The Mess That is MACRA

MACRA (the Medicare Access and CHIP Reauthorization Act) is a mess. It is extremely difficult to comprehend, it is based on assumptions that defy commonsense and research, and it may raise costs.

The Medicare Payment Advisory Commission (MedPAC) would never say what I have just said, but MedPAC definitely understands MACRA’s defects. The transcripts of MedPAC’s October 8, 2015 and January 15, 2016 meetings indicate that members and staff perceive daunting impediments to the implementation of MACRA. But those transcripts also suggest that MedPAC won’t tell Congress to rewrite or repeal MACRA. Rather, the evidence suggests MedPAC will mince words. It appears MedPAC will send CMS and Congress a few wishes dressed up as “principles” and wait for MACRA’s inevitable failure before offering more useful advice.

Before I attempt to explain MACRA, let me first convey to you MACRA’s mind-numbing complexity by quoting four commissioners. Each statement below is followed by the last name of the commissioner who made it, the date the statement was made, and the page number of the transcript where the statement appears.

“[T]he complexities involved are just absolutely enormous and mind-boggling.” (Hall, October 8, 2015, 158-159)

“I think … Congress has given us a very tricky set of semantics to work with…. What does ‘in’ mean? [Laughter]….Now, is that in our scope of discussion this morning – what these words [in MACRA] should mean?” (Nerenz, January 15, 2016, 86, 89-90)

“[W]hen you go through the law, in some parts of it it’s very hard to figure out how they fit together….” (Chairman Crosson, January 15, 2016, 90)

“I understand this is very complicated, but I think one of our first principles should be to try to simplify this, because it’s very complicated for providers to try to understand what path to take…. I understand that’s probably heroic….I think there’s a lot of aversion because folks don’t understand it….” (Thomas, January 15, 2016, 144)

Even the staff, who must explain MACRA to the commissioners, find themselves at a loss for words. Mark Miller said at the January 2016 meeting, “I don’t feel like I have a real strong handle on all these definitional issues….You know, we’ve had huge internal conversations. I’m surprised no one has resigned yet.” (94)

A bird’s-eye view of a Rube Goldberg device

To comprehend MACRA, it helps to understand the motives of its chief authors, including Representatives John Boehner and Nancy Pelosi. Like other managed care proponents, Boehner et al. thought the fee-for-service (FFS) method of paying for Medicare services was raising Medicare’s costs. Having made that evidence-free diagnosis, they decided the solution is (a) to turn the FFS incentive upside down by shifting insurance risk onto the backs of doctors and hospitals and, to minimize the possibility that risk-shifting will induce providers to short-change patients, (b) to measure the quality of a tiny fraction of all medical services delivered to patients.

Congress could have implemented this “solution” by simply instructing CMS to stop using pure FFS and to use instead pure capitation or some hybrid of capitation and FFS for all providers. Such a bill would have raised serious questions about its ability to lower costs without harming patients, but at least the questions would have been relatively easy to understand.

But instead of stating forthrightly they wanted to terminate FFS Medicare and replace it with a system resembling a giant federal HMO, Congress ordered CMS to implement a sprawling Rube Goldberg device with two compartments: One, known as the Merit-based Incentive Payment System (MIPS), would irritate doctors who stayed in FFS Medicare so much they would look for an alternative; and the second, the Alternative Payment Model (APM) program, would provide them with an alternative that would allegedly improve quality and lower costs.

But MACRA is so devoid of details about each compartment that it is impossible to predict anything. We know Boehner et al. wanted the first compartment, MIPS, to inflict large penalties and rewards, but we don’t know whether the MIPS compartment will be sufficiently irritating to drive its occupants out. Even if we knew how irritating MIPS will be, we wouldn’t be able to compare it to the APM program’s power to irritate because we don’t know what the APM entities will look like. In fact, at this date we can’t even be sure APMs will exist.

For all those reasons and more, we also don’t know whether either compartment will save money.

MIPS: Measuring the unmeasurable

The MIPS program was designed for doctors who can’t or won’t join the ACO-medical-home bandwagon. MIPS inflicts huge rewards and penalties (up to 9 percent of the average annual Part B payout per physician) based on a single “value” score (a score derived by the capricious jamming of crude quality and cost measures into one number) for each doctor. As commissioner Gradison put it, MIPS was designed for “the laggards, the people who stand for the status quo,” the knuckle-draggers who just won’t get with the Managed Care 2.0 program. (January 15, p. 133)

Evaluating how the laggards will view MIPS vis a vis the APM program is impossible because we have no idea how CMS will enforce the requirement that CMS produce a single score representing both the cost and quality of services provided by individual physicians. With the exception of a few services, measuring cost and quality accurately at the individual doctor level is not possible. There are two intractable impediments: Determining which doctor patients “belong” to (the attribution problem); and adjusting measures of physician cost and quality for factors outside of physician control such as patient health status (the risk-adjustment problem). The attribution and risk-adjustment methods used today are crude even for large groups; with the possible exception of a few of the simplest process measures, they are worthless at the individual physician level.

MedPAC is well aware of at least the risk-adjustment problem. Here is how MedPAC staffer Kate Bloniarz expressed her “concerns” about MIPS to the commission at its October 2015 meeting:

First is the challenge posed by assessing clinician performance at the individual level. The MIPS … is designed to produce an individual-level payment adjustment. But many quality and resource use measures are not reliable at the individual clinician level, and it is a particular challenge for outcomes measures. Based on CMS’s experience to date with individual-level payment adjustments, most clinicians will likely look average, and the Medicare program will only be able to reliably identify persistent outliers. (pp. 93-94 of the October 8 transcript)

At the January 2016 meeting Bloniarz repeated this criticism. She told the commission that CMS’s Physician Quality Reporting System (PQRS), which MIPS must use, could not distinguish 80 percent of the physicians from one another. (p. 74, January 15 transcript, and slide 10 of presentation)

If CMS cannot detect differences at the individual physician level for 80 percent or more of the doctors who serve Medicare patients, it seems likely that the pay-for-performance scheme Boehner et al. had in mind for the laggards in MIPS won’t have any effect on the vast majority of them. Which calls into question the ability of MIPs to “reform” doctors – to get them to “coordinate care” and do all those other wonderful things ACOs and “medical homes” were supposed to make them do. [1]

Ms. Bloniarz also expressed her concern that the reporting requirements for doctors under both MIPS and the APM program are “likely to be overly complex and further burden both providers and CMS….” (p. 94)

Sand castles on top of sand castles: The APM program

The second compartment in MACRA – the APM program – is difficult to describe for these reasons:

  • MACRA does not describe the entities that will qualify as APMs;
  • MACRA sets standards for these entities that cannot be met by the vast majority of conceivable entities, including today’s most faddish APMs – ACOs and “medical homes”;
  • MACRA says APMs must expose doctors to “risk above a nominal level,” but doesn’t say what “nominal” means; and
  • MACRA says doctors who join APMs will earn a 5 percent bonus on revenues received through APMs, but the law fails to define “revenue” (options include revenue from Part A, Part B, Part D, all or some of those parts, or revenue received for particular services).

Here is how Ms. Bloniarz explained the problem at the commission’s October 2015 meeting:

The first question is: What is an APM? The pool of APMs are all models under the Center for Medicare and Medicaid Innovation (except for innovation awards), models tested under the pre-existing Medicare demonstration authority, a demonstration required by law, and the Medicare shared savings program.

 Then there is statutory language that further winnows down the number of APMs that can qualify clinicians for the incentive payment. They must meet three criteria

…: they must use certified eHR technology; they must have comparable quality measures to MIPS; and they must either bear financial risk above a nominal amount or be a medical home that has been certified for expansion by the Office of the Actuary. And I’ll note here that that certification has not occurred.

A key takeaway is that not all APMs will be eligible APMs for which clinicians can receive the incentive payment. They will need to meet the criteria set out in the law, and presently, very few models are likely to do so. (pp. 94-95)

I suspect the reason Congress did not populate the APM compartment with clearly defined entities is that Boehner et al. knew full well that the first iteration of “value-based” entities – the ACOs and “medical homes” authorized by the Affordable Care Act – have not panned out. We know that MedPAC understands that. In its reports to Congress, and in statements by staff and members, MedPAC has clearly indicated they understand that ACOs and “homes” are saving little or no money and are having at best minor and mixed effects on quality.

It is fair to say, then, that MedPAC understands that Congress has essentially instructed CMS to build a new layer of undefined, unproven APMs on top of the existing layer of poorly defined and unproven ACOs and “homes,” in other words, a second layer of sand castles over an existing layer of sand castles.

MedPAC’s reaction to the MACRA mess

If you were a member of MedPAC and you had to advise CMS and Congress on the implementation of the MIPS and APM programs, what would you do? You know that CMS can’t measure “value” in MIPS anywhere near accurately enough to provide useful feedback to the laggards who remain in MIPS. And you know CMS has to populate the APM compartment by 2017 even though virtually no examples of the fabled APMs exist, and you know the first-generation APMs that might serve as templates for CMS’s are not working.

I suspect most ordinary people would tell Congress that it must stop writing managed care fantasies into law and hoping CMS can make them work. I suspect most people would tell Congress to go back to the drawing board and propose legislation that describes flesh-and-blood entities (not abstract managed care fantasies) that actually have a track record documented by empirical research (not happy talk). The very least MedPAC should do is define clearly the crippling defects in MACRA and tell Congress to postpone MACRA’s implementation to give CMS and MedPAC time to develop more informed recommendations.

But it appears MedPAC has no intention of doing that. Not one of the 17 commissioners suggested at the October or January meetings that MACRA should be repealed, amended, or postponed. It appears, rather, that MedPAC will send CMS and Congress a list of abstract wishes for the APM program dressed up as “principles.”

When the commissioners arrived for their January 2016 meeting, the staff (presumably with Chairman Crosson’s blessing) asked them to discuss 12 “principles” that would guide CMS in its doomed effort to make sense of the APM compartment (see slides 12 through 14 here) The principles said nothing about the MIPS program.

The 12 APM principles will look very familiar to anyone who has followed the debate about ACOs – they look just like the elements in the flabby “definition” of ACO. [3] These principles would be worthless if they were applied even to the existing layer of sand castles; they tell us nothing about why CMS’s current crop of ACOs and “homes” are performing so poorly. It is extremely difficult to comprehend, therefore, why MedPAC is wasting its time formulating these vague principles for the second layer of sand castles – the APMs that don’t exist yet.

Congress and CMS don’t need to hear any more abstract and wishful remarks about MACRA. They need to hear useful feedback. MedPAC should tell Congress MACRA is an unworkable mess and must be repealed or amended.

[1] In addition to the CMS’s inability to measure quality at the individual physician level, Bloniarz should also have listed MIPS’ bizarre attribution scheme as another mind-bending impediment to the implementation of MACRA. Unlike ACOs and “medical homes,” where insurers “attribute” patients to doctors based on how often patients visited doctors in the past, MIPS requires that doctors “attribute” themselves to patients by selecting from several possible descriptions of their relationship to each patient, such as “lead” physician and “supportive” physician, and entering a code for this relationship on each claim form.

[2] Chairman Crosson, for example, has observed that MACRA’s APM compartment “is not designed to essentially work well with what exists right now because what exists right now isn’t getting us necessarily to where you want to be.…” (October 8, 2015, p. 119) Commissioner Naylor has questioned why MACRA is built on “programs or models that have not yet been proven or, in some cases, have been proven not to be working.” (January 15, 2016, p. 150) Other commissioners have endorsed the radical notion (radical by the shoot-first-aim-later standards of the managed care movement) that APMs should be subjected to research before CMS certifies them.

[3] For example, principle 1 says CMS should authorize only those APMs that have been shown to be “successful [at] controlling cost, improving quality, or both,” principle 6 says the entity “must assume risk,” and principle 8 says APMs must have “sufficient number of beneficiaries to detect changes in spending or quality.”

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15 replies »

  1. Interesting perspective Kip, but tend to agree with Steve on this one – the doom and gloom is not quite as severe as you represent but there are certainly going to be challenges moving forward in defining exactly how MACRA will work.

    But that being said, consider the alternative.

    The last thing we can afford as a society is a return to the status quo, which due to your lack of providing any real substantive alternatives to MACRA appears to be what you infer. FFS models of reimbursement simply do not hold HCOs accountable for the true costs of care delivered. Much like the DoD and their beltway bandit consultants that also operated under cost plus models and we tax payers subsequently ended up buying $69 hammers and $250. toilet seats, HCOs via their charge masters are charging $60+ for two aspirin. We cannot afford this anymore – something has to change.

    The move to risk-adjusted care models and reimbursement is the path we are taking. It will be difficult, it will require significant change mgmt on the part of providers but it is a path we must take. We will go bankrupt otherwise.

  2. “The intent of law is indeed to force docs/medicine to create entities that are accountable and take risk and responsibility rather than just deliver the highest volume of care they can and bill as much as they can for it.”

    Was this not the intent of risk management machines called insurance companies? Why didn’t they work?

    Concerning doomsaying: this is strongly precedented. Almost a formula. Pie in the sky legislation is enacted based on some agreeable principles. Special interest driven bureaucrats decimate the principles with the particulars, and the original intent is completely lost. See results of EMRs, MU, PQRS, PCMH, ACOs and predictably: MACRA. No idea starts off as a bad idea. If you run any good idea through the same corrupted machinery, you will get similar disappointing results.

    And please, do not refer to the AMA as a “doc group”. They have nothing to do with medical professionals who have to actually work. One of the main reasons FFS is perceived as a disaster is because of their self interested dereliction of chronic and cognitive care, reinforced by price fixing.

  3. Great read! Is Kip SULLIVAN on Twitter? I’d love to follow him!

  4. Peter does Canada use the evil “fee for service” payment scheme for doctors?

  5. Re your statement: “The overall intent of the law is sound and its thrust is consistent with an overwhelming body of research and experience, and with the path the ACA and previous laws have put us on. “Pure” FFS must be vastly restricted and payment based on results and value must replace it.”

    Have your read Kip Sullivan’s three part series on ACO’s? and…please cite some of the “overwhelming research”. Thanks.

    My view is that patients should have the option of opting into true ffs systems or ACO’s….my fear is that our policy experts will succeeding in coercing people into ACO type systems.

    I think the “fee for value”/ACO model is full of wishful thinking and groupthink. The attacks on fee for service seem to have convinced many, as it sounds very logical. The only problem is, fee for service transactions have been the basis of almost all human trade since civilization began….and remains so to this day. The problem with medical care is the patient has not been the payor…..we don’t need to get rid of fee for service….we need to restore the essential element that makes fee for service work: the purchaser of services has to be the one who decides whether to “buy” the service or not….and benefit from searching for the highest value provider.

  6. “….if any docs are left in MIPS at that point.”

    Or at all. See Dr. Kernisan’s post below.

  7. This is a useful if overly critical and provocative post. Before I tackle a few issues one by one, allow me to plug my Health Affairs policy brief on MACRA, which was published on the HA site this week: http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=156
    It raises some of the same questions Kip does, but not in such negative and dire terms.
    (1) There’s little doubt that CMS will have its hands full implementing MACRA. I agree that the path is unlikely to be smooth, and that some things won’t work as Congress imagined/intended.
    (2) The overall intent of the law is sound and its thrust is consistent with an overwhelming body of research and experience, and with the path the ACA and previous laws have put us on. “Pure” FFS must be vastly restricted and payment based on results and value must replace it. The how is tough, and moving from FFS will take time. The why is not in question.
    (3) “Giant federal HMO” ? No, I don’t think so. Such language is simplistic and meant to inflame passions among older docs and people. The intent of law is indeed to force docs/medicine to create entities that are accountable and take risk and responsibility rather than just deliver the highest volume of care they can and bill as mush as they can for it.
    (4) I agree that Congresses’ intent is to make APMs the best path for most docs. And that’s probably correct.
    (5) ACOs and PCMHs are not “managed care fantasies”….nor will APMs be. There are hundreds of experiments going on across the country that are proving these concepts. I would agree, however, that not all have been successful. It’s likely that in the future Congress will have to increase the financial stake (and risk) for these entities.
    (6) Of course MACRA leaves some things (like APMs) undefined…that’s what Congress does! It create an overall approach that the executive branch (HHS/CMS in this case) must then implement — that is, do the dirty tough part. (The AMA and many other docs groups went along with this one.) And the implementation process has begun. Again, it won’t all work (it never does)….but suggesting it’s DOOMED before it even launches is not constructive or likely to be accurate. (I say this despite the SGR experience because that was a clear mistake…)
    (7) “Crude quality and cause measures” I concur that’s the reality today. But developments are moving rapidly to create better measures and a more streamlined system, and to accelerate EHR utility and interoperability.
    (8) We absolutely can–and must!–measure quality and results at the individual doc level in MIPS…for those docs who insist on running their own show. YES, it’s going to be a serious challenge. And we likely won’t get to anything very meaningful on this front for 7 to 10 years….if any docs are left in MIPS at that point.
    Enough for now. I look forward to further dialogue.

  8. I am not sure about this post. This all seems a little premature to me. The author offers a great deal of criticism but few constructive suggestions.

  9. Sobering. Starting to wonder how I’ll ever return to primary care

  10. A wonderful article. What policy makers need now is some FEAR: Docs in New York Review of Books, telling everyone just what you have written above. Also, we all need Skin In Game: accounting devices to reduce our pensions if we have been responsible for failed policy during our careers.