Medicare payment reform threatens independent practice

Paying physicians for the value and quality of care they provide may sound great in theory, but independent physicians have been burned time and time again by previous government efforts to achieve that goal. The Affordable Care Act and Meaningful Use were programs with good intentions but bad results, costing time and money, physicians say, and plans for Medicare payment reform are already inspiring ripples of dread.

Related: 3 tips to get ready for MACRA

Independent physicians in particular express grave concern for the future of their livelihood, as their practices will suffer the most under the requirements set forth by the Centers for Medicare & Medicaid Services (CMS) and what feels like repeated pressure to sell to a large group or hospital, or perhaps even leave medicine altogether.

“Healthcare reform, at least in its current iteration, has just been a systematic unraveling of private, independent practice. It makes all physicians subject to being widgets on an assembly line,” says Christopher Unrein, DO, FACP, an independent internist for 25 years.

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) was passed to replace the widely-disliked sustainable growth rate (SGR) formula that had been used to determine physician Medicare fees. It also represents a major step in the larger effort to reduce fee-for-service healthcare and shift toward a system of value-based payment.  At press time, CMS has issued a proposed rule for MACRA, with a final rule expected later this fall. 

Further reading: MACRA doesn't spell end of independent medical practices

In addition, the law represents CMS’ answer to physicians’ frustrations with quality reporting under various programs by eliminating some reporting complexity. But skeptics fear it will create new headaches, especially for smaller practices.  The federal government itself states in the proposed rule for MACRA that as many as 87% of solo practices are expected to face penalties of up to $300 million in 2019 through the Merit-based Incentive Payment System (MIPS).

MACRA intends to achieve its aims by providing financial incentives to physicians who provide high-quality, cost-effective care, and penalizing those who don’t. But many independent physicians feel the measures are weighted to favor bigger practices and may be paying little more than lip service to the idea of improving patient care. 

CMS’ acting administrator, Andy Slavitt, has clarified that the $300 million estimate was based on 2014 data, and reassured members of Congress in a hearing on MACRA that his agency is focused on providing flexibility for solo and small practices.

Physician Unrein is among many in independent practice who aren’t convinced.

Next: Loss of independence

“I don’t think [MACRA] is really about taking care of people. It’s made to look like it, but is it really?” says Unrein. The internist feels it’s designed more to control and homogenize the practice of medicine, adding, “Unfortunately people are messy and don’t fit into a box very well.”

Loss of independence

Critics of MACRA fear MIPS’s extensive reporting requirements, and physicians who choose the alternative payment model (APM) route-via certain accountable care organizations (ACOs) or patient-centered medical homes, for example-may be signing the death warrant for their practices.

Further reading: HHS offering Quality Payment Program grants to small practices

“Their choices really are to try to figure out a way to do all the reporting required under MIPS, which will be basically impossible for these little practices, or join an alternative payment model,” either by selling to a hospital or health system or a hospital-run ACO, letting the latter handle the tasks, says James C. Capretta, PhD, a senior fellow at the Ethics and Public Policy Center and a former associate director in the White House’s Office of Management and Budget during the George W. Bush administration. He considers MACRA “flawed and ill advised” and worries that small practices will have to work harder than large groups to score high enough on MIPS to earn payment incentives or avoid penalties.  

Capretta feels there will be a “political eruption” among smaller and independent physicians as a result, and that even large practices may revolt over this new law. “After the 2016 election, the physicians will say we can’t live with this, and they’ll try to come up with carve outs or other ways of allowing people to survive outside of this massive restructuring,” he predicts. Unrein suspects there hasn’t been more outcry by the large medical societies, such as the American Medical Association (AMA), because MACRA was an answer to their long battle to kill SGR. “The federal government had a chance to get the AMA and all of organized medicine to bite because they were going to kill SGR at last,” he says.  

Leon Driss, MD, a solo internist and geriatrician in Lakeside, Arizona, who has been practicing for 30 years, fears that MIPS will be “the undoing” of his practice. He is anticipating the day he has to quit his practice as a result. He has little choice but to go the MIPS route, he says, because he didn’t implement an electronic health record (EHR) for time and cost reasons, considering himself “very efficient” and “more cost-effective than most doctors” at running a practice. 

Driss joined an ACO only because the structure of the practice model will help him score at least 50% of points under the MIPS scoring system (see sidebar below), but he’s worried about meeting the other performance measure requirements. “The government itself expects [87% of solo practitioners] to get penalized on these measures. It’s frustrating and scary quite frankly,” he says.

According to a report by Leavitt Partners and the Accountable Care Learning Collaborative, as of January 2016 there were 838 ACOs in operation, serving approximately 23.5 million patients in all 50 states. But their success has been mixed. While ACOs have improved patient care, Driss fears the ways they may reduce a physician’s autonomy, force changes in practices and data reporting and change practice culture. 

Next: Too much bureaucracy?

Nadereh Pourat, PhD, director of research at the UCLA Center for Health Policy Research, feels that ACOs are a step in the right direction toward creating physician accountability for patient outcomes, but that existing models haven’t fulfilled their promise. Since patients are not obligated to stay with the same provider, says Pourat, “it’s very difficult to expect that particular physician to make a huge difference by themselves.” 

This lack of consistency in patient care under ACOs could reflect negatively on a physician’s quality rating due to no fault of their own. “If the patient is free to go in and out, and you’re responsible for delivering their care and their outcomes, but you don’t have control and influence over where you go, it’s kind of hard for you to influence them,” says Rita Numeroff, PhD, president of Numeroff and Associates, a healthcare consulting firm in St. Louis, Missouri. 

Related: Top 9 MACRA threats that could become reality for doctors, patients

Pourat favors the MIPS performance measures because they motivate providers to work harder, though she notes that many physicians feel frustrated that they are not compensated for much of the work they already do. She cites the example of a patient with diabetes, suggesting that a physician might now have more motivation to do everything possible: making sure the patient comes in for blood tests, sending them to a weight loss class, making dietary changes and so on. “From my perspective, if providers do these kinds of things it does nothing but strengthen that relationship.” 

However, Driss points out that, as is true with most doctors, he has little control over the healthcare choices his patients make. He worries that patients may be noncompliant despite his best efforts, which “harms me even though I’m doing the best I can.” He gives a hypothetical of a patient with a heart condition who does heavy lifting against his advice, and winds up in the ER with chest pain. “If that patient has a procedure, and gets a $40,000 bill, I didn’t have any way to intervene or stop that.”

Other physicians feel that MIPS does little to actually improve patient care. Unrein says, “The fact that I can click a bunch of boxes on an electronic [health record] doesn’t mean I’m a good physician.” He feels that MIPS-perhaps like Meaningful Use-will reward completion of tasks over “empathy, compassion, listening and caring.”

Too much bureaucracy?

Critics of MACRA, such as Capretta, are concerned about putting so much regulatory power in the hands of the government. “The federal government is putting itself in the position of being the arbiter of what is quality physician care in Medicare and, beyond that, in the United States,” he says.

Next: Necessary growing pains

He and others are also worried that the MIPS quality indicators are imprecise, and they don’t trust the government to update their information in a timely manner, much less accurately assess and track physician quality or patient outcomes. 

Further reading: Physicians must harness their power to ensure independence

Numeroff feels that while MACRA is well-intentioned-connecting payment and outcome-it’s likely to make more work for all physicians, and potentially drive up the cost of procedures, especially those performed in a hospital setting rather than a doctor’s office, which can often be more expensive. “Here you have physicians who are spending 25% of their time or more filling out forms and making sure that their coding is right in order to get paid,” she says. 

CMS does offer some exemptions from participating in MIPS for small practices. Physicians or groups who receive $10,000 or less in Medicare reimbursements or who have 100 or fewer Medicare patients can be exempted from the MIPS payment adjustment. Also, if a physician or practice lacks sufficient measures or activities in one of the four MIPS performance categories, CMS will allow an exclusion of that category, and adjust the score based on the remaining criteria. Further, independent physicians may also be allowed to join “virtual groups” to combine MIPS reporting, though CMS has said it won’t finalize the guidelines for this until at least 2018, a full year after it plans to collect data to determine penalties.

Necessary growing pains

Not all experts feel that MACRA will cause problems, but see it instead as a reflection of necessary growing pains in the healthcare industry.

Pourat of UCLA feels it will take time for MACRA to achieve its goals, which she feels are generally well-intentioned. “What the law is asking is that physicians do a bit more than just deliver care; [it is] asking physicians to show that what they are doing is actually consistent with the guidelines,” she says. She adds that even if a small percentage of physicians improve patient care as a result of the law, “we would be ahead of where we were.” 

Indeed, while MACRA may hasten some small practices’ demise, their numbers had been shrinking for some time even prior to the law’s enactment, and many already have relationships with hospitals and hospital systems. Data from the Medical Group Management Association’s (MGMA) physician compensation and production surveys show that the percentage of physicians in practices owned by a hospital or integrated delivery system increased from 24% in 2004 to 49% in 2011.

In addition, as of 2012 only 53.2% of physicians were full or part-time owners of their practices. Moreover, doctors coming out of medical school with high debt levels, as many now do, are less likely to set up solo shops due to financial concerns. 

“I think it would be wrong to single out MACRA as the overriding force trying to drive physicians out of independent practice,” says Mark J. Werner, MD, CPE, director of clinical consulting for the Chartis Group, a Chicago-based healthcare advisory organization. He sees MACRA’s changes as just another shift in an industry that has been undergoing a “tremendous amount of fundamental transformation” in common with many other major industries.

Next: Alternative approaches

Werner feels MACRA is necessary to bring about collaboration and innovation among practices and hospitals. Yet he acknowledges that such changes are “awkward, challenging and stressful” and understands that change is not easy. Still, he acknowledges that such changes are going to make some people feel threatened. “That’s a part of the magnitude of change going on.”

Alternative Approaches

If, as Capretta believes, physicians ultimately reject MACRA and find ways to opt out or force Congress to create new legislation, what other sorts of models might support a value-based payment system that allows small practices to thrive?

Capretta envisions a model where insurers would offer beneficiaries a “fair choice and competition, with financial consequences” something like Medicare Part D today.

ICYMI: MACRA author calls for delay in reporting requirements

Or, younger physicians may consider engaging in direct pay, says Ashesh Patel, MD FACP, a primary care physician in Washington, D.C., who has been in solo practice for 10 years. In lieu of MIPS or giving up his autonomy to a hospital practice, he’s considering adopting a direct pay model, bypassing Medicare and insurers altogether.  

 Unrein feels that there’s a lack of trust between physicians and the government. “When you’re putting [a system] in place that implicitly says, ‘We don’t trust you,’ you’re undermining one of the foundational pillars of what it is to practice medicine.”

Ultimately, while MACRA may not represent the perfect solution, Werner feels that there’s strong bipartisan understanding that “payment reform is necessary, needs to continue to evolve and convey accountability to providers.”

Pourat is more philosophical, saying, “You have to think of this as a great time for experimentation, because you’re not going to find a perfect solution that you’re going to implement overnight and that’s the end of it. We are talking about a very complex problem.”