What will MACRA mean for small practices?

Eric Schneider, MD, MPPCongress’s passage of the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA) will have profound implications for the nation’s physicians, especially those practicing alone or in small groups. Already operating on thin financial margins, many fear the law will result in their being forced to sell their practices to hospital systems, or close their doors entirely when it goes into effect next year.

With the October release of the final rule implementing Medicare’s physician reimbursement reform, the law’s full effects are becoming clearer. To gain a better understanding of what the rule will mean for small practices, Medical Economics spoke with Eric Schneider, MD, senior vice president for policy and research at The Commonwealth Fund.

The first part of the interview, presented here, looks at MACRA’s direct impact on small practices. Part two will focus on the law’s possible effects on the healthcare marketplace and on health information technology. 

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Medical Economics: CMS [the Centers for Medicare & Medicaid Services] has said it’s tried to be more sensitive to the needs of small practices in its final rule for MACRA as compared to the proposed rule. Do you think they’ve succeeded? And if so, how?

Eric Schneider: I do think CMS has been quite responsive to small practice concerns, maybe even beyond what is reasonable, given where they’re trying to go with the program. The estimate CMS has given is that basically almost a third of the Medicare Part B billing clinicians will be excluded under the exemption they introduced by resetting the threshold in the final rule under which small practices and low Medicare volume physicians can be exempted from MIPS. *

When you add that to the “pick-your-own-pace” [data reporting] rollout for 2017, that actually excludes more than half of Part B billing clinicians. So I think that CMS has been very responsive, at least in this initial period, to help ease the transition of small practices into the program.

Next: Are APMs a realistic option?

ME: They’ve also said that with the new options for participating in advanced alternative payment models (APMs), they expect somewhere around 25% of small practices will be 1in these models by 2018. Do you think that’s a realistic number?

ES: It’s really going to depend on the nature of those APMs, and whether small practices can participate effectively. It’s a reasonable guess that it could get there, but there’s so much flexibility built into the rule that I think it’s hard to make projections. Certainly to the extent that they’ve expanded APMs, one would expect that more clinicians could participate…over time.

The other part of this that’s difficult to project is, it depends a lot on the available APMs in the local community. So we’re going to need a lot better information on what the available [alternative practice model] options are for small practices in their community to get a better handle on. That’s a question we [The Commonwealth Fund] are quite interested in as a research question, because the availability of those APMs in relation to where small practices are located is going to be a crucial factor.

ME: Is there any danger that some small practices will just try and winnow their Medicare panels so as not to be subject to MACRA?

ES: I could see that happening, but we actually looked at those numbers and it’s probably a small effect. Except for certain specialties, it’s pretty hard to give up Medicare as a payer. It’s certainly conceivable in some specialties, but it’s pretty hard for most small practices to do that and remain viable.

ME: But nothing close to what might threaten the ability of someone over 65 to get medical care?

ES: We don’t think access would be curtailed to that degree. Now, you could worry in rural areas: will it reduce access even further? That would be a place to really focus in on, but I think again the number of beneficiaries affected is likely to be small.

Next: Will small practices bail on Medicare?

ME: Along the same lines, is there a danger that small practices will look at the additional expenses required for them to participate in MACRA’s payment options-maybe having to bring on a nurse manager, or acquire an electronic health record if they don’t have one-and decide that even with the hit to their Medicare reimbursements it doesn’t make sense for them financially?

ES: That’s theoretically possible. I think small practices have been doing this type of calculation for a long time, based on all the things happening in the marketplace. Under Meaningful Use and some of the other CMS programs, it was a concern, and the commercial insurers are looking to narrow [their] networks, which puts pressure on small practices.

I think this might be just one of many forces that are driving small practices to consider whether they can stay viable. And we have good data from several sources showing the trend towards consolidation among physician groups and small practices. It’s a hard set of forces to resist, and I’m not convinced that MACRA is adding much of a finger on the scale relative to what’s already happening in the market.

*For 2017, the final rule exempts providers who are in their first year of participating in  Medicare Part B or who have fewer than 100 patients or bill Medicare Part B up to $30,000 in allowed charges or provide care for up to 100 Part B patients in one year.