On 2016 Oct 29, David Keller commented:

Why MACRA seems unlikely to reduce costs or improve the quality of medical care

The Centers for Medicare and Medicaid Services (CMS) recently released nearly 2400 pages of new regulations, comprising the "Medicare Access and CHIP Reauthorization Act" (MACRA). The acronym "MACRA" actually contains another acronym within it (an homage to Kafka?), "CHIP", for Children's Health Insurance Program. New regulations introduced by MACRA mandate fundamental changes in the way doctors are paid and how they provide medical services. The following is but a partial description:

1) The main purpose of MACRA is to reduce the cost of Medicare, after the failure of the Sustainable Growth Rate (SGR) law to do so. However, the demand for real medical services, such as hernia repairs, cataract extractions, colonoscopies, skin biopsies, chemotherapy, etc., will continue to grow, while MACRA will funnel out money to clinicians for endless reports on quality metrics, and to entrepreneurs, for participating in risk-sharing ventures. Diversion of scarce CMS funds away from direct clinical care services can only worsen the looming Medicare financial collapse, and the entrepreneurs are likely to get the best of the risk-sharing ventures.

2) CMS states that physician quality-of-care bonuses will be financed with fines obtained from other doctors, however this "zero sum" financial balance is only achieved in a static model. The losers in this system, who will sustain fines that substantially reduce their Medicare reimbursements, will have their already-thin operating margins cut further, and many may decide to stop accepting Medicare. As they drop out, physicians farther up the "quality of service" food chain will see their quality score percentile ranks diminish in turn, creating a vicious cycle of [increasing fines] >>> [reduced net payments] >>> [physician dropouts] >>> [increasing fines]. Thus, in the dynamic model, fines cannot finance bonuses because doctors who pay fines will be more likely to drop out of the system, eliminating themselves as a source of funds to pay for bonuses.

3) MACRA seems designed to nurture a cohort of doctors who excel at tasks like reporting patient satisfaction surveys, and reducing costs by not performing clinical services. The demand for clinical services will not go away, however, and if paying for required medical services is causing Medicare losses, these losses can only worsen when the cost of running the MACRA bureaucracy is piled-on.

4) The original fee-for-service Medicare system is preferred by both doctors and patients, partly due to the choices and autonomy it allows for both patients and doctors. Fee-for-service also aligns the interests of the patient, who wants to receive the best medical care appropriate for his condition, with those of the physician, who wants to earn a living by providing medical care. The problem, of course, is costly overtreatment, but this is well-policed by CMS, and by the natural reluctance of patients to undergo procedures. When working for capitated fees, physicians are incentivized to provide less care, which can result in undertreatment, a far more dangerous and insidious situation, and harder to police. How will CMS guard against physicians becoming too parsimonious with their capitation money, and doing too little for their patients?

5) MACRA was implemented nationwide too quickly, rather than studied, debated and rolled out slowly. Physicians were given 2 months to study the final MACRA document during the public comment period, requiring them to read 40 pages of dense regulatory language per day, every day, during that period. Such massive changes require sufficient time to fully educate doctors about their effects. We await evidence that these measures actually reduce costs or increase quality of care.

In summary, MACRA will increase spending on non-clinical activities, worsening the financial status of Medicare. MACRA is overly intrusive in dictating how doctors should practice medicine, basing physician incentives on their performance of incentivized services, which may not be relevant or beneficial in some individuals or subpopulations. MACRA introduces capitation to original Medicare, a payment system which disincentivizes clinical services by making them an expense to the physician, rather than a source of income. Based on the above considerations, MACRA seems unlikely to improve either the financial prospects or the clinical quality of Medicare.

On 2016 Oct 29, David Keller commented:

Why MACRA seems unlikely to reduce costs or improve the quality of medical care

The Centers for Medicare and Medicaid Services (CMS) recently released nearly 2400 pages of new regulations, comprising the "Medicare Access and CHIP Reauthorization Act" (MACRA). The acronym "MACRA" actually contains another acronym within it (an homage to Kafka?), "CHIP", for Children's Health Insurance Program. New regulations introduced by MACRA mandate fundamental changes in the way doctors are paid and how they provide medical services. The following is but a partial description:

1) The main purpose of MACRA is to reduce the cost of Medicare, after the failure of the Sustainable Growth Rate (SGR) law to do so. However, the demand for real medical services, such as hernia repairs, cataract extractions, colonoscopies, skin biopsies, chemotherapy, etc., will continue to grow, while MACRA will funnel out money to clinicians for endless reports on quality metrics, and to entrepreneurs, for participating in risk-sharing ventures. Diversion of scarce CMS funds away from direct clinical care services can only worsen the looming Medicare financial collapse, and the entrepreneurs are likely to get the best of the risk-sharing ventures.

2) CMS states that physician quality-of-care bonuses will be financed with fines obtained from other doctors, however this "zero sum" financial balance is only achieved in a static model. The losers in this system, who will sustain fines that substantially reduce their Medicare reimbursements, will have their already-thin operating margins cut further, and many may decide to stop accepting Medicare. As they drop out, physicians farther up the "quality of service" food chain will see their quality score percentile ranks diminish in turn, creating a vicious cycle of [increasing fines] >>> [reduced net payments] >>> [physician dropouts] >>> [increasing fines]. Thus, in the dynamic model, fines cannot finance bonuses because doctors who pay fines will be more likely to drop out of the system, eliminating themselves as a source of funds to pay for bonuses.

3) MACRA seems designed to nurture a cohort of doctors who excel at tasks like reporting patient satisfaction surveys, and reducing costs by not performing clinical services. The demand for clinical services will not go away, however, and if paying for required medical services is causing Medicare losses, these losses can only worsen when the cost of running the MACRA bureaucracy is piled-on.

4) The original fee-for-service Medicare system is preferred by both doctors and patients, partly due to the choices and autonomy it allows for both patients and doctors. Fee-for-service also aligns the interests of the patient, who wants to receive the best medical care appropriate for his condition, with those of the physician, who wants to earn a living by providing medical care. The problem, of course, is costly overtreatment, but this is well-policed by CMS, and by the natural reluctance of patients to undergo procedures. When working for capitated fees, physicians are incentivized to provide less care, which can result in undertreatment, a far more dangerous and insidious situation, and harder to police. How will CMS guard against physicians becoming too parsimonious with their capitation money, and doing too little for their patients?

5) MACRA was implemented nationwide too quickly, rather than studied, debated and rolled out slowly. Physicians were given 2 months to study the final MACRA document during the public comment period, requiring them to read 40 pages of dense regulatory language per day, every day, during that period. Such massive changes require sufficient time to fully educate doctors about their effects. We await evidence that these measures actually reduce costs or increase quality of care.

In summary, MACRA will increase spending on non-clinical activities, worsening the financial status of Medicare. MACRA is overly intrusive in dictating how doctors should practice medicine, basing physician incentives on their performance of incentivized services, which may not be relevant or beneficial in some individuals or subpopulations. MACRA introduces capitation to original Medicare, a payment system which disincentivizes clinical services by making them an expense to the physician, rather than a source of income. Based on the above considerations, MACRA seems unlikely to improve either the financial prospects or the clinical quality of Medicare.