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Meet MACRA, health IT's next great hope

When CMS’ acting administrator Andy Slavitt announced at the J.P. Morgan Annual Healthcare Conference last week meaningful use (MU) was on the way out, he shifted focus to the Medicare Access and CHIP Reauthorization Act (MACRA). “The meaningful use program as it has existed will now be effectively over and replaced with something better,” he told conference attendees.

Medical groups, like the AMA, applauded the change, as did the College of Healthcare Information Management Executives (CHIME). Russell Branzell, CHIME’s president and CEO issued a statement, saying the group was “encouraged” with the improvement to the MU program and that through MACRA and other reforms, “we’ll see a greater alignment between physicians and hospitals."

However, on January 19, Slavitt and National Coordinator for Health IT Karen DeSalvo posted a blog post stating meaningful use was very much in full effect. "While MACRA also continues to require that physicians be measured on their meaningful use of certified EHR technology for purposes of determining their Medicare payments, it provides a significant opportunity to transition the Medicare EHR Incentive Program for physicians towards the reality of where we want to go next," they wrote.

The key goal is to simplify, said Slavitt, which he acknowledged at the conference the MU program hadn’t accomplished. The new program, he noted, will embrace MACRA, which links payments to value via the Merit-Based Incentive Program and measures physicians in four areas:

  • Quality,
  • Cost,
  • Technology use, and
  • Practice improvement.

DeSalvo and Slavitt stated they will share detail and invite public comments once proposed regulations are released this spring. They stated their work will be guided by four principles:

  1. Reward providers using technology to better patient outcomes.
  2. Allow flexibility for customized health IT, though it must be user-centered and support physicians.
  3. Promote innovation through "by unlocking electronic health information through open APIs – technology tools that underpin many consumer applications." 
  4. Prioritize interoperability through the implemention of federally recognized, national interoperability standards and focus on real-world uses of technology.

At the conference, Slavitt reiterated data blocking is a no-go. “And technology companies that look for ways to practice ‘data blocking’ in opposition to new regulations will find that it won’t be tolerated,” he added.

"The current law requires that we continue to measure the meaningful use of ONC Certified Health IT under the existing set of standards," Slavitt and DeSalvo wrote. "While MACRA provides an opportunity to adjust payment incentives associated with EHR incentives in concert with the principles we outlined here, it does not eliminate it, nor will it instantly eliminate all the tensions of the current system. But we will continue to listen and learn and make improvements based on what happens on the front line."

They added MACRA legislation addresses Medicare physician and clinician payment adjustments only. "The EHR incentive programs for Medicaid and Medicare hospitals have a different set of statutory requirements. We will continue to explore ways to align with principles we outlined above as much as possible for hospitals and the Medicaid program," they noted.

The ‘Doc Fix’

When the Balanced Budget Act of 1997 was enacted to limit the growth of Medicare payments through a formula called the “sustainable growth rate,” (SGR) which tied increases to economic growth, it didn’t take into consideration healthcare costs would grow faster than the economy. Congress worked to override the cuts prescribed by the 1997 measure in what was called the ‘doc fix.’ Congress passed 17 postponements of the cuts since 2003. Physicians were facing at a 21% rate cut in March 2015 if Congress didn’t pass legislation for a long-term change. Both parties worked together and negotiated by adding two years of funding for the Children’s Health Insurance Program (CHIP). 

President Obama signed MACRA (H.R. 2) into law in April 2015, just as the 21% cut in Medicare payments was due to take effect and many physicians were threatening to stop accepting Medicare. The measure replaces the SGR with a new system that increases payments 0.5% a year from 2015 to 2019, and then doctors are encouraged to shift to alternative payment models. Higher income Medicare beneficiaries have to pay higher premiums for doctor visits and medication starting in 2018. And in 2019, Medigap, which fills gaps in traditional Medicare, will no longer cover the deductible for services like physician visits.

How value is calculated  

Alternative Payment Models

MACRA establishes two payment tracks for providers:

  • Alternative Payment Model (APM); and  
  • Merit-Based Incentive Payment System (MIPS). 

Starting in January 2019, eligible physicians can enter either the APM or MIPS track. APM participants must use quality measures comparable to those under the MIPS, use certified EHRs, bear more than nominal risk, and have an increasing percentage of payments linked to value through Medicare or all-payer APMs.

The Comprehensive Primary Care (CPC) initiative’s goal is to provide better primary care, lower costs and improve population health. CMS and commercial and state insurers collaborate with participating primary care providers in seven regions to receive population–based care management fees and shared saving opportunities. In exchange for financial support, each provider is expected to provide five comprehensive functions: Access and continuity, planned care for chronic conditions and preventive care, risk-stratified care management, patient and caregiver engagement, and coordination of care.

According to the Commonwealth Fund, as of February 2015, 2,700 providers participated in this program, serving 2.7 million patients, of which 400,000 are Medicare and Medicaid beneficiaries. There are 38 public and private participating payers. The first year results showed there was a “statistically significant reduction in total Medicare expenditures per beneficiary, but not quite enough to offset the care management fees paid to practices; several quality measures improved among participants, but none of the changes was statistically significant.”  

Providers participating in a qualifying APM will receive a 5% bonus on Medicare payments from 2019 to 2024. Then, in 2026, a 0.75% annual increase in payments will take effect.  

Merit-Based Incentive System

MIPS consolidates three programs: Meaningful Use, Physician Quality Reporting System (PQRS), and the Value-based Payment Modifier (VBPM). The system will evaluate individual physicians in four categories (quality, resource use, MU, and clinical practice improvement activities) to establish a composite score on a zero to 100-point scale.

Starting in 2019, physicians will be paid based on their composite scores and payments adjusted accordingly. Then, starting in 2026, all physicians participating in MIPS will be eligible for a 0.25% increase in annual payments.

A high price for change

Chief Actuary for CMS Paul Spitalnic raised concerns after the law was passed, calling it a “short-term fix." His concerns were highlighted in a report the funding package would end in 2025. He wrote, “While the [new law] avoids the significant short-rate physician payment issues resulting from the current SGR system approach, it nevertheless raises important long-range concerns that would almost certainly need to be addressed by future legislation.”

The Congressional Budget Office estimates the package will cost $214 billion over the next decade, but since a portion will be offset by higher premiums for higher-income Medicare beneficiaries, the measure will add $141 billion to the deficit over that time period, as reported by the Wall Street Journal

However, a Medicare Trustees 2015 report estimated the CMS actuarial score of the bill projected $387 billion would be reduced from Medicare Part A (hospital insurance) unfunded liability and $2.5 trillion reduced from Medicare Part B (doctor visits) unfunded liability. When combined, this results in a $3 trillion reduction in the present value of Medicare’s unfunded liabilities. “Considering Medicare’s unfunded liability before MACRA was nearly $45 trillion, a $3 trillion reduction is a modest, but nonetheless very real improvement to system finances,” according to a Forbes article. Ryan Ellis, the article's author, wrote, “Consider the ratio involved here. For a little more spending over the next decade ($141 billion), Congress cut the unfunded liabilities of Medicare by $3 trillion. That’s a ratio of 20:1. That’s fantastic.”

The journey to value-based payments most likely will involve more coordination between payers and providers. “The move to value-based payment will be much more effective if Medicare continues to actively seek partnerships with private insurers, state Medicaid, and other federal programs that adopt value-based payment methods. The ultimate goal is to transform the delivery of care for everyone, improving patient outcomes and care experiences, preventing avoidable hospitalization, and lowering costs,” a Commonwealth Fund report concluded.

Filed Under: Health IT Payer Health Law Policy & Regulation
Top image credit: Flickr, 401(k) 2012