Welcome to Health Reform Watch, Sarah Kliff’s regular look at how the Affordable Care Act is changing the American health-care system — and being changed by it. You can reach Sarah with questions, comments and suggestions here. Check back every Monday, Wednesday and Friday afternoon for the latest edition, or sign up here to receive it straight from your inbox. Read previous columns here.



What's that pig thinking? (Flickr/CC)

Something weird is happening on Capitol Hill right now. Something just about unprecedented: Republicans and Democrats are agreeing on a multibillion-dollar health policy proposal.

On Thursday, legislators released a plan to overhaul how Medicare pays doctors, one that would do away with the "doc-fix" ritual and more closely tether the amount that providers make to the quality of care they provide.

The plan -- which you can read in full here -- would repeal the sustainable growth rate, the formula that Congress has used since the mid-1990s to set Medicare rates. The problem with the sustainable growth rate is it isn't sustainable at all: The rates that it sets, which were meant to hold down Medicare costs, would result in a double-digit pay cut for doctors. So each year -- or sometimes, every few months -- Congress appropriates additional funding to keep doctor salaries constant.

You can't find a health policy staffer on either side of the aisle that thinks this is a good way to set policy. Doctors hate it because it creates uncertainty about how much they'll get paid every year; sometimes the negotiations go right up to the wire, and Medicare has to ask physicians to hold off on submitting claims until a new patch passes. But because the doc-fix could cost as much as $300 billion to fix, legislators have stuck with these short-term patches, which cost significantly less and are a whole lot easier to find offsets to pay for.

The math changed this year, however, as health care cost growth has slowed, and the Congressional Budget Office has essentially cut in half the amount it thinks fixing the doc-fix would cost. Now, the CBO says it will cost $153 billion to repeal the sustainable growth rate, and legislators see that lower price tag as making it easier -- although by no means certain -- to pass legislation.

The proposal released Thursday is a thorough outline of the policies that would replace the doc-fix. What Congress wants to do differently this time around is, by 2021, put as much as nine percent of doctors' reimbursements at stake if providers can't hit certain quality standards. It would also include a bonus pool of $500 million for the doctors who do provide really great care.

The idea is to use metrics, such as whether they're adopting electronic medical records and hitting certain medical quality targets, to adjust upward or downward what doctors' earn. That's quite different from the current, largely fee-for-service system, where doctors get a flat fee regardless of whether their patients get any better.

This arguably is 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 would step up the incentives in a pretty major way.

This new proposal, however, is not yet a done deal. Congress still hasn't come up with a way to pay for it, which will be the next big hurdle. While $153 billion is a lower price tag than in years past, it's still a lot of money to come up with -- money that hospitals, insurers and other health care providers are not going to want to see come out of their current funding stream. But this is further along than Congress has gotten before, and, if the money does turn up, it could significantly change how the federal government pays doctors going forward.

KLIFF NOTES: Top health policy reads from around the Web.

Republicans pressure Sebelius on Obamacare appeals. "Six Republicans on the House Energy and Commerce Committee are pressing Kathleen Sebelius to explain why the process to appeal an error on HealthCare.gov is incomplete. In a letter to the Health and Human Services secretary, the group accused the Obama administration of not fixing errors on the federal ObamaCare portal." Rebecca Shabad in The Hill.

Where's the Democrats pro-Obamacare campaign? "The most robust defense of Obamacare on television right now lasts about three seconds and comes from a little-known Texas Democrat named Barbara Mallory Caraway, a former state lawmaker running for Congress. Her $20,000 spot says last year's government shutdown led by her home-state senator, Republican Ted Cruz, hurt "those people looking for health care insurance. And that's it for political ads that tout the Affordable Care Act, even as anti-Obamacare ads flood the airwaves." Beth Reinhard in National Journal.

Obama may allow renewal of noncompliant health plans. "Health plans allowed to continue in 2014 though they don’t comply with new Obamacare rules may be extended for as long as three years, Aetna Inc. (AET) Chief Executive Officer Mark Bertolini told investors. The Obama administration hasn’t yet decided whether Americans should be able to keep their insurance plans that don’t meet certain coverage requirements in the Patient Protection and Affordable Care Act, known as Obamacare, Joanne Peters, a spokeswoman for the U.S. Department of Health and Human Services, said in an e-mail." Alex Wayne in Bloomberg.