MACRA’s impact will be felt beyond repealing SGR

The Medicare Access and Children’s Health Insurance Program (CHIP) Reauthorization Act (MACRA) is a game changer. An article about MACRA published online in the National Review carried the headline, “A bill that actually reforms Medicare.” 

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For the practicing physician, it introduces a new fork in the road and a freeway to the future. The new law delivers some positive reforms but does not represent a physician panacea. And while it was widely publicized as the law that repealed the sustainable growth rate (SGR) formula, MACRA will impact your practice in many ways, as we will discuss here.

Repeal of SGR

First, and probably most important, the law included a permanent repeal of the flawed SGR formula enacted in 1997, avoiding a 21% cut in Medicare payments to physicians. Although Congress never intended to allow the cut to occur, the repeal was important in many ways. No longer will you be subject to payment disruption because Congress intended, but failed to pass a law preventing the cuts for that year. Since 2001, there have been 17 temporary “doc fixes.” The first impact of this change has already been implemented with a 0.5% increase in Medicare payments on July 1, 2015.

Now, even more important than eliminating the inconvenience to the practicing physician, our national organizations-the AUA, American Association of Clinical Urologists, American Medical Association, American College of Surgeons, etc.-can concentrate on other issues rather than spending all of their political capital on trying to prevent the Medicare cuts mandated by the SGR. The next time you visit with your congressman or senator, representing the AUA, the AACU, or other organization, you will be able to discuss more positive changes without having the SGR at the top of your list.

NEXT: Continuation of the 10- and 90-day global

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Continuation of the 10- and 90-day global

MACRA reverses the decision of the Centers for Medicare & Medicaid Services to eliminate bundled payments for 10- and 90-day global surgical procedures. Independent analysis has shown that this would result in a pay cut for surgeons. Over the long run, this is probably a double-edged sword because CMS is mandated to study the number and level of visits furnished during the global periods and to adjust payments accordingly. With many surgeons referring their patients to primary care for the initial history and physical and the decreased number of postoperative visits, eventually we are likely to see a significant cut in the global payments.

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Our concern is that many urologists have become too “efficient” in providing postoperative care. At least for the time being, the global cut has been avoided. If CMS chooses to collect data from practices that replace a number of their postoperative visits with emails, phone calls, and/or primary care visits, payments could take a big hit.

Stabilization of Medicare payments

There will be a modest 0.5% increase in Medicare payments over the next 4½ years. This stabilizes Medicare payments through 2019. During this time, the Medicare Payment Advisory Commission (MedPAC) is to study the effects of payment levels on the quality and efficiency of care and all Medicare patient access to physician services. MedPAC will make recommendations to Congress for future payment updates. Will the shortage of urologists and the increasing number of Medicare patients, as well as other newly insured patients, cause excess problems for Medicare patients and therefore a recommendation for increased payments?

NEXT: Traditional fee for service

Traditional fee for service

Traditional fee for service is preserved, but handicapped, by the new law. Payment is stabilized, but additional penalties and bonuses will apply. Also, the incentives to move to a new form of payment for your services will be enticing.

Current quality programs (‘The three-legged stool’)

Physician Quality Reporting System (PQRS). Penalties for failure to successfully report PQRS quality measures will be phased out at the end of 2018. However, reporting PQRS measures will continue to be an important part of your future payments, as will be discussed here.

Electronic health records/Meaningful Use (MU). MU does not go away, although the direct penalty tied to MU will disappear at the end of 2018.

Value-based payment modifier (VBM). The VBM remains intact and unchanged until the end of 2018, at which time it dies a sudden death as it is replaced by a more comprehensive merit-based system.

NEXT: Merit-based Incentive Payment System

Merit-based Incentive Payment System (MIPS)

MIPS, the new Medicare fee-for-service pay-for-performance program, will be implemented in 2019. This takes the three-legged stool and turns it into a four-legged stool: PQRS, MU, the concepts of the VBM, and now the fourth leg, clinical practice improvement activity.

The concept is different and the stakes are higher. The current system requires winners and losers in a zero-sum system. For somebody to receive a bonus, someone else has to incur a penalty. Under MIPS, penalties/bonuses will be determined by a sliding scale. Each individual physician will be compared to a performance threshold set annually by the secretary of Health and Human Services based on either the median or the mean scores from the previous year. Extra monies have been allocated for payment to physicians if all perform above average.

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As you can see, as physicians learn the system, do a better job of reporting, and/or improve the quality and cost efficiency of their practices, the threshold will be higher, and higher, and higher.

The maximum penalty under the current system will be 8% in 2018. The maximum penalty under MIPS will be 4% in 2019 and gradually increase to 9% in 2022 and future years. The potential bonus payment under MIPS will be the same as the potential penalty each year. In addition, if fewer people achieve the bonus than the penalty, the bonus will be increased to achieve budget neutrality and can be increased as much as three times the set bonus for that year.

At the start of each year, physicians will be informed of the threshold score for successful performance that year and will receive quarterly reports on their performance.

Many are of the opinion that the new combined judgment system will be much easier for physicians to successfully navigate.

NEXT: Alternative payment models

Alternative payment models (APMs)

Incentives and other benefits are available to physicians participating in APMs that base payment to physicians on quality measures, such as those included in the MIPS. There also has to be an element of risk, including the potential for monetary loss.

Physicians who receive a higher portion of their money through an approved APM will be exempt from MIPS and MU. In addition, the legislation provides 5% bonus payments from 2019 to 2024 for those who join new APMs.

This payment model will offer groups of physicians the opportunity to contract to receive a defined sum of money to care for a defined group of patients (capitation models and beneficiary panels). If the group can provide care for less and hit defined quality metrics, they retain the unused funds. Other models may include disease-based lump-sum payments.

A very intriguing part of the law is the emphasis on development of new specialty-focused models. We think this creates a golden opportunity for urologists unlike any we’ve seen in years. Grants are available to develop new APMs.

Increased patient out-of-pocket payments

The law will increase costs for Medicare enrollees, with changes phased in over a number of years. Key areas include: boosting premiums for high-income seniors, prohibiting Medigap from covering the Part B deductible for new enrollees beginning in 2020, and somewhat higher Part B premiums spread across the Medicare enrollee base. This will impact patient responsibility amounts and collections.

In summary, there are two key take-home messages. First and foremost, MACRA confirms that fee for service is being modified in the near future and will be available with a few modifications for those who wish to continue the status quo, if you consider the increased rate order requirements, bonuses, and penalties to be the status quo. Second, and more important, we are being incentivized and enticed to move to an alternative payment system. Medicare is “opening” the purse strings to encourage that movement. Since practice modalities will continue to follow the money, we all have to be flexible and prepare for a change; it will occur gradually and geographically.

The information in this column is designed to be authoritative, and every effort has been made to ensure its accuracy at the time it was written. However, readers are encouraged to check with their individual carrier or private payers for updates and to confirm that this information conforms to their specific rules.

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