Weighing MACRA’s long-term effect on healthcare

November 18, 2016

Looking past 2017, Medicare physician payment reform will have a ripple effect on areas including health IT and the future of independent practice.

Editor’s note: This is the second of a two-part interview with Eric Schneider, MD, senior vice president at The Commonwealth Fund, on the impact of Medicare payment reform legislation. In October, the Centers for Medicare & Medicaid Services (CMS) released the final rule spelling out how the Medicare Access and CHIP Reauthorization Act (MACRA) will be implemented.

 

Part 1 of the interview looked at how MACRA will affect small practices. Part 2 examines MACRA’s possible effects on the healthcare marketplace and health information technology.   

 

Medical Economics: You mentioned commercial payers a minute ago. I presume they’re keeping a close eye on what happens with MACRA. Will we see more of them going to some form of quality-based reimbursement model?

Eric Schneider: I think in several locations around the country [commercial payers have] really been ahead of the curve on that. To the extent that MACRA introduces additional tools they could use as quality measures or the practice improvement activities, the commercial payers will likely adopt those into their contracts.

Several commercial payers have been in the pay-for-performance business for quite a while. This might open up a channel for them to do it with small practices in a way that they haven’t been able to before.

ME: Was CMS looking at any of those when they drew up their criteria? Were they aware of what commercial insurers had been doing, and did they use that as a model in some way?

ES: I think they are. If you look at the Alternative Quality Contract in Massachusetts or some of the other payment contracts that have been described in the literature, those also include bonus payments for performance on quality measures, [and] shared savings in some cases for reduced cost.

What’s a bit unusual for CMS is that they’re adjusting fee payments rather than global payment with bonuses, so it’s a little bit of a different mechanism than what you’d see in the typical commercial insurance contract.

ME: Shifting gears to technology, given the importance of being able to exchange data electronically do you think MACRA is going to stimulate innovation to get us to interoperability quicker?

ES: I’m not sure MACRA will do that much. It’s a step in the right direction. The question is how the EHR vendors and clinical billing vendors will respond.

Next: Is $100 million for small practices really enough?

 

There’s still really a disconnect between the billing and claims systems and the EHRs in most practices. Where the innovation potential exists is in merging those two functions in a way that allows for reporting in order to obtain payment adjustments but still being able to bill. So to the extent that the vendors can put the quality measures and the clinical performance improvement activities into their products, I think that will be helpful.

I don’t see it stimulating interoperability. The measures I’ve seen don’t necessarily drive in that direction, although the law certainly is intending that. But again, because providers get to select their measures the innovation may be slower than we’d hoped for.

ME: The MACRA final rule includes around $100 million for helping small practices transition to MACRA. Is that really going to be enough to make a difference, or is it more like a down payment?

ES: It’s a pretty small amount relative to the size of the program. They’ve exempted a third of the practices from this rule, so that money may go a little bit further.

ME: The GOP Doctors Caucus wrote to [CMS Acting Administrator] Andy Slavitt after the MACRA final rule came out with a number of complaints and concerns and basically said if CMS doesn’t address these Congress might. Is that a realistic threat? What could Congress actually do?

ES: It’s hard to know how likely it is that they will take real action. But certainly they can make life difficult for people at CMS by calling them in to testify and making requests.

I think there have been a number of professional societies that have weighed in and said these changes between the proposed rule and the final rule are quite responsive. There might be residual concerns. Whether Congress would step in at that level is hard to imagine, but again it’s really going to depend on the outcome of the election.

ME: Do you think MACRA will affect the long-term, secular decline we’ve been seeing in the number of independent practices?

ES: I think it’s a small effect in what’s essentially a tidal wave of drivers towards that consolidation. One approach is to say, “Let’s try to keep things as they are with small practices,” but another way of thinking about this is whether MACRA creates some opportunity to be more innovative in the way consolidation is happening. So I think the accountable care organization (ACO) program is also struggling with this. Is this just giving organizations a reason to consolidate and then use that larger size to exact price concessions from insurers, or is it really innovation in the coordination of care and improvement in the delivery of care?

Despite the quality measurement of MACRA, the small number of quality measures doesn’t necessarily drive towards that learning health system everyone is hoping to see.

ME: What does that term, learning health system, mean?

ES: It’s the idea that the solo practice really does need other supports, that the complexity of delivering medical care effectively now is such that it’s hard to do it as a solo actor. It requires coordinating effectively with hospitals and other ambulatory facilities with specialists. And that’s hard to do as a solo practitioner.

Next: What about the disappearance of the family farm?

 

I think we’ve seen with the patient-centered medical home initiatives that they struggle to coordinate if there’s not a solid medical neighborhood around them. But if the medial specialty group is sort of a collection of providers who don’t really do that coordination, we’re not really gaining anything other than their ability to negotiate for higher prices for their services. But if they are brought together in a way that allows them to coordinate care and serve patients more effectively, that could be very attractive.

I think CMS has a vision for improving quality, improving the efficiency of care, reducing the cost of care. They don’t necessarily want to see practice consolidation, but they do want to see better coordination among practices, and I think that’s what MACRA’s trying to do.

ME: And it might be that more consolidation will just be the fallout of working towards that goal?

ES: Yes, but I think greater consolidation is something we’re already seeing because of larger economic forces. And not just in healthcare. We see it across the economy, in other industries as well. There’s a tendency right now, if you look at any industry, toward gaining economies of scale, whether it’s clothing stores, airlines, farms, it’s actually very hard for service delivery organizations to stay independent in this economy.

ME: We’ve been hearing for a long time about the disappearance of the family farm, right?

ES: Yeah, or the mom and pop store. And I think we’re kind of seeing it in healthcare. In fact, in some ways you could say healthcare’s been immune to those forces for a long time. Practices have managed to stay independent in a way that’s difficult in other parts of the economy. I mean, who has a neighborhood drug store down the street anymore? It’s all chain drugstores.

You could probably try to blame MACRA for this, but this has been going on for a while, and whether MACRA really adds much to force things in that direction, it doesn’t seem like it will do that at least in the first several years. I think what we’re hoping to see is that consolidation in a more productive direction.

ME: Looking down the road a few years, do you think doctors and the larger medical community will see MACRA as an improvement over the sustainable growth rate (SGR)?

ES: I think just about anything would be an improvement over the SGR. The biggest improvement right off the bat is removing the need for this annual dance with Congress to get it to override a formula that everyone knew had become sort of a farce.

I don’t think anyone would want to go back to the SGR, [although] [t]here are going to be winners and losers under a payment system like this. In fact, it’s designed to have winners and losers. I suspect that there will be some voices that are expressing disappointment at the way this played out, but I suspect that providers are going to be relatively pleased. There’s a lot of flexibility built into this program. It will need tweaks as it goes along, but there’s a lot of flexibility for providers to control their destiny under MACRA.