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Feds shut uncompensated care out of MACRA doctor pay regs

By Allison Bell

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The Centers for Medicare & Medicaid Services has made a Medicare reimbursement policy decision that could eventually have broad, hard-to-predict effects on the kinds of people who buy health coverage from insurance agents and brokers.

CMS says it wants to leave the impact of uncompensated care out of the calculations used in new types of “alternative payment models,” or APMs.

CMS is developing the new payment models to comply with Medicare doctor pay provisions in the Medicare Access and CHIP Reauthorization Act of 2015, or MACRA.

Related: View: Doctor-pay reform crawls at the speed of Medicare

Some physician groups asked CMS to make allowances in the new models for patients who fail to pay their bills, but CMS decided against doing that.

“We do not wish to downplay the financial impact of uncompensated care, but we believe that addressing such costs in the context of APMs is beyond the scope of this final rule,” CMS officials say in the introduction to a new batch of Medicare physician payment change final regulations. “We do not believe that such costs can be considered as financial risk under an APM in any systematic, quantifiable manner.”

CMS says it will gather public comments on the final regulations for 60 days before taking further action.

Implementation of the final regulations would have a direct, immediate effect only on Medicare physicians who get paid using the new APMs, but because Medicare is so big and has so much influence on how the rest of the U.S. health care system, the decision could eventually have an indirect effect on how Medicaid plans, individual commercial policies and even commercial group plans operate.

Dr. Jay Kaplan, president of the American College of Emergency Physicians, wrote in a letter sent to CMS in November that leaving the uncompensated care burden out of new types of Medicare reimbursement arrangements could hurt some types of physicians more than others.

Hospital emergency departments and emergency physicians, for example, “incur unique financial risks due to higher rates of uncompensated care,” Kaplan wrote at the time.

In theory, new Medicare pay rules that leave uncompensated care out of reimbursement arrangements could make specialties such as emergency care and urgent care less attractive, and specialties that give physicians more time to analyze incoming patients’ finances more attractive.

Congress created the MACRA Medicare physician payment fight to kill the old SGR payment fights. (Photo: Thinkstock)

Congress created the MACRA Medicare physician payment fight to kill the old sustainable growth rate payment fights. (Photo: Thinkstock)

Out with SGR, in with APMs

Physicians provide some uncompensated care because they consciously agree to treat uninsured or underinsured patients for free.

In other cases, patients get uncompensated care when the patients are unwilling or unable to pay their out-of-pocket costs, and physicians are unable to use lawsuits or other means to get cash from the patients.

Private health plans have been increasing patients’ out-of-pocket costs to discourage patients from getting unnecessary care and to hold down the cost of the claims that are paid. Congress has pushed Medicare managers to follow suit. Some hospitals have reported seeing signs that, because of the increase in what health policy specialists call the “patients’ skin in the game,” consumers are having more paying their share of the bills.

Related: Health plan coverage gaps give hospitals sunburn

Members of Congress drafted MACRA in an effort to replace an unpopular Medicare provider reimbursement provision that was created by the Balanced Budget Act of 1997.

In 1997, Congress tried to hold down Medicare spending by holding increases in Medicare physician reimbursement rates to the same level as growth in U.S. gross domestic product. Whenever any GDP-related changes in physician pay were set to take effect, medical societies pushed Congress to postpone the adjustments.

In 2015, Congress replaced the old 1997 sustainable growth rate cost-containment strategy with a provision requiring CMS to come up a new Medicare physician payment strategy that would reduce reliance on the old fee-for-service payment approach.

Congress told Medicare managers to tie physicians’ pay to success at efforts to hold down the cost of care and improve the quality.

For commercial health insurers, any efforts by the giant Medicare or Medicaid programs to exclude costs from reimbursement arrangements could increase claim costs, by pushing providers to try to shift the costs public program enrollees fail to pay into the bills of commercial plan enrollees.

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