In what may be the most significant modification to Medicare since the program began in 1966, on Oct. 15, the Centers for Medicare and Medicaid Services (CMS) released the final rule for implementing the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). It dramatically changes how Medicare pays doctors for their services.
Does it really matter how doctors get paid? Yes — the success or failure of the new payment system will profoundly influence the future of the U.S. health care system. And while the goals of MACRA are laudable, its implementation carries a number of unknowns and the potential for unintended consequences — for patients and doctors alike.
One recent survey of physicians found nearly 40 percent expect a “mass exodus” from Medicare over MACRA.
Before MACRA, Medicare used a fee-for-service payment system, reimbursing separately for each individual service provided, without regard to the quality of the care. The new system will reward doctors for providing high-quality, efficient care that leads to better patient outcomes, and penalize those who fail to do so. At least — that’s the idea.
MACRA creates two pathways for physician payment. There’s the Merit-Based Incentive Payment System (MIPS), which will pay doctors based on how they score on a number of performance metrics relative to their peers. The second pathway will reward doctors who participate in Alternative Payment Models (APMs) meant to promote high-quality, cost-efficient care by incentivizing doctors to work together toward a common purpose: improving patient outcomes while eliminating unnecessary spending.
This sounds good, but all the emphasis on better quality care comes with a trade-off. To assess the quality of care provided by doctors in the MIPS pathway, the physicians will have to report on a number of measures that many feel do nothing to help them improve the care they provide.
Doctors already devote a considerable amount of time reporting on quality measures. A recent analysis found that a typical medical practice currently spends, on average, 785.2 hours a year per physician to track and report quality measures. That’s time away from patient care, and the costs — $40,069 per physician — present a particular hardship for small, independent practices operating on narrow margins. Moreover, three-quarters of the doctors surveyed felt that the measures did nothing to help them improve their care.
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How much MACRA will add to the already considerable administrative burden on physicians remains to be seen. To its credit, CMS has made some effort to minimize the reporting requirements and has allocated funding to help small practices prepare. Still, the impact will likely be substantial.
The ultimate — and undeniably laudable — goal of the legislation is to base physician payments on the value of the care patients receive, rather than the volume of services provided. And the Obama administration has set a rather aggressive timeline of tying half of all Medicare payments to value through APMs by 2018.
But a cloud lingers over that optimistic horizon: APMs have yet to fulfill their promise.
Accountable Care Organizations (ACOs), the best known type of APM, accept responsibility for the total costs of care for their patients. If the providers in an ACO can reduce health care spending below an established benchmark, while maintaining quality of care, they can share in the savings. If spending is above the benchmark, they are on the hook for the excess. But after four years, ACOs still haven’t generated the savings that many had hoped for.
This is cause for real concern. If faced with increased reporting and administrative burdens, declining reimbursements and new payment arrangements that put their income at risk, many doctors — especially independent practitioners — may feel that they simply can’t afford to participate in Medicare any more. One recent survey of physicians found nearly 40-percent expect a “mass exodus” from Medicare over MACRA. Given the predicted shortage of doctors over the next decade and an aging population, this would be disastrous.
MACRA’s goal — to create a payment system that promotes better quality of care for patients and spends taxpayer money wisely — is sound. However, the necessary infrastructure to achieve that goal — meaningful quality measures and viable APMs — is not yet in place.
If MACRA is implemented according to the arbitrary timeline set by the administration, it could force doctors to abandon private practice for salaried positions or leave practice altogether — neither of which would be good for patient care. So, yes, we all should care how doctors get paid.
John S. O’Shea, M.D., is a practicing surgeon and a senior fellow in The Heritage Foundation’s Center for Health Policy Studies.