When Congress sent a "doc-fix" bill to the president's desk a year ago, the moment was hailed as a turning point, ending the perennial anxiety felt by providers in anticipation of Medicare's physician-payment updates.
Signed into law on April 16, 2015, the Medicare Access & CHIP Reauthorization Act, or MACRA, repealed the sustainable growth rate, or SGR, an aspect of Medicare's payment structure that could have drastically cut payments to doctors and potentially limited access for Medicare beneficiaries.
But as celebrated as MACRA was at the time for ending the widely unpopular method of setting fees, the law's true impact will be felt in the long term. It introduced a new payment structure aimed at rewarding physicians for high quality, good patient outcomes and efficiency, rather than volume of services.
To be sure, insurers had been moving in the same direction before the law was enacted, but the participation of Medicare -- the largest payer of them all, with its 55.5 million beneficiaries -- will provide the critical mass to help drive fundamental reform of the health care system.
The law is a clear signal to the country's physicians that fee-for-service -- for decades the primary way business was done in health care -- will one day soon be the exception, not the norm. It's no longer enough to perform health care services, bill for them and get reimbursed. The insurers, purchasers and consumers who pay for care want high quality and good outcomes, and they want to pay a reasonable cost for them by minimizing unnecessary or needlessly costly services.
HOW MACRA WORKS
Prior to MACRA, physicians had to lobby Congress and the president every year for a reprieve from SGR, which they always received, though not without significant weeping and gnashing of teeth. Twelve months later, they would repeat the same effort.
MACRA replaced SGR with a schedule that will increase baseline Medicare Part B payments by 0.5 percent per year until 2019. Then, starting the same year, physicians who want to participate in Medicare must opt into one of two payment tracks: the Merit-Based Incentive Payment System, or MIPS; or the Alternative Payment Model, or APM, track. Doing nothing is not an option.
In the MIPS track, from 2019 to 2024, a providers individual performance on four dimensions -- quality, resource use, meaningful use of electronic health records and clinical practice improvement -- will be scored on a 100-point scale. Based on whether a provider scores above or below average, Medicare Part B payments will be adjusted the following year, positively or negatively, up to 4 percent in 2020 and up to 9 percent by 2023. Because winners and losers are determined based on how they score relative to their peers, the system will potentially spur physicians to improve performance, so they don't end up on the wrong end of the average.
In the APM track, providers starting in 2019 to 2024 can receive an additional lump sum incentive payment of 5 percent services under the Medicare Physician Fee Schedule if they show that a significant part of their business comes from alternative payment models like accountable care organizations or patient-centered medical homes. In the first year, 2019, 25 percent of revenue must be in APMs meeting Medicare definitions, with the percentage increasing in future years. It is notable that reimbursement from APMs with both Medicare and private payers will count towards reaching the required levels.
WHY IT MATTERS
It's all very complicated, but in the end MACRA will benefit all patients, not just Medicare beneficiaries.
Here's how:
Think of a physician's practice as a business. Like any business, a practice must invest in the infrastructure, technology and capabilities that will help it better serve its patients.
It is always difficult for doctors to decide which bets to make, even in the most tranquil of times. These are not those times. Even though health care is moving towards fee-for-value reimbursement, which rewards high quality, good outcomes and efficiency, fee-for-service remains dominant in the industry. So providers are hearing mixed signals as to which payment models to plan for, and as such, they are left trying to anticipate every eventuality.
MACRA, with its clearly defined value-based incentives and path to stable reimbursement, gives providers an unequivocal signal that public and private payers are united in the push for value-based care. The law's purpose aligns closely with those of the Health Care Transformation Task Force, the Health Care Learning and Action Network, the Core Quality Measures Collaborative and CMS' announcement of alternative payment model targets for 2016 and 2018 -- each of which is an industry-wide effort to bring consistency to how health care is measured and paid for.
With the clarity of purpose and direction, physicians will be able to invest in and retool their practices to best succeed in a value-based environment, one in which it simply won't make business or clinical sense to operate a practice any other way, even for a subset of patients.
Fee-for-value can then become the norm, rather than the exception, and we may all have better health system for it.