5 questions about SGR's replacement

Now that Congress finally repealed the long-hated Sustainable Growth Rate (SGR) payment formula, I'm curious to see what happens with its replacement. 

About the only benefit the SGR had going for it was its acronym, which sounds like the sporty trim level in a Toyota Corolla. SGR's replacement is officially known as the Medicare Access and CHIP Reauthorization Act of 2015, which is really about as sexy as a name for a Medicare payment process should ever get. Since its acronym, MACRA, sounds like something skiers wear to keep their elbows dry and warm, I will instead refer to it as the "New Guy," which is what office drones call a replacement for an employee who's been unceremoniously cashiered. 

Here are some questions I have regarding the SGR's replacement:

1. How will the New Guy work out? 
The SGR was so universally reviled by the provider community that it had been relegated to a "rubber room" as Congress instead trotted out modest payment increases year after year at the behest of the American Medical Association (AMA) and other provider lobbies. As a matter of fact, SGR was last employed in 2002--the one and only time it came to bat in its 18-year-career. Given that that led to a 4.8 percent cut in reimbursement, it was destined for bench-warming ignominy thereafter.

The New Guy comes with modest pay raises: 0.5 percent annual reimbursement increases until the end of the decade, at which point the law will prod providers to participate performance-based programs in order to save money for Medicare.

No one has expressed high hopes for the New Guy. The nicest comment so far is that he's bipartisan--the kind of label that can get you in deep trouble in flyover country. He's just the guy who's replacing the guy everybody hated. You know how this scenario works in the office: If he shows up and even appears to be working, everything will be fine. But if he does or says anything beyond that, all hell will break loose.

2. What are those new performance-based programs?
They will be part of the Merit-Based Incentive Payment System, which will go by the acronym  MIPS (perhaps a salty snack that never got past the focus group phase). MIPS really isn't anything new; it will replace and consolidate three existing programs: The Physician Quality Reporting System, the value-based payment modifier model and Meaningful Use for the deployment of electronic medical records. Oh, and other alternate payment mechanisms that could be developed in the future. If doctors don't participate, they may face a cut in reimbursement.

That's where the real squabbling lies. Expect a battle over how those alternate payment mechanism (APMs--ATMs for simians?) will take shape--and the AMA and other provider interests piping up if they think they will make then leave any money on the table. 

3. Will hospitals benefit financially?
A little. They have been buying up physician practices for the past several years, so it is certainly convenient for them to have the SGR issue finally fixed--if it had been allowed an at-bat this season, rates would have been cut more than 21 percent. If there are cuts in the future, hospitals are far better positioned financially to digest a whole bunch of MIPS than solo practitioners.

4. Does anybody vehemently object to the New Guy?
A few fiscally conservative conservatives. But given the New Guy was the hire of the AMA, the AHA and other well-heeled organizations who bankroll a lot of political candidates, expect muted criticism. Unless of course, the New Guy doesn't work out, at which point they will be loudly cheering on Congress to dump him. 

5. What happens next?
More acronyms probably (MAP). - Ron (@FierceHealth)

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