Oops We Did It Again for Too Little Payment By Design

The one major problem that has faced primary care for the past three decades has been cost of delivery rising faster than payment. Each "fix" has not really been a fix as steadily fewer enter and remain in primary care from all six sources. 

MACRA is the new design and CMS has already projected the impact for decades. Here is what the Chief CMS Actuary says in his April 9, 2015 report:


"While H.R.2 avoids the significant short-range physician payment issues resulting from the current SGR system approach, it nevertheless raises important long-range concerns that would  almost certainly need to be addressed by future legislation. In particular, additional updates totaling  $500 million per year and a 5 percent annual bonus are scheduled to expire in 2025, resulting in a payment reduction for most physicians. In addition, this bill specifies the physician payment update amounts for all years in the future, and these amounts do not vary based on underlying economic conditions, nor are they expected to keep pace with the average rate of physician cost increases. The specified rate updates would be inadequate in years when levels of inflation are higher or when the cumulative effect of price updates not keeping up with physician costs becomes too large. We anticipate that physician payment rates under H.R.2 would be lower than scheduled under the current SGR formula by 2048 and would continue to worsen thereafter.  Absent a change in the method or level of update by subsequent legislation, we expect access to Medicare-participating physicians to become a significant issue in the long term under H.R. 2."  

Temporary Fixes
  • The initial Medicare and Medicaid design initially was a great boost to primary care and care where needed. In a few years the design proved insufficient to keep up with staggering inflation, malpractice, personnel, and other costs in the 1980s. 
  • The RBRVS fix in the 1990s was also short lived. 
  • SGR left all physicians hanging under the Sword of Damocles - so much so that anything seemed tolerable. 
  • The MACRA gets away from SGR, but whether it is a fix is questionable.
  • Note that the actual payment process has yet to be determined and this could be powerful in who survives and who thrives, but much will happen in the next ten years and MACRA does not have the flexibility.
MACRA Appears To Be Just What the Doctor Ordered

That is for those doing well in the largest and most organized practices that have the most advantaged patients.

For the smallest practices where care is most needed, MACRA will pay less.

Discrimination By Design

Readmission penalties and Pay for Performance cannot help but pay less where care is more complex and most needed. The same social determinants, situations, and conditions that have shaped shortages of clinicians and access barriers also shape lesser outcomes. Lesser pay will add insult to injury. 

It is most likely that MACRA will join Medicare Advantage as paying more for the care of populations that have advantages. Populations in need of care are left behind by MACRA and populations in smaller and less organized settings cannot access the favored payment plan - Medicare Advantage. The new designs do not work well for small hospitals, small practices, and care where needed. Lack of awareness continues to add consequences by design.

Accelerating Recruitment and Retention Costs

Where care is needed, there are more storm clouds. Even if patchwork programs survive, primary care delivery faces more problems. Insufficient payment is a primary reason for the rapidly rising cost of recruitment and retention bonuses, locums payments, broker fees, consultant costs, and other special programs.

A major consequence of insufficient payment is greater turnover of the teams and clinicians to deliver the care. The costs of turnover now include learning new software and other applications. There is little encouraging about the most important determinants of primary care at the current time.

SGR has been defeated. Congress did get a payment plan through. But more than two miracles are needed to recover primary care delivery capacity.


Variation in the Ecology of Health Care

Revisiting Physician Distribution by Concentration Coding

Ecology of Health Care for a Disadvantaged Population - Native Americans

Perverse Health Payment Dividing US - More for Fewer and Less for More, and Penalties for Those Caring for Those Most in Need

Open Season Upon Small Health Care

Improving Health Care is Not Likely for 2600 Counties

Global Fails Local But Local Focus Succeeds Globally

Domino Decline By Design - as ERs Close, Those Nearby Face Challenges, as Small or Rural Hospitals Close or Practices Where Needed...


Blogs indicate that primary care can be recovered and should be recovered.

Dr. Bowman is the North American Co-Editor of Rural and Remote Health. He was the founding chair of the Rural Medical Educators Group of the National Rural Health Association and the long term chair of the STFM Group on Rural Health.

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