Transition to value-based care requires MACRA reform

Congress currently faces a long list of health care-related legislative priorities. While surprise medical billing and prescription drug prices are likely to continue garnering the most attention, physician groups will also be pushing for legislative action this year to reform the implementation of MACRA.

When the Medicare Access and CHIP Reauthorization Act (MACRA) was passed in 2015, it represented the most significant change to how physicians and other clinicians are paid under Part B of the Medicare program since it was established in 1965.

The law was passed to address flaws with the Sustainable Growth Rate (SGR) system, a fee-for-service reimbursement model that was used to determine annual physician payment updates. SGR failed in part because the formula did not address quality improvement. Payment rates did not reward providers for adopting proven practices or focusing on prevention and care coordination with other physician practices.

MACRA Title I established a two-track system based on the quality and value of care provided. Under the new Quality Payment Program, or QPP, clinicians can choose to participate in either the Merit-based Incentive Payment System (MIPS), under which providers continue to be reimbursed largely through fee for service, or through Alternative Payment Models (APMs) that provide financial incentives for providers to become more responsible for the care they provide.

The law allowed for a 0.5% annual increase in the Physician Fee Schedule from 2015 through 2019, but imposed a 6-year freeze on fee updates from 2020 through 2025. Even during the first 5 years, the modest payment increases have not kept up with inflation. Without a fix to MACRA, Medicare payments will increasingly fall below physician costs, which are estimated to rise by an average of 2.2% per year.

The rise in practice costs is due in part to the increasing number of regulatory requirements that physicians are required to comply with, including health IT regulations, quality reporting requirements, and migration to electronic health records. CMS estimates that providers spent $694 million in 2018 complying with MIPS reporting requirements. Other estimates of the administrative costs of reporting quality measures are much larger.

The 2019 Medicare Trustees Report, an annual financial review of Medicare’s two trust funds, found that “absent a change in the delivery system or level of update by subsequent legislation, access to Medicare-participating physicians (will) become a significant issue in the long term.”

To address this issue, physician advocacy organizations have been pushing Congress to implement positive payment adjustments for providers to replace the scheduled payment freeze over the next 6 years. A letter spearheaded by the AMA and sent to congressional leadership in June calls for “a stable and sustainable revenue source that allows (physicians) to sustain their practice and invest in practice improvements.”

Underlying this issue is the fact that Medicare physician pay has barely changed since the beginning of the century. Over the last 15 years, Medicare payments have increased just 6%-0.4% per year on average-while the cost of running a medical practice has increased 30%. Consequently, physicians have experienced a 19% decline in inflation-adjusted pay since 2001.

“Like other attempts at legislating medical economics, MACRA had the noble intention of trying to align clinical practice with the tenets of value-based care delivery,” lamented AACU President Mark Edney, MD, MBA. “Like its predecessors, it was swamped out of the gate, the victim of poor design and unforeseen consequences, and is now a liability to physicians.”

Unrealistic time frame

While the impending pay freeze has received the most attention from physician groups in recent months, various other adjustments to MACRA are needed to ensure physicians who participate in the program can be successful moving forward.

For example, the 5% bonus payments providers receive for participating in one of Medicare’s Advanced APMs are scheduled to expire after 2022. The bonus payments were instituted in 2017 as an incentive for clinicians to transition into more innovative payment models and to help them invest in changing the way they deliver care.

The incentive payments, however, were only funded for the first 6 years of the program. Considering only a few Advanced APMs were made available during the first 3 years of the program, 3 more years is not nearly enough time for hundreds of thousands of providers to transition to a value-based care system that requires significant investment in new technologies, workflow systems, personnel, and training.

In 2018, the number of physicians participating in Advanced APMs nearly doubled to 183,306 (from 99,076 in 2017). That is just a small fraction, however, of the approximately 1.3 million providers currently under MACRA.

AACU and other physician advocacy groups have called on Congress to extend the 5% bonus for Advanced APM participants for an additional 6 years. The proposal was discussed at length during a Senate Finance Committee hearing on May 8 focused on MACRA implementation and reform. But so far, no legislation has been introduced in either congressional chamber to address this issue.

There are various other technical changes to MACRA that are needed in order to simplify MIPS and make quality reporting more meaningful. These include: providing scoring flexibility to CMS to allow for multi-category credit; updating the Promoting Interoperability category to allow physicians to use a certified EHR or similar technology; allowing CMS to develop multiple performance thresholds; and removing the requirement that episode-based cost measures account for half of all expenditures under Medicare Parts A and B.

On a positive note, Congress has attempted to address one roadblock to the adoption of value-based care models by removing a statute that restricts integrated health care delivery. The Medicare Care Coordination Improvement Act (S. 966/H.R. 2282) would modernize the Medicare referral law or “Stark Law” by allowing physicians to enter into agreements with other providers to better coordinate patient care. The legislation is supported by AACU, LUGPA, and the AUA.

Congress must pass Stark Law reform this year, and in coordination with CMS, engage the medical community to update MACRA so that physicians have the support they need to transition to more efficient models of care delivery and better serve Medicare patients.