New Directions for Medicare Physician Payment

Commonwealthfnd-twitterBy Jordan Kiszla and Rachel Nuzum, The Commonwealth Fund
Twitter: @CommonwealthFnd

In April, the U.S. Department of Health and Human Services (HHS) issued a proposed rule to implement the Medicare Access and CHIP Reauthorization Act of 2015, or MACRA. Congress passed this bipartisan legislation last year to replace the sustainable growth rate formula (SGR)—which tied the growth of Medicare physician payments to growth in the economy—with an approach that rewards high-performing providers and supports alternative payment models.

In May, nearly 200 congressional and administration staff, journalists, and other stakeholders convened in Washington, D.C., for a briefing hosted by the Alliance for Health Reform to discuss the MACRA legislation and its implementation. The briefing featured Elizabeth Mitchell, president and CEO of the Network for Regional Healthcare Improvement; Kate Goodrich, M.D., director of the Center for Clinical Standards and Quality at the Centers for Medicare and Medicaid Services (CMS); Timothy Ferris, M.D., senior vice president at Partners HealthCare; and Ashley Thompson, senior vice president at the American Hospital Association (AHA). Moderating the briefing were Sarah Dash of the Alliance for Health Reform and Rachel Nuzum, Commonwealth Fund vice president for federal and state health policy.

According to Mitchell, MACRA could be even more transformational than the Affordable Care Act (ACA) in aligning provider payment with value rather than volume. She underscored that bringing health providers up to speed quickly is essential as the payment changes that take place in 2019 will be based on provider performance in 2017. To support clinicians preparing for the payment changes under MACRA, CMS announced $10 million in additional funding under their Transforming Clinical Practice Initiative.

Under the reforms slated to begin in 2019, Medicare providers will either be paid under the Merit-Based Incentive Payment System (MIPS) or Alternative Payment Models (APMs). As CMS’s Goodrich explained, MIPS will be the default payment method, streamlining three current Medicare payment programs into one to ease clinical burden.¹ Providers in MIPS will be subject to negative and positive payment adjustments based on their performance in four categories: quality, resource use, clinical practice improvement, and meaningful use of certified EHR technology. If providers elect to participate in an advanced APM—defined as payment models where provider organizations are bearing “more than nominal financial risk” for the cost and quality of care—they are excluded from MIPS and instead receive a 5 percent lump sum bonus beginning in 2019.

Goodrich said that advancing both APM and MIPS adds complexity but also flexibility, as it allows providers to select the pathway that is the most appropriate for their situation.

Ferris, of Partners HealthCare, called the MACRA legislation a “step forward” and praised the rule for encouraging the provider-designed changes envisioned in the MACRA legislation. However, he warned that the long delay proposed between the performance period and the reward payment could hinder the impact on health care providers’ behavior. Ferris also noted that asking providers to participate in multiple payment initiatives, often with conflicting measures of success, could lead to “demoralization and destabilization” of the provider community. Ferris argued that this could be avoided if physicians have technical support, if quality metrics are aligned across multiple initiatives, and if physicians believe that MACRA’s incentive payments are aligned with doing “the right thing.”

AHA’s Thompson also praised the MACRA legislation for providing stable physician payments (no longer subject to annual congressional action to stave off large cuts as under the SGR), rewarding value, and financing changes in a sustainable manner. She expressed concern that the law could pressure hospitals and other providers to participate in risk-bearing arrangements before they are ready. Thompson also urged CMS to be as inclusive as possible when defining APMs in the final rule and to consider appropriate risk adjustment, especially adjustments for the sociodemographics of a patient population, when measuring provider performance to calculate payment bonuses or penalties.

Panelists’ slides, as well as a transcript of the briefing and additional materials, are available on the Alliance for Health Reform’s website. HHS accepted comments on the proposed rule implementing the MACRA legislation until June 27, 2016, and plans to issue a final rule later this year.

The Commonwealth Fund will continue to track MACRA implementation, so please check our website for additional analysis and commentary.

¹The three current Medicare programs that are being streamlined under MIPS are the Physician Quality Reporting Program (PQRS), the Value-Based Payment Modifier, and the Medicare EHR Incentive Program.

This article was originally published on The Commonwealth Fund Blog and is republished here with permission.