Last year, Congress changed the way Medicare pays physicians, It scrapped a system that paid docs based largely on the number of procedures and tests they do, and instructed federal Medicare officials to come up with a design that rewards quality and value. Medicare has already moved in this direction for hospitals and health systems, and the new law was potentially an historic shift in the way physicians deliver care. But what exactly does it mean for them and their patients?
This week, the Obama Administration took the first steps towards making this landmark change, issuing 962 pages of proposed regulations that explain how physicians should measure and report the quality of care they provide, and how they’ll get paid. Medicare would start scoring performance next year, and the new payment system would begin in 2019.
The law is called the Medicare Access and CHIP Reauthorization Act (MACRA), and it will give physicians a choice of participating in one of two new payment models.
The first is called the Merit-based Incentive payment System, or MIPS. It would link performance to four broad categories—quality; use of electronic medical records and other technologies; clinical practices such as care coordination, person-centered care, and patient safety; and cost. Quality would count for half the score, use of IT 25 percent, clinical practice 15 percent, and cost 10 percent.
Under this system, providers would get a base level of Medicare compensation that would then be adjusted—up or down—depending on how they meet these performance measures. The adjustment could be as much as 4 percent in either direction. Medicare expects that, at least to start, most docs would participate in MIPs.
An ambitious payment model
The second, more ambitious model, is called the Advanced Alternative Payment Model, or advanced APM. Physicians who participate in this program would take greater financial risk, but could also earn larger bonus payments. These models would move closer to fully integrated health care and could include the next generation of Accountable Care Organizations, patient-centered medical homes, and the like. For a more detailed explanation of how this all works, here’s a nice Q&A from Mary Agnes Carey at Kaiser Health News. If you’d like read Medicare’s own summary of its proposal, you can go to this web page.
What will this new payment system mean for physicians and their patients?
Physician groups such as the American Medical Association seem relatively pleased, mostly because the new rules would provide docs with additional flexibility and largely scrap much-hated pay-for-performance and health care IT rules that are already on the books.
The new payment model also begins to get docs and hospitals on the same page when it comes to payment for value. Even this proposal falls far short of a truly aligned system, but it is a step in the right direction.
Good news and bad news for patients
For patients and their families, it is the classic good-new-bad news story. A sensible payment system that rewards quality, and not just numbers of procedures, can only benefit older adults. It could help reduce the number of meaningless invasive tests that physicians order too often. It might encourage a surgeon to think twice about doing an operation that has little hope of improving her patient’s quality of life. It might even encourage specialists and primary care doctors to work more closely together to care for a patient.
But much will depend on how Medicare defines person-centered care and what it really means by care coordination. And by placing such a relatively low value on reducing costs, it is hard to predict how much the new rules would reduce those needless tests and ineffective procedures.
Keep in mind too that this new payment system still lies in the uncertain world between traditional fee-for-service Medicare and a risk-based capitated payment model that exists, for instance, in commercial managed care insurance. The MIPs model tilts just a bit towards better coordinated care. The Advanced APMs tilt more that way. But for the foreseeable future, Medicare will remain in payment limbo.
And, because these new payment models will not expand the basic services provided by Medicare, the program still remains all about medical treatment. There is no room in even this reformed payment system for the kind of social services and supports that are so important to many older adults suffering from chronic conditions. And until medical treatment is fully coordinated with personal assistance and other social services, Medicare beneficiaries will still receive second-rate care, no matter how much Medicare improves its physician payment system.