New Medicare Payment System Beats Old Hands Down, Says ACP

Neil Osterweil

May 02, 2015

BOSTON — A whole new set of choices related to payment plans are emerging now that the sustainable growth rate (SGR) for Medicare payments has expired.

The changes will affect the way practitioners are paid by Uncle Sam, according to policy experts here at the American College of Physicians (ACP) Internal Medicine 2015.

The old formula was designed to reduce payments every time they exceeded the growth in per capita gross domestic product, so Robert Doherty, senior vice president of governmental affairs and public policy for the ACP, said he and his colleagues are not sad to see it go.

"One of the many problems with the SGR was that it penalized physicians; no matter how efficient you are, or your quality, you got cut the same," he said during a news conference outlining what internists and general practitioners can expect under new payment systems.

"The SGR created a huge amount of uncertainty for us in practice, and it was perennial," said Nitin Damle, MD, from an internal medicine practice in Wakefield, Rhode Island, who is president-elect of the ACP.

The roller-coaster ride of legislative changes to and patches of the SGR left gaps in payments and played havoc with practice cash flow, Dr Damle reported.

All that ended on April 16, when President Obama signed into law the Medicare Access and Children's Health Insurance Program Reauthorization Act, a bill that met with exceedingly rare bipartisan support in both houses of Congress.

New Payment System

Under the new law, there will be annual increases in payments of 0.5%, beginning July 1 and continuing until the end of 2019.

Starting in 2019, existing Medicare quality-reporting and incentive programs, including the Physician Quality Reporting System, Value-Based Payment Modifier, and Meaningful Use, will be consolidated into a single program, dubbed the Merit-based Incentive Payment System.

At the end of 2018, current penalties for failure to report quality measures, to implement an electronic health record, and to provide adequate value-based care will be eliminated. As of January 1, 2019, physicians will be paid according to Merit-adjusted payment rates.

Under this system, physicians will get credit for quality-improvement initiatives, and there will be strong incentives to transition to the patient-centered medical home model of care, Doherty explained.

It will also be possible for high-performing physicians to earn additional payments from a pool of up to $500 million per year from 2019 to 2024. Doherty pointed out that these funds are new to the Merit-based Incentive Payment System and don't exist under the current Medicare incentive or reporting programs. There will also be a pool of $20 million annually specifically to help smaller practices.

Read the Fine Print

The new payment rules require that providers choose between merit-based and alternative payment models, such as accountable care organizations and advanced patient-centered medical homes. However, providers will be able to change payment preferences annually.

Physicians who choose to go the alternative payment model route will be eligible for a 5% bonus each year from 2019 to 2024. This additional money is added to any current payments, such as prospective care coordination fees and structured savings, Doherty explained.

"Practices really need to start thinking about which pathway they want to take," Shari Erickson, MPH, vice-president of governmental affairs and medical practice for the ACP, told reporters.

Dr Damle said that, as imperfect as it is, the merit-based system removes a good deal of the uncertainty surrounding Medicare reimbursements, which dropped by 21% in April.

"That's something that our practice really struggled with," he said. "What would we do if there was a 23% or 21% cut in Medicare reimbursement? Would we opt out of accepting Medicare?"

About 50% of patients in his practice are elderly and on Medicare.

Physicians, patients, payers, and politicians all agree that higher-quality care at a lower cost is desirable, but getting there could mean a substantial change for some physicians, said Steven Stack, MD, president-elect of the American Medical Association (AMA).

"One of the things that we have to recognize is that there is not going to be a 'one size fits all' solution. There is going to have to be a multitude of ways to compensate for medical care, depending on the medical specialty and the type of care that's sought," Dr Stack told Medscape Medical News.

The AMA, in collaboration with the RAND Corporation, recently released a study suggesting that physicians are willing to accept new payment models that provide evidence of improved patient care, and that these changes are being implemented in practices of all sizes and specialties throughout the United States.

The report also found, however, that "physicians are finding it all but impossible to keep up with the various pay-per-performance and pay-per-value schemes that are out there between the Federal government and private payers," he explained. "One of the physicians said that it's like having 50 people shout all their priorities at you at the same time."

"There is a crying need to bring some consistency and harmonization across all these different efforts so we can all be pulling the boat in the same direction," he added.

Mr Doherty, Dr Damle, Ms Erickson, and Dr Stack have disclosed no relevant financial relationships.

American College of Physicians (ACP) Internal Medicine 2015. Presented May 1, 2015.

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