Lessons on MACRA & the Alphabet Soup of Healthcare Payment

On Friday, I spoke at the Second National MACRA MIPS/APM Summit held in Washington D.C. Under the leadership of Peter Grant, and co-chairs Donald Crane, Harold Miller, Dr. Barbara McAneny and Dr. Kavita Patel, this program focused on educating attendees on the new payment options available to physicians through fee-for-service Medicare.

Increasingly, policy experts recognize that the traditional fee-for-service system of physician payment is broken. We need to reward the value, not the volume, of care we provide.

Today, a growing percentage of Medicare beneficiaries are choosing Medicare Advantage, which pays private health plans based on the severity of the underlying medical problems the patients have and the quality outcomes achieved. Many of the leading Medicare Advantage programs in the country achieve superior results compared to traditional fee-for-service Medicare. A number of these plans, usually HMO-based, pay physician groups on capitation, or on some sort of value-based formula. But more than half of Americans are covered under “traditional” or fee-for-service Medicare and, until recently, the doctors caring for them were paid based solely on the quantity (not the quality) of care.

Two years ago, Congress passed MACRA (Medicare Access and CHIP Reauthorization Act of 2015) to replace earlier physician payment incentive programs and to further the evolution of value-based physician Medicare payment. Recognizing that it could be difficult for some doctors to transition rapidly, the Centers for Medicare and Medicaid Services (CMS) set payment implementation to start in 2019, and offered two options. Doctors could be paid based on their own practice, with upside and downside risk eventually reaching 9% (this is known as the Merit-based Incentive System or MIPS). Or doctors could choose to receive payment through Advanced Alternative Payment Models (A-APMs), a set of value-based payment models, including some participating in integrated delivery systems.

The problem is that the requirements for participation in both A-APMs and MIPS are complex. And even though the data collection part has already begun, both options are poorly understood by nearly all doctors. Although still uncertain about their best long-term path, the attendees at the two-day event left with a much greater understanding of the choices they have today, and what they will need to do to be successful in each.

My talk at the summit focused on the advantages of choosing the Advanced Alternative Payment Model, regardless of how difficult the transition might be. Citing research from my book “Mistreated: Why We Think We’re Getting Good Health Care and Why We’re Usually Wrong,” I pointed out the many ways integrated, technologically enabled organizations are able to achieve superior quality outcomes for patients. And I focused on the zero-sum nature of these payment methodologies. Although MIPS was intended to reward quality of care and eventually cost containment, it retains the fee-for-service payment methodology of traditional Medicare, and reimburses doctors based on the volume of care provided. As such, it is likely to lead to the continued escalation of minimally effective interventions. That is, participants have incentives to maximize the number of services provided, regardless of the value created. And if, over time, payments per unit of service decline, doctors will just do more (rather than better) to maintain income. The futurist Ian Morrison likes to call it, “the hamster wheel of American medicine.”

In contrast to MIPS, the Advanced Alternative Payment Model allows doctors to succeed when they invest in prevention, create alternatives to the doctor’s office visit (using modern technology), and work with colleagues to make medical care delivery more efficient and less costly. This path is more complex and difficult to organize because it requires doctors to come together, and work in a highly coordinated and collaborative structure. But in the end, I believe it will create not only the best clinical outcomes for patients and savings for the Medicare program, but also the greatest professional satisfaction for physicians.

For those doctors still confused by the alphabet soup of MACRA, MIPS and APMs, you might consider attending the next summit. In the interim, educate yourself about the alternatives that exist, and consider how you might become part of an A-APM in the future.

Dr. Robert Pearl is the bestselling author of “Mistreated: Why We Think We’re Getting Good Health Care–And Why We’re Usually Wrong” and a Stanford University professor. Follow him on Twitter @RobertPearlMD.