MACRA doesn’t spell end of independent medical practices

While the Medicare payment reform law Congress passed last year poses numerous challenges for independent medical practices, it will not doom them. In fact, practices that understand how they will be evaluated under the law may be able to improve their bottom lines when the law takes effect.

That was the consensus of participants in the Medical Economics roundtable discussion of the issues medical practices confront today, held during the National Society of Certified Healthcare Business Consultants’ 2016 annual conference in Palm Springs, California.

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“There are opportunities to do better under this model if you’ve got your act together and you understand that opportunities to increase [revenues] really are there,” said panelist Max Reiboldt, CPA, president and chief executive officer of Coker Group, a healthcare consultancy. “It’s going to be different, though, and change is hard to adjust to.”

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His observations were echoed by Dave Zetter, CHBC, founder of Zetter HealthCare, a medical practice management consulting group. “Those that understand what they’re doing and know how to manage the process, especially in the first couple of years, are the ones that are going to be making the bucks,” he said.

Education is important

Congress passed the Medicare Access and CHIP Reauthorization Act (MACRA) in 2015 to replace the Sustainable Growth Rate formula for determining how Medicare reimburses physicians. Earlier this year, the Centers for Medicare & Medicaid (CMS) issued a preliminary rule with details of how the law will be implemented, including the categories it will use when evaluating physicians and determining if they will receive penalties or bonuses in their Medicare reimbursements.

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Despite the law’s far-reaching impact, many physicians remain unclear about what’s in it or unaware of it entirely, and panelists urged their peers to educate doctors about it. “All our clients need to realize that this is going to happen, and it starts in January 2017 [the date doctors will have to begin reporting quality data to CMS,] said Chris Zaenger, CHBC, principal of Z Management Consulting Group.

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 “It will affect their [Medicare] payments in 2019 and will have the same impact as a couple of years ago when everyone learned they were getting a payment adjustment because they didn’t pay attention to PQRS [the Physician Quality Reporting System]. Only this is going to be more painful because the percentages will be higher,” Zaenger said.

Panelist Ginny Martin, CMA, president of Healthcare Consulting Associates of N.W. Ohio,  pointed out that MACRA is part of a larger effort to move healthcare away from its traditional fee-for-service model and towards value-based payments, an effort that includes commercial payers as well as Medicare. “This isn’t a Medicare [only] initiative, it’s a CMS initiative, and it’s being done in collaboration with commercial insurers,” she pointed out. “So it’s not going away.”

‘Provider Godzillas versus insurance King Kongs’

Turning to the subject of the ongoing consolidation among commercial payers, Zaenger said it’s being driven by payers’ desire to reduce costs and expand market shares, and to keep up with the expansion of health systems, which are themselves acquiring independent practices and hospitals in their geographic regions. “It’s provider Godzillas versus insurance King Kongs,” he said.

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At many insurers, he added, customer service has suffered due to the companies’ rapid expansions. In helping his clients with tasks such as provider credentialing and getting questions answered about their contracts, “in every aspect I personally see it [service] breaking down,” Zaenger said.

Zaenger noted that the Federal Trade Commission has narrowed its definition of what constitutes an anti-competitive merger, and “it’s really changing the landscape of allowing larger entities to come together.”

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“I think the question is, how far will the government allow it to go,” added Zetter. “My concern is that a small practice in a highly concentrated payer market may not have a lot of leverage in its contract negotiations.” *

The changing face of independent practices

Despite the challenges they face from MACRA and elsewhere, independent medical practices still have a future, the panelists said. Martin noted, for example, that many small towns and rural areas still need doctors, especially primary care practitioners. “They’ll build them a house or whatever, so they can practice medicine the way they want to. So I don’t think that’s going away,” she said.

In metropolitan areas, it’s more likely that independent practices will need some kind of affiliation with a hospital system, although it could be something other than outright ownership, Reiboldt said. “I feel there’s a role for both, although you have to be a little innovative sometimes,” he said.

He cited the example of North Side Hospital in Atlanta. “Their attitude has always been, ‘figure out ways to work with your physicians. Don’t necessarily say it’s employment or nothing.’” The system looks for ways to work with doctors through mechanisms such as clinically integrated networks and accountable care organizations. “I would like to think there are other systems out there thinking like that, and would allow physicians some level of independence and autonomy,” he said.

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Echoing Reiboldt, Zaenger said that some systems no longer have the money to acquire new practices or hire individual physicians. “They’re looking for alternative ways to partner with doctors that don’t cost them a lot of money,” he said. “I’m hopeful that in the long run you’re going to see there will still be a mix of providers, whether they’re independent or employed. So generally speaking, I think we’re alive and well.”

 *Editor’s note: On July 21, the U.S. Department of Justice announced it had filed a lawsuit to block the planned mergers between Aetna and Humana and Anthem and Cigna.