Medicare reimbursements don’t cover the cost of care

Medicare payments in 2019 aren’t likely to cover the cost of delivering care for two-thirds of medical practices, according to a survey from the Medical Group Management Association (MGMA).

MGMA’s Stat poll revealed 67 percent of medical practices believed Medicare payments in 2019 will leave them with a shortfall, while 17 percent said payments were equal to the cost of care and 16 percent believed they were above. Of the group that reported payments were too low, some stated the Medicare population is more complex and sickly, with comorbidities that take more resources to manage.

According to MGMA, the Medicare Access and CHIP reauthorization Act of 2015 (MACRA) revised methodology for updating the physician fee schedule that did not allow Medicare payments to keep up with inflation or the cost of running a physician practice.

Furthermore, MACRA’s push to accelerate value-based payments has resulted in lower-than-expected performance payments, according to MGMA. The Merit-based Incentive Payment System (MIPS) offered payment incentives that looked significant from the outset, with performance payments that could have ranged from -4 percent to 22 percent in 2017. 

In reality, payment adjustments for 2019, based on 2017 data, are less than 2 percent, “even for top performers,” MGMA stated. That’s because the program requires budget neutral payments, meaning the payment adjustments aren’t large enough to offset the inadequate updates to Medicare reimbursement rates.

“This well-intentioned program is costing practices money to comply, with little promise for financial reward,” the STAT poll noted. “MGMA members tell us burdensome reporting requirements may be affecting patient care and other clinical priorities that drive value.”

Medical practices have also not been able to make up the cost of delivering care through alternative payment models (APMs), according to MGMA, as these options have been minimal. Only eight national advanced APMs are available in 2019 and specialty providers are even more limited in their chances to participate. APMs have the potential to boost payments with a 5 percent lump sum bonus paid by Medicare, and they offer practices shared savings and greater flexibility to provide patient-centered care.

“A successful APM is a win-win for everyone: better quality care for patients, increased savings for Medicare and financial reward and viability for physician practices,” MGMA stated.

Adding more APMs could help offset Medicare payment updates, according to MGMA.