Medicare Makes Far-Reaching Change to Payments

(CBS NEWS) Medicare on Friday unveiled a far-reaching overhaul of how it compensates doctors and other clinicians. The goal is to reward quality, cost-effective care instead of just paying piecemeal for services.

The legislation is bringing about one of the biggest changes in Medicare's 50-year-history.

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

Whether it succeeds or fails, it’s one of the biggest changes in Medicare’s 50-year history.

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

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. The administration will continue to accept comments, and Slavitt signaled openness to fine tuning.

MACRA, the Medicare Access and CHIP Re-authorization Act, creates two new payment systems, or tracks, for clinicians. The majority of medical professionals who bill Medicare - some 600,000 doctors, nurse practitioners, physician assistants and therapists - are affected. Medical practices must decide next year what track they will take.

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

About 100,000 clinicians are expected to initially take that track, which is more challenging. Officials are hoping that number will quickly grow.

Another 400,000 to 500,000 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.

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 actually been streamlined to make them easier to meet.

With 57 million beneficiaries, Medicare is the government’s premier health insurance program. 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.

Medicare’s previous congressionally mandated system for paying doctors 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.

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