Medical Economics - June 4, 2015 - for the original online version of this article go HERE.
What a difference a year makes. Congress passed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)—also known as the “doc fix” in mid-April by overwhelming, bipartisan votes.
Contrast that outcome with 2014, when House Republicans barely passed
essentially the same bill with just 20 Democratic votes and the Senate,
then controlled by Democrats, never even voted on it.
What MACRA does
The doc fix legislation eliminates the sustainable growth rate (SGR)
formula that has dictated drastic reductions in the Medicare fee update
for many of the past 15 years, after being established in 1997.
The underlying provisions in H.R. 2 are the very same ones that were in
the legislation that ran aground in the last Congress. The new law
eliminates the SGR, substitutes a .5% fee-for-service (FFS) update
through 2019, eliminates any update for the five years thereafter.
Also starting in 2019, the bill offers physicians two options for
increasing earnings beyond the zero percent update. One is an
FFS-grounded Merit-Based Incentive Payment System (MIPS). The other is
Alternative Payment Model (APM) program.
Physician groups pushed hard for the bill. Says American Medical Association
President Robert M. Wah, MD, “Not only did MACRA stabilize the Medicare
program, it put in place significant reforms that could reshape how we
deliver health care in this country.”
But that popping of champagne corks is probably a bit premature. It is
true that future SGR-mandated cuts in Medicare reimbursements are
averted. In addition, some of the penalties currently assessed in three
Medicare programs—Physician Quality Reporting, Meaningful Use and
Value-Based Payment Modifier—will be reduced starting in 2019. Physician
reporting, now required separately for all three, will be consolidated
in one report for MIPS. Those are solid pluses.
However, inflation will almost certainly swallow the .5% update in each
of the next five years. Rep. Michael Burgess, MD, (R-TX), the prime
sponsor of MACRA, says in an interview with Medical Economics,
“Half a percent for five years was not high enough, and I walked out of
the room on several occasions. But it wasn’t going to go any higher and
it was important for me to leave a fee for service option and eliminate
the doc fix drama.”
What changed from last year?
The AMA’s Wah praised House Speaker Rep. John Boehner (R-OH) and
Majority Leader Rep. Nancy Pelosi (D-CA) for getting MACRA through a
contentious Congress, especially since its predecessor, H.R. 4015,
failed last year. A variety of factors accounted for this year’s
success, the most important of which was the financing package.
In 2014, the GOP “paid for” elimination of the SGR, and the associated
$141 billion hit to the budget over the next 10 years, by introducing
legislation that would have effectively killed the Affordable Care Act.
That source of financing was anathema to Democrats. The bill passed the
House of Representatives by a vote of 238-181, with near-exclusive
Republican support. But Sen. Harry Reid (D-Nev.), then the Senate
majority leader, refused to bring the bill up for a vote.
But the November 2014 election changed the political calculus.
Republicans won control of the Senate. Reid was no longer at the wheel,
replaced by Sen. Mitch McConnell (R-KY). Democrats in the Senate still
could filibuster the bill, and perhaps block its passage in 2015. But
that became less of an issue as Boehner began negotiating the financial
terms with Pelosi. Eliminating the ACA was no longer considered as an
option to pay for SGR repeal.
Instead, Boehner and Pelosi came up with a financing package built on
compromise and concessions from a number of parties, both inside and
outside Congress. According to one source, the scuttlebutt is that
Boehner and Pelosi both plan to retire at the end of this Congress, and
were motivated by the desire to erect a legislative edifice to their
tenure. The House passed the bill by a vote of 392 - 37 on March 26.
The major Republican concession was to finance the bill in part by
adding $141 billion to the federal deficit over the next 10 years. But
Burgess explains that the deficit-busting nature of H.R. 2 did not
incite more of a Republican House revolt because the 10-year cost of
repealing the SGR was $1 billion less than keeping the SGR and
continuing to pass one-year “patches“ to the fee schedule over the next
10 years.
Burgess points out that the remaining cost of the $214-billion SGR
repeal package was paid for by making structural changes to Medicare.
Here is where the Democrats compromised, as did some of their
constituencies, primarily seniors. The legislation includes $34 billion
of Medicare beneficiary reforms, in the form of higher premiums for
wealthier seniors in Parts B and D in 2018, and increasing the number of
beneficiaries paying those higher premiums in following years.
In addition, Medicare recipients will have to pay higher out-of-pocket
costs for Part B supplemental insurance, which will save the federal
government another $1 billion or so.
Hospitals contributed $34 billion to the funding of the bill in the
form of reduced payments. Testifying before a House committee in
January, Richard Umbdenstock, president and chief executive officer of
the American Hospital Association
(AHA), said “Offsets should not come from other health care providers,
including hospitals, who are themselves working to provide high-quality,
innovative and efficient care to beneficiaries in their communities and
are being paid less than the cost of providing services to Medicare
beneficiaries.” In the end, hospitals swallowed a bitter pill.
After the House passed the legislative package, its fate still hung in
the balance during an early April congressional recess. But upon its
return, on April 14, the Senate passed the bill by a vote of 92-8.
President Obama signed it into law soon thereafter.
What it means for docs
Despite the accolades from physicians groups, it is unclear just how
good a deal MACRA will turn out to be for doctors. Again, inflation is
expected to consume the .5% update in each of the next five years.
After that, FFS transitions to the Merit-based Incentive Payment System
(MIPS). Whether a physician receives a negative or positive update
between 2019 and 2024 will depend on his or her score above or below
some pre-established threshold. The score will depend on how well that
physician does with reporting under PQRS, meaningful use, and
value-based modifier programs, which will be consolidated into a single
program that will be—at least theoretically— easier to comply with.
Scores falling below the threshold will result in penalties. Doctors
who don’t report at all—and Burgess acknowledges that some physicians
won’t—will receive the maximum penalty, which will be 4% in 2019 and up
to 9% after 2022. Even physicians who do report will face penalties if
their score is below the established threshold, with the exact amount
dependent on how far below the threshold they score.
Physicians who score above the threshold will receive incentive
payments of up to 4% in 2019 and up to 9% in 2024, depending on how far
above the threshold they score. Exceptional performers will also qualify
for an additional bonus pool.
Physicians who choose to participate in an APM program will receive a
5% bonus. However, they will be participating in risk-based,
value-payment programs such as accountable care organizations (ACOs).
Consequently, they face the possibility of the 5% bonus eroding in part
or in full if their costs exceed their revenue. Several of the Pioneer
ACOs participating in Medicare’s first-generation program have left the
program exactly because the penalty was more than the incentive.
The elimination of the SGR allows physicians to breathe somewhat easier
until 2019, although current penalty/incentive programs remain in place
until then.
Author bio:
Mr. Barlas, a freelance writer based in Washington, D.C., covers topics inside the Beltway.
Author bio:
Mr. Barlas, a freelance writer based in Washington, D.C., covers topics inside the Beltway.
