The two strongest external forces for creating value are aligned incentives and competition. As the largest payer of health care in the world, the federal government is in a unique position to promote both. With the incoming Baby Boomer generation putting continued fiscal pressure on Medicare, creating greater value in health care is imperative to Medicare. How CMS sets up the new payment system under the MACRA law is critical to accelerating the transition from volume to value. As CMS considers the final rules for how to implement this law, we believe that there is an opportunity to use this new payment structure to increase aligned incentives for small physician practices and foster robust competition among health care providers. Both are critical to hasten the move of eligible clinicians out of fee-for-service and into advanced alternative payment models (AAPMs), a goal that the drafters of MACRA, the President, and many in health care agree on.

Of course, aligning incentives and fostering competition can conflict. Yet, one thing both goals have in common is the centrality of the independent, primary care physician practice. Responsible for a patient’s overall health and health spending, primary care doctors play a critical frontline role in controlling spending and delivering care[i]. In such a world, the independence of primary care physicians is important because any pressure to serve a larger health care system could run counter to these goals. These physician-led ACOs may lack the capital and resources of their hospital-owned brethren. However, they have the ability to act more nimbly with no internal conflicts between a business model predicated on hospital admissions, and a different one based on preventing them[ii]. This is why it is essential that independent primary care physicians are supported, not squashed, by these new rules.

To both move every physician who is ready towards aligned incentives and to foster competition, we encourage CMS to evaluate the MACRA implementation using these principles:

  • With nearly 50 percent of eligible clinicians still in small practices, health care organizations of all sizes must see themselves in AAPMs. Specifically, for MACRA implementation, the level of financial risk needs to be more than nominal as it relates to the organization, otherwise CMS policies will inevitably favor one type of organization over another.
  • Competition plays a key role in value creation even in health care. This is particularly true in the private health insurance market in which CMS now is a major participant through the Exchanges. CMS along with the FTC and DOJ must be vigilant in preserving competition.
  • Beneficial network integration does not have to be sacrificed to preserve competition. Through health information technology and aligned incentives, independent health care organizations can come to together to create beneficial networks that do not rely on hierarchical ownership structures. These groups go by many names — such as accountable care organizations, conveners, or virtual groups. CMS should support the concept that clinicians can be integrated in their delivery of health care without being in the same corporate structure.

In particular, if CMS creates AAPMs that favor larger organizations, further consolidation will occur, thereby eroding competition. The goal should be that no one will be able to claim that “MACRA forced me to consolidate.” To ensure this does not happen CMS should

  1. Define “more than nominal financial risk” such that smaller practices are motivated but do not face an existential threat. We propose basing financial risk on the participating APM Entity’s Part A and B Medicare revenue, and a pathway for making it available in time for 2019 payments.
  2. Allowing independent practices to come together in “virtual groups” now for all aspects of MIPS reporting, and rewarding their clinical practice and health IT advances as they work towards participation in APMs (like gain share only ACOs) and on to AAPMs.
  3. Providing administrative flexibility for these small businesses by comparing their performance under MIPS to that of their peers by practice size.

By making these small, but important, changes to the implementation of MACRA, we believe that CMS will create a path for independent practices to thrive, deliver high quality care, and reduce costs. This will benefit patients, doctors, and the health care system overall.[iii]

[i] Mostashari F, Sanghavi D, McClellan M. Health Reform and Physician-Led Accountable Care: The Paradox of Primary Care Physician Leadership. JAMA. 2014;311(18):1855-1856. doi:10.1001/jama.2014.4086.

[ii] The Paradox of Size: How Small, Independent Practices Can Thrive in Value-Based Care Ann Fam Med January/February 2016 14:5-7; doi:10.1370/afm.1899

[iii] J. Michael McWilliams, M.D., Ph.D., Laura A. Hatfield, Ph.D., Michael E. Chernew, Ph.D., Bruce E. Landon, M.D., M.B.A., and Aaron L. Schwartz, Ph.D. N Engl J Med 2016; 374:2357-2366 June 16, 2016 DOI: 10.1056/NEJMsa1600142