Whether or not your doctor stays in business over the next few years could hinge on their ability to adapt to a new regulation changing how Medicare pays doctors and clinicians.
The game-changing regulation aimed at paying medical providers for quality instead of quantity is known as MACRA. It’s based on legislation passed last year by Congress to overhaul how Medicare pays doctors.
There are two routes medical providers can take: Medical practices can earn higher reimbursements if they learn new ways of doing business. That includes being willing to accept financial risk and reward for performance, reporting quality measures to the government, and using electronic medical records. The majority of medical practices will go this route, according to the Kentucky Medical Association.
Or they can join a network of medical providers and hospitals that shares financial and medical responsibility for providing coordinated care to patients in hopes of limiting unnecessary spending.
How it works
Every time a medical provider bills Medicare for a patient, the provider gets paid a lump sum regardless if the patient gets better. Most insurers pay this way. Under the new regulation, the federal government will give bonuses to providers if they use electronic medical records and report quality measures that patients are improving.
Patrick Padgett, executive vice president for the Kentucky Medical Association, said some doctors might already be doing some of the what the rule sets out, but for many, it will be a complete shift.
“It’s asking the medical system to essentially a adopt a new way of operating and documenting and reporting completely different from what they’ve done traditionally,” Padgett said.
Doctors will still be paid for every visit. The bonuses will start out at 4 percent and increase to 9 percent by 2022. At the same time, providers that do not follow the MACRA regulations will get penalized the same percentage.
A 4 percent dock in pay might not sound like a lot but that amount could make or break an independent medical provider’s office. That’s according to Trudi Matthews, managing director of the Regional Extension Center, a federally funded organization that helps hospitals and doctors across Kentucky comply with federal regulations.
“A lot of folks would say they make just enough money to cover the cost of patients,” Matthews said. “They may only have a margin of 2 to 4 percent, so if they’re going to lose 4 percent, that’s a big hit. There aren’t many health care organizations that could take reductions year over year and stay in business.”
Medicare is by far the biggest payer of health insurance claims in Kentucky. The Department of Health and Human Services sets rules for how and how much doctors are paid, and other insurers follow suit.
“Most commercial insurers have announced that they’ll be tying spending to value,” Matthews said. “It’s not just Medicare, it signals a trend in the [health insurance] marketplace.”
Under MACRA, providers can earn bonuses for reporting quality measures. The government will use this as a means of gauging how well a medical provider is improving a patient’s health outcome. For example, providers can earn bonuses for keeping track of patients who have schizophrenia and whether or not they take their medication on a daily basis. Or measuring a hyperglycemia patient’s blood glucose levels.
Most quality measures adjust if a patient is very sick in the beginning but improves. They also adjust based on age and gender. But most measures don’t take into account if a patient lives in a bad neighborhood, far from a pharmacy or doesn’t have reliable transportation to the doctor for follow-ups. In 2015, Kentucky ranked in the bottom five states with the most people living in poverty at 19.1 percent.
These factors can put Kentucky doctors at a disadvantage. And Padgett said the government will score doctors on these quality measures against every other state.
“We have a population base that’s less healthy than the rest of the country. And I don’t think that’s a big secret,” Padgett said. “Some of the measurements Medicare will use could be based on national bench marks, and if they are, we could potentially be ranked lower, and therefore the providers get penalized.”
Health care providers next year will have to report this information and 50 percent of that bonus or penalty will based on the how well patients do. Another 25 percent will be based on the use of electronic health records, 15 percent on professional education courses and 10 percent on the cost of care.