MACRA’s Quality Payment Program and the “Goldilocks Problem” in Federal Healthcare Policy

July 5, 2017
The release this week of the proposed rule for 2018 for the Quality Payment Program under MACRA has fueled a full spectrum of reactions from industry leaders. Are federal healthcare officials getting it “just right” in terms of the levels of rigor built into the program?

All of us have heard the fairytale of “Goldilocks and the Three Bears.” The Wikipedia entry on it has a good plot summary, with lots of interpretations of the myth. In any case, as Wikipedia notes, referencing the version of the tale published in Britain in 1837 by English writer and poet Robert Southey, the story goes like this: "A little girl named Goldilocks, goes for a walk in the forest and comes upon a house where she enters and finds to her delight three bowls of porridge. The first one she tastes is too salty, the next too sweet, but the third one just right so she eats it all up. Goldilocks finds the three different size chairs where she tries them out and finds the first one too high, the next too low, and then the little one just right but it breaks when she sits in it. As she wanders in the home she finds three beds and tries them out. The first bed is too hard, the next too soft but the third is just right and she curls up and falls asleep. Meanwhile the owners come home who happen to be three bears, Papa, Mama and little baby bear. Much to their surprise they discover the outcome of what Goldilocks has done to their porridge, chairs and finally their beds. Goldilocks wakes with a fright when she sees and hears the bears; she jumps from the bed and runs away as fast as she can.”

The Wikipedia entry on “Goldilocks” also offers some fascinating interpretations of the fairytale’s meaning. But for our purposes, let’s focus here instead on the idea of the “just-right measure.” Is the porridge too salty or sweet, or just right? (Most of us grew up with the idea of the porridge being too hot, too cold, or just right, but you get the idea.) Is the chair too high, too low, or at just  the right  height? Is the bed too hard, too soft, or at just the right level of firmness?

The Goldilocks story absolutely sprang to mind for me this week, as officials at the federal Centers for Medicare and Medicaid Services (CMS) on Tuesday afternoon released the proposed rule for 2018 with requirements for providers under what will be the second year of the Quality Payment Program (QPP) under the MACRA (Medicare Access and CHIP Reauthorization Act of 2015) law. The proposed rule, at 1,058 pages in length, is the first major update to MACRA since January, when a new presidential administration was put in place, while the MACRA final rule concretely launching the program had released in October, just a few months before the first reporting year of the QPP—inclusive of two payment paths that eligible Medicare-participating physicians could partake in—MIPS (the Merit-based Incentive Payment System) and the advanced alternative payment models (APM) track—was set to begin in January 2017.

As our team of editors has reported, there has been a full spectrum of reactions to the content of the proposed rule, with regard to some of the core incentives for physicians that are embedded into it—leaders of the Alexandria, Virginia-based AMGA (American Medical Group Association), for example, are seeing unfairness in it, in that they see the work that the leaders of the most innovative medical groups are doing to shift quickly towards value, being insufficiently rewarded—while on the other end of the spectrum, leaders at the Englewood, Colorado-based MGMA (Medical Group Management Association) are expressing concerns that, even with some of the adjustments made to how CMS will calculate rewards and penalties under the QPP, many physicians in the smaller and smallest practices could be heavily penalized within the next two years.

Meanwhile, there were widespread reactions of relief over the fact that, under the proposed rule, even in 2018, the use of 2015-certified electronic health record (EHR) technology would remain optional rather than mandatory, easing major concerns among physicians, hospital executives, and vendors, over the pace of change in terms of IT-related requirements. Advocacy leaders for both HIMSS (the Chicago-based Health Information and Management Systems Society) and CHIME (the Ann Arbor, Michigan-based College of Health Information Management Executives expressed great relief over that element of the proposed rule, even as they reflected on the broad direction of the QPP and of MIPS and MACRA more broadly.

And that is where the story of Goldilocks and the Three Bears comes in. Because, really, at a fundamental level, one of the core questions facing practicing physicians, medical group leaders, and healthcare IT and clinical informatics leaders, clinician leaders, and executive leaders in hospitals and health systems, is this: as the MACRA law evolves forward, will its requirements and mandates be paced at just the right pace and intensity to stimulate clinical transformation, improved  patient outcomes and satisfaction, and bending of the healthcare cost curve, at just the right pace? Because if federal healthcare officials attempt to move things forward too quickly, they could face both intense struggles on the part of practicing physicians in terms of fulfilling both the process-related and data- and technology adoption-related requirements, as well as potentially even open revolt in the medical profession. On the other hand, moving too slowly would fail to bend the cost curve, at a time when the U.S. healthcare system, according to the latest estimates by the Medicare actuaries, is set to increase in overall cost by up to 70 percent within the next decade; clearly, that is an unsustainable pace of healthcare system cost increase. And it is primarily through the gigantic lever of the Medicare program that the federal government can exert pressure on providers to move forward, as needed.

So, is the porridge too salty or sweet, or alternatively, too hot or too cold—or are its flavor and temperature “just right”? And how about those rocking chairs? Too high, too low, or at just the right height? What about the bed? Too hard, too soft, or at just the right level of firmness? Fundamentally, what CMS officials are doing is attempting to carefully calibrate and manipulate all the levers within the big lever of the Medicare program, to achieve just the right level of achievable change within physician practice, around both the clinical and financial outcomes pieces of physician practice, and also around the use of information technology to support improvement in those clinical and financial outcomes in medical practice. And getting things “just right” is going to pose an ongoing set of conceptual and practical challenges for CMS officials, as they try to shepherd forward hundreds of thousands of physicians practicing across a kaleidoscopically broad spectrum of practice environments.

There’s yet another key element here, too, and that is the zero-sum game element built into the MACRA law itself. As Tom Lee, Ph.D., CEO of the Chicago-based SA Ignite consulting and software services firm, said of the reimbursement system built into the QPP under MACRA, “It’s a competitive system, and winners will be paid by losers. And there’s about a 2.9 percent maximum incentive estimated for 2018. And that incentive could actually go substantially higher if it turns out that the actual number of people who participate is only 10 percent lower than the number who participate. Also, they’ve repeatedly said that the 2019 performance year is locked into the legislation,” so that in 2019, the law will necessarily require physicians to be measured—and paid—against a system of national average-based performance measurement. And that adds a huge element of promise/threat for Medicare-participating physicians going forward. Unlike under previous quality-based incentive systems, this one really is a zero-sum system. For every physician who receives a bonus, another physician will receive a penalty. And that changes everything, particularly since it raises the stakes immeasurably.

As Doug Fridsma, M.D., Ph.D., president and CEO of AMIA (the Bethesda, Maryland-based American Medical Informatics Association), put it to us, when asked about the Goldilocks analogy, “Well, you know, we’ve never been to Grandmother’s house! Is it too hot, too cold, or just right? We don’t really know. We could always speculate about whether they did too much or not enough” in how this proposed rule was crafted, Fridsma told us. “But we have to recognize that we’re moving in this direction for the first time. And to what extent are the measures process-based or outcomes-based? Do we even have the right thermostat?? I think it’s hard to say.”

What’s more, Fridsma told us, “Given the regulatory climate and where we are, we’ve got to make sure that whatever we do is put in place to help the patient and to improve healthcare. That’s ultimately the only thing that matters, with regard to being too hot or too cold.”

I think that Doug Fridsma has got this just right. The question will be, and will remain for years, are CMS officials getting it right, in terms of the overall level of rigor built into the Quality Payment Program, as it evolves forward? If the porridge turns out to be too hot, we’ll all (or at least most will) get burned; but if it’s too cool, the pace of change will be insufficient to stave off U.S. healthcare system disaster around financial viability. So really, the stakes couldn’t be higher.

And only time will tell. But healthcare IT leaders will have an enormous stake in all of this, particularly as physicians massively flee into employment and pseudo-employment arrangements, given the significant increase in data collection, data reporting, technology adoption, and care delivery processes changes being mandated under the QPP. One thing’s for sure: the next few years will be fascinating for physicians, medical group leaders, hospital and health system leaders, and healthcare IT leaders. And we’ll be wanting to check firmness and temperature all along the way, going forward. So stay tuned, because this tale will only become more and more interesting over time.

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