What Merit-Based Medicare Payments Mean for You

Seniors receiving Medicare benefits might not know it, but the government is implementing a major change in how it reimburses doctors for their care. The change is intended to ensure doctors are keeping their patients healthy and financially reward them for doing so.

Merit-based payments. The Medicare Access and CHIP Reauthorization Act of 2015, also known as MACRA, is eliminating the old formula of paying for Medicare Part B services and replacing it with two options: advanced alternative payment models and the merit-based incentive payment system. Called MIPS, that second option will apply to health care professionals that bill Medicare more than $30,000 a year and see more than 100 Medicare patients annually.

Starting in 2017, physicians will need to track patient data and outcomes and record how they've used technology in their practice. Data needs to be submitted by March 31, 2018. Physicians who achieve positive outcomes will receive a 5 percent bonus in 2019. Those who don't record and submit data on patient outcomes will be charged a 4 percent penalty.

While some see the new payment model as a positive move away from the fee-for-service system, critics argue it could result in more work for doctors. "This is a lot of work for 5 percent," says Ash Toumayants, founder of financial planning firm Strong Tower Associates in Pennsylvania.

[See: Medicare Out-of-Pocket Costs You Should Expect to Pay.]

Potential unintended consequences. MIPS is intended to move Medicare away from the longstanding fee-for-service model. Under that form of reimbursement, doctors receive a fee for every service they perform. Some argue this payment method encourages doctors to perform more interventions and tests rather than focus only on those that will have a positive outcome for the patient.

As merit payments are implemented, physicians will be rewarded based on quality measures such as how well, for example, a patient's blood pressure is controlled. As a result, doctors may feel pressured to write prescriptions to quickly control side effects or health conditions that could be addressed through other means. "The system is geared toward prescribing new medicine," says Pawan Grover, an interventional spine specialist in Houston. "It'll be a boom for pharmaceutical companies because doctors will have to add more medications."

[See: 10 Medical Services Medicare Doesn't Cover.]

Grover says the new system doesn't take into account a person's education, income or health history -- all factors that can affect a physician's ability to keep a patient in prime condition. So, there may be an incentive for physicians to limit the number of patients they see or move away from practicing in low-income areas. "A half dozen non-compliant patients could bring down your numbers," Tremblay says. In a worst-case scenario, Toumayants worries there are no safeguards to prevent doctors from dropping patients who are not managing their conditions well. "You have a right to send them away," Toumayants says. "There's no law that you have to treat someone."

Another concern from Grover is that doctor-patient interactions could suffer as more time is spent recording information. Already, physicians and their staff spend 785 hours each year tracking and reporting quality measures, according to a study published by the journal Health Affairs in March 2016. "I have patients complain about it all the time," Grover says. "They go to the doctor, and the doctor is buried in the computer."

Positive changes. Not everyone has a dark view of MIPS. "The net effect for patients is that they should see more engagement with their provider," says Chris Tremblay, director of product strategy for electronic health record provider Amazing Charts. That's partly because of the focus on wellness, but also a result of expanded reimbursement options from the government.

Most notably, physicians will be able to bill Medicare for some services that don't involve face-to-face care. Examples include consultations with other physicians, case management for chronically ill individuals and care planning for seniors with dementia. That's in addition to previously approved telehealth services that allow doctors to consult with patients on the phone or virtually and then bill Medicare for that time. That may offer new opportunities for patients to connect with their physicians and doctors more incentive to manage patients with complex health issues.

[Read: Medicare Enrollment Deadlines You Shouldn't Miss.]

The stakes may get even higher when physician scores are eventually published, as is the government's plan. Not only could a low score mean the loss of a bonus, but it could drive away other patients. And Toumayants says that could unfairly penalize providers who can't control their patients' behavior or their circumstances. "I'm not sure the doctor can do much about the fact they don't have enough greens to eat," Toumayants says.