Study: Medicare Hospitals could lose $250B under MACRA

Highlights:
•    Medicare hospital reimbursement could lose $250 billion – or could even increase by $32 billion relying on the model – over a fifteen-year period under MACRA, in accordance to the new study in Health Affairs.

• From the time period of 2015 to 2030, the researchers projected Medicare payment policy under 4 scenarios and discovered hospitals could take a financial hit as physicians get used to the different value-based payment model, which will likely cut hospital admissions and re-admissions.
• Slated to take effect in the year of 2019, MACRA will shift Medicare payments from a fee-for-service to a value-based model. MACRA will eradicate the sustained growth formula and replace it with a .5 percent annual rate increase through the year of 2019, which is when physicians will be motivated to move to one of two Quality Payment Programs (QPPs): Merit-Based Incentive Payment System (MIPS) or an APM. Proponents of MACRA see it as a way to stabilize the Medicare reimbursement system.

In-depth Details:
MACRA is coming and is anticipated to impact more than 500,000 clinicians. Although the value-based payment model is 2 years away, it is not too early to begin planning. Performance information for this year, which is observed as a transition year, will be utilized to affect 2019 payments. Hospitals and physicians require starting planning ahead and consider about how this model might affect them.
The payment system requires two things to happen for MACRA to work – “organized medicine,” involving physicians, must accept that they are “responsible stewards of society’s resources and redevelop their business model around value” and APMs (alternative payment models) must be well designed and executed.
In the study, researchers offered few words of cautioning about MACRA regarding industry buy-in and program payment design. If either one is lacking, MACRA might not control charges, could ruin healthcare delivery, and may cause the Centers for Medicare and Medicare Services (CMS) to look to try a different Medicare payment reform down the road. “If victorious APMs are not available to physicians, there could be unintended consequences for sufferers, and one of the key aims of MACRA will be missed. The authors wrote, “If these circumstances aren’t met, then in coming years, modifications to Medicare payment policy will again be at the top of the federal health policy legislative agenda”.
There is yet a possibility to be heard on one aspect of the value-based payment model. Until the day of June 30, the CMS is taking feedback on physician grades and what steps could make better the health outcomes, safety and patient engagement.