Hospitals could experience $250 billion decrease in reimbursement under MACRA

Hospital reimbursement from Medicare could potentially decrease by $250 billion over a 15-year period under the Medicare Access and CHIP Reauthorization Act, according to a new study.

The report, published earlier this month in Health Affairs, found hospitals would likely be most financially affected by changes from MACRA as physicians adapt to value-based payment models that will likely reduce the number of hospital admissions.

MACRA, which goes into effect in 2019, is intended to shift physicians away from the fee-for-service model and onto value-based payment systems. Physicians will be required to participate in one of two reimbursement tracks: a merit-based incentive payment system or advanced alternative payment models.

The researchers focused largely on the impact of Medicare reimbursement among physicians and hospitals as a result of participation in advanced alternative payment models. These models are more risk-oriented, involving accountable care organizations or patient-centered medical home, which align doctors, hospitals and post-acute providers to coordinate care.

The CMS estimated that in 2017 only about 10% of physicians would qualify as participating in advanced APMs.

The study established four scenarios to project Medicare reimbursement from 2015 to 2030: pre-MACRA and alternative payment models with low, medium or high financial incentives.

Results varied greatly depending on the scenario. For example, when financial incentives are low, hospital Medicare reimbursement could actually increase by $32 billion for hospitals from 2015 to 2030. But when financial incentives are high, Medicare reimbursement could decrease by $250 billion in that same period.

Physicians would also experience a slump in Medicare reimbursement as a result of MACRA, the researchers predict.

For physicians in alternative payment models, Medicare reimbursement in 2030 will be 8% higher than in 2015, compared to 13% higher if MACRA didn't exist. This is likely because physicians will experience reimbursement declines after the year 2025 when the bonus payments for participation in more risk-oriented alternative payment models under MACRA are set to go away, the authors wrote.

Overall, MACRA would reduce physicians' Medicare reimbursement by $47 billion from 2015 to 2030. In the pre-MACRA scenario, physicians are projected to receive a rise in Medicare reimbursement from $81 billion in 2014 to $109 billion in 2030.

The researchers note these estimates are "highly dependent on specific elements of model design" and subject to "many future political skirmishes."

But the authors caution that "if successful APMs are not available to physicians, there could be unintended consequences for patients, and one of the key goals of MACRA will be missed."