Two weeks ago, the Centers for Medicare and Medicaid Services (CMS) caught the immediate attention of the healthcare industry by releasing the draft of its proposed federal rule outlining the implementation of Medicare Access & CHIP Reauthorization Act of 2015 (MACRA).
When the debate for national health reform began nearly ten years ago, there was consensus that any effort to change the system would be part of an on-going process. The major experiment in healthcare reform began when federal policymakers attempted to incentivize the American healthcare system to embrace technology in the American Reinvestment and Recovery Act (AARA), legislatively referred to as HITECH, by offering billions of tax dollars to healthcare providers to invest in electronic medical records.
The key problem for many organizations looking to react to these changes in public policy was that these projects are expensive, and the necessary infrastructure was not yet in place to make such significant investments in technology. This presented even greater challenges for many smaller providers, prompting them to consolidate with larger organizations, while others continued to roll the dice and stay independent.
The overall economic impact of these changes began to present itself more clearly in 2015 when large health insurance companies along with other stakeholders began merging into larger conglomerates. We covered this extensively on our weekly radio program, America’s Healthcare Challenge, when it became apparent that the U.S. healthcare system was going to be operating much differently in the coming years.
The initial result for the American healthcare consumer thus far has been less choice, and behind the scenes there are more administrative burdens for the healthcare providers who serve them than one would want to count.
What is particularly troublesome are the problems patients are having accessing care with narrowing of networks and higher. What may well prove worse is the stark forecast for healthcare providers resulting from of another federal initiative passed to fix a flawed Medicare payment system that has been in place since 1997. According to CMS estimates, 87% of solo practitioners will face penalties in 2019.
Understanding the Context
One fundamental problem with the bloated American healthcare system is the amount of administrative overhead built in as one third of healthcare costs go to administration. You might have seen several examples of this and my favorite example is a form proclaiming “this is not a bill,” or explanation of benefits, which outlines the procedures received by the patient, the cost for the services, and the discount offered through the insurance company.
The Affordable Care Act was supposed to address some of these administrative issues and while some of these programs like mandating electronic medical records, penalizing hospitals for re-admissions and requiring reports on quality measures are good ideas, the sheer weight of the new burdens has led many practitioners to be fed up and threatening to leave.
Changes in Federal Reimbursement
In February of 2015, the Department of Health and Human Services, led by their Secretary, Silvia Burwell, announced an aggressive payment restructuring program for the Medicare program by the year 2020. This concept of tying 50 percent of Medicare payments to some sort of “value-based” reimbursement received a lackluster response from those on the front lines of the healthcare industry.
Later in 2015, Congress passed a major piece of legislation replacing the aging Sustainable Growth Rate (SGR), which was the old formula that was used to reimburse physicians. When Congress passed MACRA in 2015, the goal was to provide healthcare providers with a reimbursement structure that rewarded providing high quality and low costs. Like the ACA, authority was given to CMS to determine criteria for incentives. They are:
- The ability of the provider to protect patient health information and perform a security risk analysis;
- Engaging in electronic prescribing;
- Providing patient electronic access and patient-specific educational programs;
- Coordinating care through patient engagement, secure messaging and patient generated health data;
- Participating in a Health Information Exchange, including patient care record exchange and clinical information reconciliation; and
- Engaging in Public Health and Clinical Data Registry Reporting and Immunization Registry Reporting
Analysis and Commentary
While many of these ideas are well intentioned, the execution of implementing these changes has been extremely rocky. Furthermore, the weight of the evidence indicates that some of these value-based reimbursements might not be all that they are cracked up to be. The same experiment was attempted in the United Kingdom and improvements were marginal at best.
Another problem is that despite penalties in the ACA for providers allowing hospital re-admissions, over-all hospitalizations and emergency room utilizations are higher.
Nevertheless, our fearless leaders in the Administration are trying to solve this problem through regulation. The new MACRA rule streamlines several quality reporting programs, yet these new payments will present serious challenges for solo-practitioners and smaller provider groups while also creating incentives for larger organizations to continue to get bigger.
Un-intended consequences are beginning clearly present themselves as they contributed to the un-raveling of many smaller and rural hospitals creating serious problems for rural Americans.
While the idea of tying payments to quality measures seems to make sense from a conceptual standpoint, there are questions to whether it actually works. Will these rules improve healthcare or cause an aging healthcare workforce to leave the industry altogether? Many stakeholders are forming their own opinions and we will soon learn more during the comment period. In the mean-time share your own thoughts on our weekly radio program, America’s Healthcare Challenge, on News Talk 1290, or through our Facebook page found here.