$100B Aftermath of Medicare Access, CHIP Reauthorization Act
By - The ongoing push for value-based reimbursement endures with the finalization of new legislative decisions regarding the permanent SGR repeal's ripple effect on the healthcare industry at large.
The Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 (H.R. 2) will increase combined federal spending for Medicare, Medicaid, and the health insurance marketplace by over $100 billion within the next decade, according to an April 9, 2015 actuary study of MACRA from the Centers for Medicare & Medicaid (CMS) Chief Actuary, Paul Spitalnic, ASA, MAAA.
Within 2019, MACRA will shift reimbursements from fee-for-service to pay-for-performance programs, such as the Alternative Payment Model (APM) and Merit-Based Incentive Payment System (MIPS).
According to Spitalnic, MACRA will result in limited pay-for-performance initiatives which may result in physicians losing faith in the healthcare system and resultantly driving them out of the program. A deficit in physicians may mean care for Medicare beneficiaries will become jeopardized, confirms Spitalnic, who surmises annual physician practice costs as determined by the Medicare Economic Index (MEI) will increase well beyond annual rate increases.
"While [MACRA] addresses the near-term concerns of the SGR system, the issues of inadequate physician payment rates are ultimately greater," Spitalnic writes. "If Medicare payments were to fall to a fraction of payments based on cost drivers, there would be reason to expect that access to physicians' services for Medicare beneficiaries would be severely compromised.”
Medicare payments to physicians are currently raised annually according to growth within the Medicare Economic Index (MEI). This growth varies according to performance under the Sustainable Growth Rate (SGR) system’s objective to limit growth in physician spending to the rate of overall economic growth as quantified by Gross Domestic Product (GDP), confirms Spitalnic.
Since Medicare physician expenditures are expected to increase by an average of 1 percentage point faster than GDP, future implications indicate the current-law baseline assumes the performance adjustment will be less than 1 percent throughout this particular timeframe, confirms Spitalnic.
Physician payments are resultantly assumed to increase by an average of 1.3 percent, says Spitalnic. However, the average physician payment update is estimated to equal the MEI growth rate of roughly 2.3 percent under the projected baseline scenario.
According to Spitalnic, increased financial incentive implies assuming the share of Medicare physician dollars in APMs would increase from 60 percent in 2019 to 100 percent by 2038. The widespread modeling of H.R. 2 reflects the physician update amounts specified in the bill of 0.75 percent for physicians participating in an APM program and 0.25 percent for physicians participating in MIPS. APMs would be paid increasingly more annually relative to non-APMs after 2026.
“The new systems for calculating physician rates under H.R. 2 would effectively avoid the need for annual (or more frequent) legislative overrides to the SGR formula under current law,” explains Spitalnic. “These new physician payments would result in additional Federal Medicare spending of $150.5 billion for fiscal years 2015 through 2025.”
Additional provisions contained within H.R. 2 would partially counteract these impacts, resulting in a net cost for the legislation in excess of $100 billion.
Although Spitalnic confirms physician payment updates will likely remain adequate within the immediate future, multiple concerns about long term specified updates require attention.
“The physician payment rates would be problematic under H.R. 2 in years with high inflation, in 2025 when the 5-percent APM bonus and the $500 million additional pool for MIPS are scheduled to expire,” maintains Spitalnic, “or at the point when the cumulative effects of payment updates not keeping up with physician costs become too large.”
Spitalnic's dismal future assessment of MACRA’s direction and impact may be echoed within the Senate's recent SGR repeal.
If such aforementioned concerns are ignored by subsequent legislation, Spitalnic anticipates a deterioration in quality and access regarding physicians’ services for beneficiaries.
