These reforms are worthwhile, but they are really minor in comparison with the far more consequential provisions in the legislation related to the payment of physicians under Medicare. Unfortunately, many in the GOP seem completely unaware of how these provisions will work.
The heart of the bill is a new, two-tiered indexing system for physician fees. Physicians who agree to participate in Medicare Accountable Care Organizations (ACOs) — or in similar structures established by the Medicare bureaucracy — will receive a permanent 0.75 percent increase in their fees each year. Physicians that don’t join an ACO will be placed into a new Merit-Based Incentive Payment System, or MIPS. Under MIPS, the Medicare bureaucracy will assess the “quality” of a physician’s services to patients and reward or penalize them accordingly. On average, physicians in MIPS will receive a payment increase of 0.25 percent every year — far below the annual payment increase for physicians in ACOs.
The actuaries who assess Medicare finances for the administration have looked at these provisions and come to the perfectly rational conclusion that physicians will have little choice but to join an ACO to get an extra 0.5-percentage-point bump in their payments every year. By 2019, the actuaries assume that 60 percent of all physicians taking care of Medicare beneficiaries will be part of an ACO, up from 25 percent today. By 2038, they assume that 100 percent of physicians participating in Medicare will be a part of an ACO or a similar structure invented by the Medicare bureaucracy.