GAO Report to Congress: New Medicare Payment Models Prove Frustrating for Small Practices

Dec. 13, 2016
A review of literature and CMS documents by the Government Accountability Office has identified various challenges faced by small and rural physician practices when participating in Medicare's new payment models.

A review of literature and Centers for Medicare & Medicaid Services (CMS) documents by the Government Accountability Office (GAO) has identified various challenges faced by small and rural physician practices when participating in Medicare's new payment models.

As the 39-page GAO report to Congress stated, in recent years, CMS has used its authority to develop and implement value-based payment models in which providers may receive additional payments for providing high-value care based on quality and cost metrics designed for each model or be financially penalized for care that does not meet certain standards. To this end, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) included a provision that GAO examine organizations that can assist small physician practices with participation in these models.

As such, this latest GAO report describes (1) stakeholders' perspectives on the challenges faced by small and rural physician practices when trying to participate in Medicare value-based payment models; and (2) the types of organizations that help these practices participate, and the activities they conduct. GAO defined small and rural practices as those with 15 or fewer physicians and those located outside of an urban area, respectively. And to address the objectives, GAO reviewed literature and CMS documents on value-based payment models and interviewed 38 stakeholders, including CMS, providers, and organizations that assist with value-based payment models.

In the report, GAO researchers broke down challenges that small and rural physician practices face when participating in value-based care models into five key categories: financial resources and risk management; health IT and data; population health management care delivery; quality and efficiency performance measurement and reporting; and effects of model participation and managing compliance with requirements.

Regarding the financial/risk challenge, GAO found that practices may lack financial resources needed to make initial investments, such as those to make electronic health record (EHR) systems interoperable, and that recouping investments may take years. One stakeholder told the researchers that most small practices are on a month-to-month budget and have small profit margins. A stakeholder from a physician practice added that it cost about $20,000 for the group to connect two EHR systems, which would be the same cost for a small or large practice.

For the health IT and data challenge, one small physician practice stakeholder touched on interoperability issues, noting that the practice has had difficulties accessing the results of tests conducted in an outside lab because the lab scans rather than types the test results into its system. The stakeholder said that the practice is working with its EHR vendor to address the problem but that he suspected the vendor may be less concerned about the practice’s challenges because the practice is small. This stakeholder added that challenges like this one are far too common amongst rural healthcare practices.

What’s more, stakeholders indicated that physician practices’ ability to succeed in value-based payment models can be hindered by the preference and location of patient populations. For example, one stakeholder stated that physicians may have difficulty getting patients to complete wellness visits or other activities necessary for them to stay healthy. This is especially relevant for rural physician practices, as some patients in rural areas may have to travel long distances for wellness care or care from specialists, which can influence how often they actually seek such care.

One stakeholder also said that under a bundled payment model, practices are responsible for costs during an entire episode of care, but practices cannot influence where the patient receives post-acute care, which could affect the total cost of patient care. Additionally, another stakeholder said that it can be difficult to engage patients using technology. This accountable care organization (ACO) has tried to manage patients’ post-acute care by communicating with patients through a technology system. However, the effectiveness of the system has been limited because some patients do not want to use it, preferring to speak with their physician directly, according to the report.

Regarding quality reporting, one stakeholder who works within an ACO noted a challenge that there are 58 unique quality measures across all the payers he works with. This could lead to burdensome reporting as Medicare value-based payment models are not well-aligned with those used by commercial payers, and even if payers have similar quality measures, there may be slight variations in their calculation.

Further, many small and rural practices now feel pressure to join other practices or providers (such as a hospital or health system) to navigate these models even if the practices would prefer to remain independent. One stakeholder said that physicians are often busy seeing patients throughout the day and are unable to complete administrative tasks, such as attending meetings. And, practices that want to add staff may also face challenges, such as finding qualified staff that are experts within their field and that understand the requirements associated with value-based payment models.

As the report stated, in the final MACRA rule, CMS said that protection of small, independent practices was an important thematic objective and that in performance year 2017 many small practices will be excluded from the new MIPS (Merit-Based Incentive Payment System) requirements due to the low-volume Medicare threshold. Federal officials also said MACRA will provide $20 million each year for five years to train and educate Medicare clinicians in small practices of 15 clinicians or fewer and those working in underserved areas. Beginning December 2016, local, experienced organizations will offer free, on-the-ground, specialized help to small practices using this funding. And starting in 2018, “virtual group” reporting will allow small practices to be assessed as a group across the four MIPS performance categories.

According to the stakeholders GAO interviewed, organizations offer a variety of services that can help small and rural physician practices with challenges to participating in Medicare's value-based payment models, but there is the issue that not all small and rural practices are able to access these services. Organizations include group practices, private companies, nonprofit groups, and universities. GAO grouped the organizations that can assist into two categories: partner and non-partner organizations. Partner organizations share financial risk associated with model participation and provide comprehensive services that can mitigate challenges. These services may include sharing resources, such as data systems and care management staff, and conducting analysis to manage patient care. Non-partner organizations do not share financial risk but provide specific services that can help with certain challenges, such as health IT and data challenges.

However, not all small and rural practices have access to organizations and the services they provide, GAO found. For example, some partner organization stakeholders told GAO that they are selective about the practices they will form partnerships with. Further, some stakeholders said that small and rural practices may have limited financial resources that prevent them from hiring the organizations that could best assist them with participation.