by Sanaz Cordes, MD | Founder & Principal
From fee-for-service models that compensate quantity of care but not necessarily its quality or efficiency, to the Sustainable Growth Rate plan (SGR) which practically guaranteed physician pay cuts… the question remains: What is the ideal way to structure Medicare reimbursement? How can this reimbursement encourage quality and cost improvement yet maintain provider satisfaction to prevent the continuous decline of physicians in the U.S.?
One solution may be the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). It repeals the flawed SGR plan and replaces it with two new payment pathways that could redefine the way we measure the quality of medical care - but still reduce costs and allow for flexible care delivery by providers. The final rule is set to release November 1, 2016. Before we dive into the MACRA structure, let’s review the SGR plan and its flaws.
The SGR plan was put into practice in 1997. Under this act, physicians would endure ever-increasing pay cuts in order to control increasing health care costs. If physician spending exceeded the target value, it would result in an overall decrease in payment to all physicians caring for Medicare patients. The payment that Medicare gave physicians was intimately tied to growth in the national economy which actually benefited physicians in the late 90’s; however, the recession at the turn of the century set physicians on track to receive pay cuts every year.
As a result, physicians were scheduled to receive a 21.2% cut in April 2015. The intent of the SGR was to curb the incentive to provide quantity of procedures over quality patient care. The downsides, however, included significant physician dissatisfaction and contributed to the decrease and shortage of physicians we’re experiencing as a nation. A system that virtually guarantees pay cuts, despite performance, offers little regard for physicians who are prioritizing quality care for their patients.
While MACRA does not completely replace the fee-for-service model, it incorporates two additional value-based compensation models - the Merit-based Incentive Payment System (MIPS) and the Alternative Payment Model (APM) described below. By default, the majority of physicians will fall into the MIPS category, meaning that their yearly Medicare reimbursement will be adjusted based on a “performance threshold.” Only those scoring precisely at the threshold will incur no wage changes. Those above or below will have their reimbursement adjusted accordingly.
The MIPS program will score physicians based on 4 key components: quality, resource use, advancing care information, and clinical performance improvement activities. Based on performance reporting, in 2017 payment will be potentially adjusted starting at up to 4% in 2019 and increasing to up to 9% in 2022.
The intent of the MIPS program is to enrich the current measures by which physician performance is assessed while allowing physicians the flexibility to make patient-appropriate care choices.
Though the vast majority of physicians will initially fall under the MIPS pathway, physicians that focus on disease prevention, saving money, and working cooperatively with other clinicians to deliver patient care may be exempt from MIPS, and qualify for a 5% annual bonus. At first glance, this pathway may seem like a dream option for physicians, but there is a catch: for a physician to qualify for the APM pathway, the practice must participate “in an entity that bears more than nominal financial risk if actual aggregate expenditures exceed expected aggregate expenditures.” What does this mean?
As a means of controlling cost, CMS intends to make the physician financially accountable if total costs exceed the target budget. The majority of physicians are understandably apprehensive at the idea of taking on any risk associated with care of a large patient population with chronic diseases whose costs are not easily controlled.
Pros vs. Cons
There are many aspects of the reform plan that can be considered progressive and beneficial to healthcare. The new bill incorporates several new ways to help define how we measure the value of care rendered. In addition, CMS makes concerted effort to acknowledge physicians that deliver resourceful, patient-centered, high-quality care using a medical team approach.
Of course, there are areas of the bill that leave room for improvement. The MACRA plan comes with increased requirements for physicians to file reports to CMS on aspects of their practice. This causes additional administrative burden for providers who are already inundated with 200+ inbox tasks per day. In addition, it is crucial that practices in all specialty areas and of all sizes are able to maintain a focus on the patient care without getting bogged down in the imposed regulations. Finally, the pace at which practices will be expected to implement these changes and essentially transform their practice is quite steep. Reporting is set to begin January 1, 2017, which leaves little time for many practices to engage in the proper education for its staff.
As with any new legislation, whether these changes will have a meaningful impact on the healthcare landscape remains to be seen. The medical community is left with many questions: how will this impact my freedom to practice medicine according to my best professional judgement without worrying about financial penalties? Will this even result in lower healthcare costs over time? And most importantly, will any of this actually help patients and improve outcomes?