Medicare unveils new method of paying doctors

Medicare unveiled Friday a far-reaching overhaul of how it compensates doctors and other clinicians with the goal of rewarding quality, cost-effective care instead of just paying piecemeal for services.

The complex regulation is nearly 2,400 pages long and will take years to fully implement. It's meant to carry out bipartisan legislation passed by Congress and signed by President Barack Obama last year.


Whether it succeeds or fails, it's one of the biggest changes in 50-year history of Medicare, the government-sponsored health insurance program for older Americans that accounts for about one of every five dollars spent on health care in the United States. It serves about 57 million people.

While the concept of paying for quality enjoys broad support, the details have been a source of trepidation for some physicians who worry that the new system will force small practices and old-fashioned solo doctors to join big groups. Patients may start hearing soon about the changes from their doctors, but it's still too early to discern the effects.


The Obama administration sought to calm concerns Friday.

"Transforming something of this size is something we have focused on with great care," said Andy Slavitt, head of the federal Centers for Medicare and Medicaid Services.

Officials said they considered more than 4,000 formal comments and held meetings around the country attended by more than 100,000 people before issuing the final rule, which gives clinicians more time to comply. The administration will continue to accept comments and suggestions.

The Medicare Access and CHIP Reauthorization Act, known as MACRA, creates two new payment systems, or tracks, for clinicians. The majority of medical professionals who bill Medicare — more than 600,000 doctors, nurse practitioners, physician assistants and therapists — are affected. Medical practices must decide next year which track they will take.

Starting in 2019, clinicians can earn higher reimbursements if they join a leading-edge track that's called Alternative Payment Models to learn new ways of doing business. That involves being willing to accept financial risks and rewards for performance, reporting quality measures to the government, and using electronic medical records.

Medicare said some 70,000 to 120,000 clinicians are expected to initially take that track, which is more challenging. Officials hope that number will grow quickly.

Most clinical practitioners — an estimated 590,000 to 640,000 — are expected to join a second track, called the Merit-Based Incentive Payment System. It features more modest financial incentives, and accountability for quality, efficiency, use of electronic medical records and self-improvement.

Finally, about 380,000 clinicians are expected to be exempt from the new systems because they don't see enough Medicare patients, or their billings do not reach a given threshold.


"This law and this regulation are going to need to evolve as medicine evolves," Slavitt said.

Doctors in Maryland, including those at Greater Baltimore Medical Center and Mercy Medical Center, said that they needed time to review the changes before they could comment.

Gene Ransom, CEO of MedChi, which represents many of the state's doctors, said not having to worry about a Medicare cut every year would be a welcome change.

But he said most doctors wouldn't qualify for the advanced payment model and worried a system of value-based payment might make a doctor's job more complicated.

"It is making it harder to practice medicine," Ransom said. "We understand what they are trying to do, but this is another large burden and another large cost to physician practices."

Many doctors, however, should find aspects of the new Medicare system familiar, particularly in Maryland.


Doctors already participate in programs through private insurers that approach reimbursement in much the same way as MACRA, said Jonathan P. Weiner, professor of health policy and management in the Johns Hopkins Bloomberg School of Public Health.

CareFirst BlueCross BlueShield, the state's largest insurer, for example, has opened its so-called patient-centered medical home program to all its primary care doctors. It provides rewards to them for coordinating care with a patient's specialists and hospitals to improve care and cut costs. Other groups of doctors coordinate care through so-called accountable care organizations promoted by the Affordable Care Act.

Both of those structures are examples of the advanced payment model, Weiner said.

MACRA options also are still largely fee-for-service based, only with incentives to either add preventive services and screens or go a bit further to coordinate care, Weiner said. Eventually, he said, Medicare could move entirely to a model where payments hinge on a community of patients' outcomes rather than on piecemeal services.

For now, he said, changes to Medicare payments are "really just a continuation of what's been happening over the last few years. … Sometimes ideas and policy aren't a perfect match, but this is a sound policy, in my opinion. It passed Congress in a bipartisan fashion and captures both quality and cost control."

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Advocates say the new system will improve quality and help check costs.


But critics say the complicated requirements could prove overwhelming. The administration says some doctors will be pleasantly surprised to find out that reporting requirements have been streamlined to make them easier to meet.

The Obama administration has pushed to overhaul payment not only for doctors, but also for hospitals and private insurance plans that serve many beneficiaries. The unifying theme is a new emphasis on rewarding quality over volume.

While some quality improvements have already been noted, it's likely to take years to see whether the new approach can lead to major savings that help keep Medicare sustainable over the long run.

Maryland's hospitals operate under an experimental reimbursement arrangement with Medicare that gives them a fixed budget to manage the health of their patient populations. The state is only halfway through the first five years of that experiment, which is unique to Maryland and is designed to control costs and improve patient outcomes.

Medicare's previous system for paying doctors — mandated by Congress — proved unworkable. It called for automatic cuts when spending surpassed certain levels, and lawmakers routinely waived those reductions. MACRA was intended by lawmakers as a new beginning.

The Associated Press and Baltimore Sun reporters Meredith Cohn and Andrea K. McDaniels contributed to this article.