On April 27, 2016, the Centers for Medicare and Medicaid Services (CMS) released its proposed rule regarding the implementation of the provisions outlined in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).
The basic goal of the MACRA was to repeal the Sustainable Growth Rate (SGR) mechanism of Medicare physician payment and replace it with a payment system that would allow physicians to choose the payment arrangement that best suits their practice, as long as they provide high-quality, patient-centered health care with the most efficient use of limited resources.
The proposed rule for MACRA implementation provides more detail on the complex provisions contained in the law. However, it fails to fully address some basic challenges to implementation and falls short of honoring the original intent of the legislation.
Beginning in 2019, according to MACRA, physicians and other eligible clinicians will be paid through one of two mechanisms. According to Centers for Medicare and Medicaid Services estimates in the proposed rule, in 2019 the vast majority (between 687,000 and 746,000) of clinicians will be paid through the Merit-Based Incentive Payment system (MIPS), essentially a complex pay-for-performance program.
In a Merit-Based Incentive Payment system, fee for service payments will continue, according to the Medicare Physician Fee Schedule (PFS). However, updates will be based on clinicians’ performance relative to their peers in four categories: quality; resource use; clinical practice improvement activities and advancing care information (a substitute for meaningful use of electronic health records). Merit-Based Incentive Payment system bonuses and penalties up to 4 percent each start in 2019 and increase to 5 percent in 2020, 7 percent in 2021, and 9 percent in 2022 and beyond. The 2019 Merit-Based Incentive Payment system payment updates will be based on clinician performance in 2017.
One troubling feature of a Merit-Based Incentive Payment system is that it clearly disadvantages smaller independent practices, creating a very uneven playing field.
The Centers for Medicare and Medicaid Services estimates that 87 percent of solo practitioners will receive Merit-Based Incentive Payment system penalties, while 87 percent of clinicians in practices larger than 100 will get bonuses. Small practices do not have the infrastructure to deal with the substantial administrative burden that quality measure reporting creates. Physicians and their staff currently spend, on average, 785.2 hours ($40,069 per physician) annually simply to track and report quality measures for Medicare, Medicaid, and private health insurers. In spite of the substantial time diverted from patient care and the money ($15.4 billion—roughly the amount Medicare spends each year on Graduate Medical Education) that could be used for other purposes, most physicians do not feel that the current measures help them improve the care they provide.
Clinicians who participate in “advanced” alternative payment models (APMs) will be reimbursed according to the payment arrangement of the alternative payment models and be exempt from the Merit-Based Incentive Payment system program.
In addition, beginning in 2019, alternative payment model participants will receive incentive payments equal to 5 percent of their Medicare Part B revenue the year before. However, Centers for Medicare and Medicaid Services (estimates that only 31,000 to 90,000 clinicians in 2019 will qualify for bonuses, highlighting the rigorous requirements in the legislation and the complexity of designing and implementing the models.
According to MACRA, to be a qualified “advanced” alternative payment model, it must: Use certified electronic health record technology; provide payment based on quality measures comparable to those used in the MIPS program; and bear more than a nominal amount of financial risk (Patient-Centered Medical Homes are exempt from the financial risk requirement). Again, it is small, independent practices that will be disadvantaged by being least able to absorb “more than nominal” financial risk.
MACRA also establishes a process for individuals and stakeholders, such as medical specialty organizations to propose innovative physician-focused payment models (PFPMs) to the newly created Physician-Focused Payment Model Technical Advisory Committee (PTAC). The role of the PTAC is to review proposed PFPMs and prepare and submit comments and recommendations to the Secretary regarding whether such PFPMS meet the criteria. However, according to the language in MACRA, CMS is under no obligation to test any stakeholder-proposed PFPMs, even if they are favorably reported by the PTAC and, unfortunately the proposed rule clearly reiterates this position.
The process of designing alternative payment models is arduous and expensive. If CMS makes the PFPM proposal process difficult and imposes restrictive limits on new models, it will only serve to stifle innovation in payment reform. Physicians will then be limited to remaining in the MIPS program or squeezing into one of the existing CMS-developed alternative payment models, such as Accountable Care Organizations (ACOs) that have had less than encouraging results early on in terms of generating savings.
Getting rid of the Sustainable Growth Rate (SGR) method of physician payment in Medicare, as MACRA has done, was a good thing. Aside from repealing the SGR, the overarching goal of MACRA is to move away from traditional fee for service to a payment system that rewards the value rather than the volume of care. Clearly, MIPS will make fee for service increasingly inhospitable over the next few years, pushing physicians to seek another payment option. As physicians are prodded out of fee for service, they will need somewhere to go.
Much of the language in MACRA is, perhaps unavoidably vague. For example, the development of alternative payment models is in the early stages and nobody really knows where payment reform is headed or exactly what it should look like. This has left many of the important decisions about MACRA implementation to the Secretary of HHS.
One thing is clear; the timeline for MACRA implementation is ambitious, if not overly aggressive.
The MACRA final rule is scheduled for release in November, 2016, just three months prior to the first MIPS performance year. As the MACRA implementation process moves forward, rule makers need to be sure that there is an adequate infrastructure in place. That should include, at a minimum, meaningful performance measures and an ample number of alternative payment models, so that all physicians, including those in small independent practices can participate. If, as it currently appears, the infrastructure is not there, CMS should reconsider the timeline. Transitioning doctors to a better payment system is a worthy goal, but don’t push them off the cliff before they have place to land.