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Understanding Changes in Provider Reimbursements

Medicare & Payment Reform (MACRA)

In mid-October 2016, the Centers for Medicaid and Medicare Services (CMS) revealed a new system for how it reimburses doctors and other providers who accept Medicare.

Many seniors were left wondering, “How will this affect my Medicare?”

My Medicare Partners set out to find answers to these new regulations.

How Did These Changes Come About?

The 2,389 page Medicare Access and CHIP Reauthorization Act, also known as MACRA, was originally passed by Congress in 2015. Some of the new changes proposed to physicians under MACRA, called the Quality Payment Program, promises to allow physicians to spend more time focusing on quality of care, therefore making patients healthier. These changes became final on October 14, 2016.

These proposed changes to Medicare, a government health program mostly for seniors serving over 55 million people, were subject to public comment before going into effect. CMS hosted events and received more than 4,000 public comments between when the MACRA law was passed and when the proposed changes to reimbursement became final in October 2016. Allowing for public comment is regularly done before government agencies like CMS make large changes.

How Will Medicare Doctors Be Paid?

Providers and medical facilities that accept Medicare assignment, meaning they accept Medicare patients and payments, will now have to select one of two payment systems: the Advanced Alternative Payment Model or the Merit-Based Incentive Payment System. Physicians, Physician’s Assistants, Nurse Practitioners, Clinical Nurse Specialists, and Certified Nurse Anesthetists all must abide by and select one of the new payment systems.

The new system creates a higher reimbursement for physicians providing high-quality services. Physicians evaluated as providing lower quality services will be penalized. Medicare is also striving to steer doctors towards providing comprehensive care and will now change its reimbursement structure for piecemeal services.

Are These Changes Good or Bad?

Overall, many in the healthcare field are praising rewarding quality medical providers. Supporters predict the new changes will result in less Medicare waste and fraud. The goal is to provide Medicare beneficiaries with better quality of care, and advocates of the law feel confident the new payment systems will accomplish that.

However, some skeptics are concerned that these changes will disproportionately rate small medical groups as less effective, eventually forcing these providers to join larger medical groups or retire from practicing medicine. Andy Slavitt from CMS tried to quell fears by sharing, “Transforming [Medicare] is something we have focused on with great care.”

Opponents to MACRA feel the changes are too sweeping, while supporters argue that electronic medical records are beginning to become the “new normal” in medical practices, and that doctors who are hesitant to utilize new technology may be left by the wayside, regardless of these new changes to Medicare payment.

The American Medical Association agreed that CMS has addressed their concerns and overall the leading physicians’ group seems to be supportive of these new regulations. Other experts and organizations, such as the Medicare Group Management Association, feel that the changes allow the financial risk of providing care to be more evenly distributed between physicians and Medicare, which is a welcome advancement from most healthcare providers.

In the meantime, politicians on the Hill are divided in their support. Although the MACRA legislation received bipartisan support when it was originally moving through Congress, some federal legislators are still taking the proposed improvements with a grain of salt.

Members of Congress are embracing the changes overall, but some say they are keeping a close eye on the implementation. The Obama Administration supports these changes and sees them as a step in the right direction: reward providers for quality, not quantity.

When Will These Changes Take Effect?

By 2018, doctors and facilities will need to decide which of the two payment system options they are selecting: the Advanced Alternative Payment Model or the Merit-Based Incentive Payment Model.

The year-long transition period will provide doctors with adequate time to familiarize themselves with the two options and to begin implementing improvements. CMS has allocated $100 million over five years for small medical practices to help them upgrade their technology and more. CMS is also developing special provider-only trainings on their website to ensure doctors select the best payment system for their practice.

Furthermore, physicians groups such as the American Academy of Family Physicians have pledged to “fully prepare” their members. Some healthcare experts are even going as far to say that most, if not all, medical providers should be able to receive neutral or positive reimbursements, since the requirement to at least keep reimbursement rates steady is to provide one quality measure.

CMS is generously allowing providers to “pick their pace” for implementing the new payment system changes, with some hard deadlines. Physicians may begin collecting information on the quality of their services as early as January 1, 2017. However, physicians may begin collecting information as late as October 2, 2017. The data collected must be provided to CMS by March 31, 2018.

What Are The Reimbursement Options Providers Have?

Providers who accept Medicare will have to select one of two options for Medicare reimbursement: either the Advanced Alternative Payment Model or the Merit-Based Incentive Payment Model. CMS is allowing providers to decide during the year 2017 which method they prefer, begin collecting data in 2018, and submit reports for new reimbursements by 2019.

Advanced Alternative Payment Model

Beginning by 2019, medical providers who provide the government with more quality measure reports, use electronic medical records, and keep their patients healthier will begin to receive higher reimbursements than those who do not. This is known as the Advanced Alternative Payment Model.

Only a fraction of providers are expected to choose this more arduous payment system. However, advocates of the changes are quick to remind physicians of the benefits of choosing this payment option: higher reimbursement for services provided and healthier patients.

CMS predicts that by the year 2018, one quarter of physicians will be in the Alternative Advanced Payment Model and efficiently using new technologies in medicine.

Merit-Based Incentive Payment System

On the other hand, a majority of providers are expected to choose the Merit-Based Incentive Payment System. While the financial rewards – and therefore risks – for providers is less under this option, there are fewer changes required and more room for growth allowed.

Providers selecting this method will be reimbursed based on the quality of healthcare provided as well as the use of electronic medical records. The providers will collect and submit their own data, using guidelines set by CMS.

Physicians who don’t send in 2017 data by late March 2018 could see a -4% reimbursement, while those who submit the minimal amount (only one measure) of information may see their reimbursements remain steady. Physicians who participate in the Merit-Based Incentive Payment System and who fully submit their data on time may see a slight to moderate payment increase.

Each year, the percentage of reimbursement reward or risk, for lack of better term, increases from a low of +/- 4% in 2019, up to +/- 9% by the year 2022. Many opponents of the new MACRA changes quickly remind physicians who chose this option that only one measure of data needs to be submitted to keep their reimbursement the same!

Physicians Who Don’t Qualify

There are some physicians who care for too few (less than 100) Medicare patients or do not bill Medicare a high enough amount (less than $30,000) each year. This pool of providers are exempt from the new payment systems. Small practices and single-doctor offices will likely be exempt.

Next Steps

A recent survey of physicians by the Deloitte Center for Health Solutions revealed that only half of providers have heard of MACRA. CMS sure has a long road ahead of them to ensure all physicians are aware of the changes!

Thankfully for medical providers, their professional organizations indicate they are supportive of the new changes and will fully assist doctors with implementation. While the new changes are in their very early stages, we suspect that more and more physician groups will provide hands-on trainings and perhaps even grants to ensure the transition is smooth for providers and their staff.
Like many overhauls of government programs, it’ll likely be years before experts are able to tell if the new reimbursement systems actually do improve quality of healthcare for seniors and other Medicare beneficiaries. We are hopeful that data gathering will lead to increased quality of care for seniors and other Medicare beneficiaries.

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