Doctors Can Expect Pressure to Compete Under MACRA Changes

Oncology Business News®May 2015
Volume 4
Issue 4

The signing of the Medical Access and CHIP Reauthorization Act of 2015 ends the yearly nightmare of congressional budget wrangling associated with the Sustainable Growth Rate formula.

Blase N. Polite, MD, MPP

The signing of the Medical Access and CHIP Reauthorization Act of 2015 (MACRA) ends the yearly nightmare of congressional budget wrangling associated with the Sustainable Growth Rate (SGR) formula, but it will intensify the pressure on both physicians and the Centers for Medicare & Medicaid Services (CMS) to achieve a leaner, more effective health payment system. Oncologists and other physicians need to acquaint themselves with the new legislation, and if they have any ideas for improvement, those need to be registered with CMS quickly, advises Kavita Patel, health policy scholar and managing director Clinical Transformation at the Brookings Institution, an independent research organization.

The clock is ticking, Patel warns. “Like many things in Washington, it took a long time for us to get to this stage where we had an SGR fix, but the timeline for this is pretty aggressive. By the fall of this year CMS has to deliver on some of these programs, so the time for feedback is right now. Doctors should become familiar with the provisions in this legislation, and respond to it quickly.”

MACRA eliminates an unwieldy formula for determining physician Medicare payments and brings doctors a big step closer to what the Department of Health and Human Services has envisioned as a value-based care environment. Signed into law last month by President Obama, the legislation contains a broad set of incentives for doctors to meet performance measures, which are designed to end the practice of relying on volume of care to build up revenues.

“I think this will really up the stakes for us, and I hope this will bring us to the stage in 2019 where we have much more flexibility to innovate with ideas that are coming from the ground up,” Blase N. Polite, MD, MPP, chair of the Government Relations Committee for the ASCO, told Oncology Business Management.

CMS Will Be Listening

Polite, a medical oncologist with University of Chicago Medicine, is optimistic that the level of involvement physicians had in helping to design MACRA and the changes that were incorporated into the $200-billion-plus spending measure mean that CMS will be more receptive to physician input in the future as the incentive plan is refined. Patel agrees that physicians do have an ear at CMS. “I do think that CMS has an intention of working with doctors to achieve a balance. It is just as all things are: the devil is in the details. There are a lot of aspects of this legislation that CMS has to turn into policy, so I do think the dialogue with CMS right now is pretty important.” That being said, these changes have been legislated, and CMS is under a mandate to implement them, Patel says.

Kavita Patel

The SGR, designed to keep physician payments in line with inflation and the gross domestic product, was blasted for its reliance on huge congressional spending adjustments each year to avoid wild swings in physician compensation. This year, a threatened 21.2% SGR cut in spending helped to prompt movement on the repeal measure.

The replacement package involves $175.4 billion in additional spending over 10 years to keep physician payments stable and to incentivize improvements in coordination, efficiency, and quality of care delivered. The bill also would temporarily extend the Children’s Health Insurance Program (CHIP) and a number of other expiring provisions related to Medicare, Medicaid, and certain grant programs.

An analysis by the Congressional Budget Office has predicted that through 2025, MACRA will increase direct spending by about $145 billion and revenues by about $4 billion, causing a net increase in federal budget deficits of $141 billion.1

The program will lead to modest improvements in physician pay over the next several years, with much higher increases and also bonuses to kick in later, based on measures of performance and whether physicians participate in alternative payment models (APMs), which CMS believes will be key to cost-efficient high quality care.

Steep Pay Cuts Are Possible

Some of the pay adjustments that may result could reduce CMS compensation for physician services by up to 9%, but Polite notes that there are opportunities for physicians to receive fairly substantial pay increases and bonuses. “Those at the top end could receive as high as a 27% bump,” he says (Figure). Those who enter the APMs may eventually qualify for 5% bonuses that are based on their Medicare payments over the previous year.

Patel notes that the payment penalties are graduated, so that physicians have plenty of time to correct their procedures and avoid the deepest payment cuts. “It doesn’t go from zero to 9% in one year. You would have to be ‘underperforming’ in previous years. If you’re having consistent problems year after year, and you know that you’re likely to be in that negative 9% category in year five, then you need to do something different about the way that you practice; and it might be that you’re a great doctor but the business of your practice or the clinical work flows need to be changed, and that’s the type of thing I think CMS is looking to try to help doctors with.”

Physicians will be nudged to participate in APMs, such as medical homes, accountable care organizations, and bundled care, through which they can sidestep some of the penalties that may result from failure to meet performance standards in the Merit-Based Incentive Payment Systems (MIPS), which are a hallmark of CMS changes.

Figure 1. SGR Repeal Creates Two Tracks for Providers

1. Fee for service.

2. Meaningful Use; Physician Quality Measure Reporting; Value-Based Payment Modifier.

3. APM participants who are close to but fall short of APM bonus requirements will not qualify for bonus but can report MIPS measures and receive incentives or can decline to participate in MIPS.

Source: The Advisory Board Company,

Initial annual pay increases amount to just 0.5% a year under the program, and Congress has legislated additional support for MACRA in the form of $500 million annually from 2019 to 2024, to help pay for some of the incentives.

In a review of the legislation, CMS indicated that certain factors such as an unsteady economy or inflationary pressure could still necessitate the congressional “patches” that were common to the SGR-based payment formula.2 However, CMS expressed confidence that otherwise MACRA represents a balanced replacement for SGR.

“The physician payment rates would be problematic under [MACRA] in years with high inflation, in 2025 when the 5% APM bonus and the $500-million additional pool for MIPS are scheduled to expire, or at the point when the cumulative effects of payment updates not keeping up with physician costs become too large,” CMS wrote.

Key to the optimism expressed by Polite was a shift in performance measures that graduated the penalties and rewards under the program, rather than having broad cutoffs based on certain achievement scores that would have made a single point the difference between getting a bonus, larger fees, nothing at all, or even seeing physician payments reduced.

“We were always concerned about threshold payment systems,” he says. “It creates winners and losers, and disincentives people from working together.”

Doctors Dislike the Competitive Aspect

Physicians are also concerned about being forced into competing with one another rather than competing with themselves, says Ted Okon, executive director of the Community Oncology Alliance, regarding the program. He noted that a physician who achieved improvements over a period of time but didn’t do as well as another practice in the same care bracket might still face penalties. This is an apparent feature of the Oncology Care Model APM introduced earlier this year by CMS, he said.

Ted Okon

Relying on systems that cause physicians to compete with one another is typical of many private sector payer programs, and CMS cannot be expected to take another route, Patel said. “I would look to see CMS feel comfortable with the approaches other payers are taking, but I don’t think CMS has any desire to put something in place that makes doctors feel uncomfortable or unable to practice in the way they thought they could.”

Like Polite, Okon believes MACRA is a “step in the right direction.” APMs can be effective, Okon says, noting that a body of evidence has accumulated in recent years showing that experiments with these models have worked out.

COA wants CMS support for a different oncology care model, however—one that involves input from the oncology community. Okon says physicians should be able to formulate their own APMs as long as they meet achievable criteria laid down by CMS. US Representative Cathy McMorris Rodgers is backing proposed legislation for a different APM that COA also stands behind.

While there is reason for hope, Polite says, there could still be the case where a physician finds himself getting whittled down on the revenue side by negative performance reviews.

“We have no idea, and I don’t think CMS has any idea yet, how they’re going to set up these merit-based payment systems so that they’re equitable,” Polite says. “That is a concern for everybody. On the MIPS side, that is the 10,000-pound gorilla in the room.

“They absolutely have to be set up in the right way, otherwise you have what people call a payment randomization program, where if I have the wrong mix of patients or have a different set of resource uses for whatever my practice is, I can be penalized even if I’m doing the right thing,” Polite adds. “That’s where all of the specialty groups are going to be vigilant in the next few years in helping them get the risk adjustment mix right.”


  1. Congressional Budget Office staff. Cost Estimate and Supplemental Analyses for H.R. 2, Medicare Access and CHIP Reauthorization Act of 2015. Congressional Budget Office. https:// Published March 25, 2015. Accessed April 21, 2015.
  2. Estimated Financial Effects of the Medicare Access and CHIP Reauthorization Act of 2015 (H.R. 2). Centers for Medicare & Medicaid Services website. search-Statistics-Data-and-Systems/Research/ActuarialStudies/Downloads/2015HR2a.pdf. Published April 9, 2015. Accessed April 21, 2015.
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