors will still get positive payment updates overall, it said.
Between the lines: The policy would go into effect as the Trump administration seeks to leverage Medicare alternative payment models to drive HHS Secretary Robert F. Kennedy Jr.'s priorities of prevention and personal choice in health care.
- The Centers for Medicare and Medicaid Services told Axios it does not comment on proposed legislation, but said it's continuing to prioritize policies that encourage providers to join payment models that reward high-value and coordinated care.
Reality check: Just about all physicians and physician trade organizations agree that stable Medicare payment updates with some link to inflation is necessary to ensure continuous access for Medicare patients, AAFP's Martin said.
- It's "extraordinarily healthy" for physician advocacy groups to have different opinions on exactly how to reach that conclusion, he added.
The Senate is currently debating what to include in its own version of the reconciliation bill.
- "If this is where we end up, then I think it's better than another cut. But if we can get someplace different and more comprehensive, I think that's obviously much better," Martin said.
- "There's still plenty of time for us to have these conversations."
