MACRA, Non-Adherence Shaping Medtech Reimbursement — For Now

By Edward Black, founder and principal, Reimbursement Strategies

The Medicare Access and CHIP (Children’s Health Insurance Program) Reauthorization Act of 2015, commonly known as MACRA, permanently repealed the Sustainable Growth Rate (SGR). 

The SGR had been used to limit the annual growth rate in Medicare payments to physicians under the traditional fee-for-service model. Every year, the SGR threatened to reduce physician payments by about 2 percent. Every year, Congress waived the SGR reduction, until the cumulative reduction reached 21 percent in 2015. Such a huge reduction would not have been tolerated by the medical community, nor did Congress have the political will to pull the trigger on such an onerous physician payment cut.  Now, in lieu of SGR, physicians have MACRA.

Rather than institute large percent payment cuts under the fee-for-service model, in which providers are paid for the volume of services and care they provide, MACRA established a new payment model: the Quality Payment Program.  In this payment model for 2017, providers submit patient care quality data, as well as information on the practice’s use of technology to further patient care, which includes improvements in coordinating care. Following feedback from the Centers for Medicare and Medicaid Services (CMS), the practice may receive up to a 5 percent incentive payment in 2019, depending on its level of participation. 

MACRA expands on the concept of paying for quality patient care, rather than quantity of care, which was fundamental to the fee-for-service model. MACRA also increases the efficiency of care provided, and controls healthcare costs within provider payment models.

The Quality Payment Program provides two different paths for provider participation:

• Merit-based Incentive Payment System (MIPS) – A performance-based adjusted payment for healthcare providers, including physicians, physician assistants (PA), nurse practitioners (NP), clinical nurse specialists (CNS), pharmacists, and certified registered nurse anesthetists (CRNA).  Beginning in 2017, MIPS is a way for providers to demonstrate they provide high-quality and efficient care, supported by technology, in four categories.  The payment incentive is based upon quality measures over 12 months.

1. Quality (Implemented as of 2017) — Replaces the Physician Quality Reporting System (PQRS), equals 50 percent of incentive payment.
2. Improvement Activities (2017) — New category, equals 15 percent of incentive payment.
3. Advancing Care Information (2017) — Replaces Electronic Health Record (EHR) Incentive and Meaningful Use, equals 25 percent of incentive payment.
4. Cost (2018) — Replaces Value Based Payment Modifier program (Value Modifier), equals 10 percent of incentive payment.

• Advanced Alternative Payment Model (APM) — Provides incentive payment for participation in an innovative payment method.  Participating physicians who receive 25 percent of Medicare payments, or see 20 percent of Medicare patients through an Advanced APM in 2017, can earn a 5-percent incentive in 2019 and 2020. This incentive would change to + 7 percent in 2021 and + 9 percent in 2022

An example of an Advanced APM is the Next Generation Accountable Care Organization (ACO).   The 45 Next Gen ACOs will have three years during which their performance will be measured, and two opportunities for one-year extensions.  The Next Gen ACOs will examine best practices to coordinate care for patient populations and improve the patient experience, providing better care for individuals and better health for populations, all while lowering the growth of healthcare expenditures.  Next Gen ACO goals are to set and attain predictable financial targets, to enable providers’ and patients’ participation in care coordination, and to attain higher quality care.  The incentive is a share in healthcare cost savings.

Next Gen ACOs will be assisted in meeting these goals through means including:

• Expanding telehealth, so its use is not limited to rural areas and Medicare beneficiaries can receive telehealth communications within their own homes.
• The Post-Discharge Home Visit Waiver allows another qualified healthcare professional, rather than a physician, specifically, to visit the patient up to two days in the 30 days post-discharge.
• Three-Day Inpatient Stay Waiver will allow admissions to a Skilled Nursing Facility (SNF) from sites other than an inpatient hospital, such as directly from the patient’s home, physician office, or a hospital in which the patient has stayed less than a three consecutive days.

Now, how do all of these programs affect medical device development?  MACRA has been highly touted as a guide for leading the development of new devices, particularly in the fast-emerging connected health industry. This industry holds great promise for more fully engaging patients, improving medical decision-making, and enhancing the cost-effectiveness of care.

But, new payment models will challenge some historical constructs, including clinicians’ ability to choose preferred devices or companies.  One can imagine Next Gen ACOs continuing moves to standardize the equipment, procedures, and technology in use across their care delivery system.  Technology Evaluation Committees will not only evaluate medical devices on the usual parameters of safety and effectiveness, but will closely examine cost and value.  

However, device and technology companies need to understand these dynamics without putting all of their eggs in the MACRA basket.  Much of MACRA could go away with the new American Health Care Act, or whatever survives out of Washington.  And, its demise could come with lots of physician support.

MACRA is the most sweeping initiative of the past several years, and was seen as instrumental in rewarding doctors for high-quality, low-cost care. The Affordable Care Act (ACA) and MACRA were designed with very little physician input, and we’re seeing the same with new administration initiatives.  Much of care quality and cost is compromised by patient non-adherence — either because the patients don’t understand, don’t agree, or can’t afford continuing care (think of patients who cut back on their prescription, or fail to show up for physical therapy or follow-up physician appointments). 

Empowering patients with more information through connected health devices should make us better healthcare consumers, but also sets us up with information that might conflict with physician treatment recommendations or established clinical protocols. How is healthcare affected when patients start thinking they know better than their doctors? Doctors don’t like to be at financial risk to begin with; patient non-adherence, spurred by better access to information, could make their ability to manage cost and quality even more challenging, and less rewarding professionally.

However, Mark Egan (University of Minnesota) and Tomas Philipson (University of Chicago) — professors of finance and public policy, respectively — postulate that some non-adherence is good for clinical results. To paraphrase Dr. Archelle Georgiou, an Executive in Residence at UM’s Carlson School of Management, physician recommendations are based on, “Does this medication or treatment work?” Patient adherence behavior is based on, “Does this medication or treatment work for me?”  Patients will use individual experience to guide adherence by considering the clinical efficacy of medications and treatments, as well as their side effects, costs, inconvenience, and impact on quality of life. 

Egan and Philipson demonstrated that, among non-adherent patients, those who cease effective medication cause the industry far less in financial losses than patients who unquestioningly follow prescribed treatments, regardless of those treatments’ efficacy.  How will connected health and the movement to supplant drugs with devices (i.e., electroceuticals) affect the relationships between patients, healthcare providers, and preferred treatments and systems?

We continually remind the device industry that the biggest barriers to new product coverage by health plans are the requirements that, a) the technology must be as beneficial as any established alternatives, and b) the improvement must be attainable outside the investigative setting (Blue Cross Blue Shield Association Technology Evaluation Criteria #4 and #5).  Much of this is driven by non-adherence.  Medical device manufacturers need innovative strategies to stay relevant in this era of quality-based provider payment, within the context of a health care economy under continually increasing financial strain.