Trump Pushes Medicare Doctors to Rein In Costs or Face Penalties

(Bloomberg) -- The Trump administration is beefing up an Obama-era program aimed at cutting costs and improving the quality of treatment in the $670 billion Medicare system.

U.S. health officials will push doctors and hospitals to take on more responsibility for Medicare patients by requiring them to take on financial risk more quickly in the Shared Savings Program, under rules proposed on Thursday.

Seema Verma, administrator of the Centers for Medicare & Medicaid Services, said results from the program have been mixed, and that the new rules are designed to generate more financial savings. While the participants, known as accountable care organizations, or ACOs, have improved the quality of care, they’ve failed to generate savings for the government, Verma said. The new proposal will save an estimated $2.2 billion over the next decade.

“We hope that we’re going to attract providers that are serious about delivering high-quality care and cost-effective care,” Verma said in a briefing ahead of the publication of the proposed rule change.

Under the ACO system, doctors and hospitals get financial bonuses if they spend less money on caring for patients, taking on what’s called upside risk. In some cases, they can also be slapped with financial penalties for cost overruns.

More Risk

The administration said too few ACOs were willing to take financial risk for cost overruns. The new rules will require them to do that in most cases. In 2018, just 18 percent of ACOs in the Shared Savings Program face financial penalties for high costs.

“The ones that have been in the program for a long period of time, it’s time for them to start taking risk or move out of the program,” Verma said. “It’s time for them to accept some responsibility.”

ACOs were created by the 2010 Affordable Care Act and designed to encourage doctors to take more accountability for patient care and spending in the Medicare program for the elderly and disabled. They’re part of a broader push to move the U.S. health-care system away from paying doctors for each test and procedure, and toward compensating them for keeping patients healthy and delivering high-quality care.

ACOs in the Shared Savings Program care for about 10.5 million Medicare beneficiaries. Doctors and hospitals will be able to apply for the new ACOs starting in the spring of next year. Because the launch of the rules is occurring later than usual, current ACOs will get a six-month extension of their contracts to June 30.

Some doctors and hospitals may opt to drop out. A survey from the National Association of ACOs, an industry group, found that some organizations might quit the program rather than take on the risk of financial losses.

The administration is also making two big changes that will help ACOs. The savings they generate will be measured against benchmarks that include spending patterns in their regions, rather than just nationally. And ACOs will be allowed to give incentives to their members to encourage them to get care for their diseases. For instance, a doctor group could pay patients as much as $20 for certain primary-care services.

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Mark Schoifet, Timothy Annett

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