Will Medicare Advantage swallow fee-for-service Medicare?

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Medicare Advantage, the private-plan alternative to traditional fee-for-service (FFS) Medicare, is threatening to swallow the program. MA enrollment has been growing by leaps and bounds and is projected to surpass 50% of total Medicare enrollment by next year.

That raises the danger, as J. Michael McWilliams points out in Health Affairs, that traditional fee-for-service (FFS) Medicare will lose its capacity to serve as a reliable benchmark for MA pricing.  At present, the federal government pays MA plans a per-enrollee fee that's based, with regional variations and a complex array of adjustments, on the per-enrollee cost of FFS Medicare.  Thanks to that tether, MA plans pay providers roughly what FFS Medicare pays them. And FFS Medicare pays rates set by the federal Center for Medicare and Medicaid Services, albeit with arguably too much influence from powerful physician groups* that help set Part B (physician) rates.

Query: will the doc fix bend the healthcare cost curve?

[Program note: the lede is somewhat buried here, in that the post goes from exposition to open query 5 paragraphs down. Also, see update at bottom re doc fix pay-fors]

The doc fix is in, as Sarah Kliff pithily put it. That is, bipartisan legislation unveiled on Feb. 6 would repeal the broken Medicare payment formula that has had to be patched every year -- and transition essentially all Medicare payment to doctors away from fee-for-service and into (alleged) payment-for-performance.

Under the proposed legislation, three existing merit-based incentive payment programs would be consolidated. Payments to doctors will be adjusted based on a composite score of their performance compared to peers comprised of  scores in four categories: 1) quality of care; 2) resource use; 3) "meaningful use" of electronic health records (EHRs); and 4) improvement over their own past performance.* The quality measures, to be updated every year with input from "eligible professional organizations and other relevant stakeholders," are in five categories: clinical care, safety, care coordination, patient and caregiver experience, and population health and prevention.

If it passes and works more or less as designed -- two enormous ifs -- the doc fix, as I have noted before, could eclipse in impact all the toxically politicized budget wrangling of the past five years.  "Healthcare reform is entitlement reform": if Medicare cost growth is slowed significantly, our fiscal future is likely secured  If it works (or, for that matter, if it fails spectacularly), the doc fix could have more impact on the healthcare cost curve than the Affordable Care Act, since its package of consolidated performance incentives, as Sarah Kliff points out, "constitute a more significant move toward pay-for-value than is the Affordable Care Act, where those efforts are either limited to pilot programs (like the Accountable Care Organizations) or, if they are system-wide, tend to limit providers' risk to two percent or three percent of their reimbursements. Going up to nine percent [as the doc fix does by 2021] would step up the incentives in a pretty major way."

It's a supreme irony that this potentially radical long-term budget reform is strongly bipartisan -- put forward by the outgoing chair of the Senate Finance Committee, Max Baucus, and the Republican Chairs of the House Ways and Means and Energy and Commerce Committees, Dave Camp and Fred Upton. I wonder if it can stay that way. Partisanship will be in force on the unresolved matter of how to pay for the fix, which needs to be paid for only because the status quo baked an unsustainable "Sustainable Growth Rate" into long-term budget projections.** The collaboration on new payment mechanisms, however, is evidence that either a) Republicans are capable of rational thought and action when an issue is somehow sequestered from ideological dispute, or b) that both parties are in the grip of untested shibboleths regarding the potential of pay-for-performance and currently prevalent principles of its design. Probably a bit of both.

A program note: as I mentioned in a prior post, I am branching out from amateur blogging to amateur reporting.  On the prior subject on which I mentioned I would seek expert input -- "what will Republicans do to the ACA if they win both houses of Congress and the presidency by 2014?" --I have completed an article based on in-depth discussions with healthcare economists on both sides of the political spectrum that will either appear on this blog or elsewhere early next week. I plan to do the same with respect to the potential impact of the doc fix (that is, the SGR Repeal and Medicare Provider Payment Modernization Act). Let me again go open source here (my prior query drew a blogged response from Duke's Don Taylor) and pose the following questions:

In which "strategic advisor" Howard Dean attacks IPAB

Why would Howard Dean -- physician, former governor, former meteoric presidential candidate and current "strategic advisor" to healthcare clients at a lobbying firm, stick a knife in IPAB, the Independent Payment Advisory Board created by the Affordable Care Act to rein in the federal government's Medicare spending?

In a Wall Street Journal op-ed published this morning, Dean first pays lip service to core aspects of the ACA before launching into a perfunctory, mail-it-in attack on  IPAB: