How MACRA Will Fundamentally Transform Healthcare

Updated on November 23, 2016

By Pawan Grover M.D.

The Medicare Access and CHIP Re-authorization Act (MACRA) is a dramatic change from the traditional “fee for service” payment system to reimbursement based on outcome and quality measures. 

This law is complicated; rubex cube complicated. If you’re in the healthcare industry, at this point you’re probably reading through the final rules of implementation of the law which begins January 2017.

Perhaps you are attending a seminar on the excruciating details of how to comply with the law.

Make no mistake, this is no ordinary piece of legislation, it is the most dramatic change in Medicare since the laws’s inception and it will fundamentally transform healthcare. What effect will this have on doctors, hospitals and the healthcare providers? And more importantly, what effect will, it have on patients and their families?

Let’s take a step back from the weeds of implementation and explore the real world implications.

Let’s simplify it so that non-medical persons can understand it. 

Suppose you are an orthopedic surgeon and you have a patient who needs a knee replacement. Let’s say, Medicare will pay the doctor $700 for the complex surgery which will take a few hours includes a global fee that covers office visits for 6 months. Getting that reimbursement comes at a business and administrative cost, you have to be sure you have entered all the appropriate documentation and data to avoid being penalized by Medicare. 

Recent studies show that a typical medical practice spends, on average, about 785.2 hours a year per doctor to track and report quality measures at a cost of $40,069 per doctor. In addition, three-quarters of the doctors surveyed reported that the quality measures did nothing to improve patient care. Currently, with the lower reimbursements and higher administrative costs , doctors are struggling to keep their practices above water.

Now, according to the new MACRA law, the $700 reimbursement will be tied to your outcome and quality data. By how much? After a year of transition, by 2018, 50% of the doctor’s payment will be tied  to the outcome and quality measures, with the goal of reaching 90% after that.

Sounds good, right? Quality over quantity is the idea otherwise, the doctor does not get paid.

Here’s where it appears that MACRA is not well thought out. It assumes that the doctor has full control of the patient’s compliance with his recommendations. Its baseline assumption is that if the doctor or healthcare provider just “worked a little harder”, the patient would adhere to all the doctors’ recommendation and outcomes will be significantly improved especially if the doctor’s reimbursement depended on it.

We all know this is not the case. Patients do not take the medications as prescribed, do not follow the dietary, exercise and lifestyle changes that are recommended. MACRA does not take this account What else does it not take into account? Quite a lot, actually , the financial resources of the patient to afford the co-pays for physical therapy and nutritional consults , education, family support resources  and most importantly , co-existing diseases. 

What if the patient is diabetic, cardiac issues or has other limiting conditions that will affect the outcome? This is the fatal flaw of MACRA. 

It lies at the feet of the doctor’s things he cannot control. It is also improbable that any law could take into account the myriad of factors that would affect outcome and quality data. Keep in mind, this data is made public and will affect every future referral.

 So, which doctor or practice stands to gain the most from this new payment structure?

Certainly, the practices that have a larger percentage of healthier patients with better financial, educational and family support resources and those that are the most compliant. 

The healthcare practitioner that will be hurt the most? Everyone else that does not have this demographic. 

What would be the perverse incentives that are built into the system? On elective cases, the doctor who would want to stay in practice and get paid would have to select healthier, less complicated patients. Sicker patients with low resources could have difficulty finding doctors locally to take care of them. Would there also be pressure on that family’s doctors to prescribe more pain medications for their patients because they cannot get the needed knee replacement.

What would be the eventual and long-term costs of these patients would deteriorate and then need much more intensive healthcare, along with the costs to society of a greater number of patients losing their independence and the ability to take care of themselves.

A study found that nearly 40% of physicians would expect to leave Medicare because of MACRA.

This would worsen the doctor-shortage crisis.

The increased burden of regulation, reporting, data collection and declining reimbursements along with the new payment structure and financial risks of factors sometimes beyond their control would make it more difficult for doctors to sustain their practice.

An alternative option of this new law is to get reimbursed by an APM [alternate payment method] such as an accountable-care organization. In this model, a group assumes the risk of the total costs of care. If they hit certain benchmarks they can share in savings. If the cost is higher than the benchmark, they are penalized. Unfortunately, over the years this type of arrangement has been mixed and the cost savings have not lived up to the hype.

Dr. Pawan Grover, MD, is an interventional specialist, who prides himself on being an advocate for patients. He believes in pulling back the medical curtain to explain how big medicine works, so patients can take the power of health care back into their own hands.  Dr. Grover has more than 20 years of experience as a medical doctor, has served as a medical correspondent for CNN, NBC, CBS and PBS.

He is a graduate of the UMDNJ- Robert Wood Johnson Medical School (Rutgers Medical School). He completed his residency at the Texas Medical Center, and did a special fellowship in Sydney, Australia with professor Michael Cousins who is considered the father of regional blockade and pain management for cancer and non-cancer pain. He has worked extensively with top neurosurgeons from MD Anderson Hospital in the Texas Medical center for cancer pain management. 


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