- Will Private insurers follow Medicare cuts? Yes
Reduced Medicare reimbursements might drag down the generally higher private insurance reimbursement rates as well. The cuts could be significant.
According to “In the Shadow of a Giant: Medicare’s Influence on Private Physician Payments,” a statistics-heavy 2017 study in the Journal of Political Economics, “we estimate that a $1.00 decrease in Medicare’s payment for a surgical service causes a $1.16 decline in private payments for that service. This response emerges within 1 year of Medicare’s administrative change.” A second branch of the study, using broader sets of data than surgical-only, found that a $1.00 decrease in Medicare reimbursement brought about a $1.12 decline in private insurance reimbursement.
- Change ASC payments to be risk-adjusted but budget-neutral
Currently, Medicare bases payments for services at outpatient hospital and ambulatory surgery centers (ASCs) on the care setting rather than on patient acuity. The budget proposes to risk-adjust payments to these facilities based on the severity of patients’ diagnoses in a budget-neutral manner. “This proposal will promote site neutrality in payments for similar services and similar patient characteristics at these facilities,” the budget proposal says.
This proposal goes hand-in-glove with cutting payments to hospital-based outpatient surgery facilities. The AHA has argued that hospitals get the more complex and difficult surgery cases, and ASCs don’t have the capability to deal with some emergencies.
Site neutrality is the sort of proposal Congress might accept, given the federal budget deficit and given the support from surgeons.
- Financial incentives to risk-taking ACOs; Stark Law exemptions
The budget seeks to boost patient use of accountable care organizations (ACOs) which accept down-side risk. One proposed action would allow them to “cover the cost of primary care visits to encourage use of the ACO’s providers.”
Another proposal, strongly supported by AAOS, would establish “safe-harbors” for surgeons and ACOs from Stark Law rules. A White House budget-in-brief document says:
“The Physician Self-Referral Law … [is] a significant impediment to care coordination, participation in alternative payment models, and the establishment of novel financial arrangements that further the goals of a value-based system. Effective CY 2021, the Department, in consultation with the HHS Office of Inspector General, will establish a new exception to the physician self-referral law for arrangements that arise due to participation in advanced Alternative Payment Models and identify the types of arrangements and the minimum risk levels and level of participation in the model required for such exceptions.”
That statement seems to imply that the Administration believes HHS [Health and Human Services] can create exceptions to the Stark Law without congressional action. The AAOS comments on the Stark Laws are closely similar to the Administration’s.
Also, AAOS issued a statement supporting, but seeking changes in, a bill which would similarly relieve ACOs from the Stark Laws. That bill, the Patient Affordability Value and Efficiency (PAVE) Act, is still a draft. U.S. Sens. Bill Cassidy, M.D., a Louisiana Republican, and Mark Warner, a Virginia Democrat, released it for comments February 13. They didn’t indicate when it might be introduced.
