MACRA: Will these carrots and sticks work?

The comment period for MACRA proposed rules started a couple of weeks ago and ends June 26, 2016. CMS is to be commended for valiantly translating MACRA legislation into specific rules that will apply at the start of the first performance period scheduled to be January 1, 2017 (wow!). However commendable though, we should all be clear about the inherent problems, of which there are a number. I’ll briefly outline one central problem: behavioral economics.

Incentives do work, at least under certain conditions. They work when the actions (or outcomes) being incented are:

  1. Aligned with social and ethical incentives
  2. Simple (as in “if this, then that”)
  3. Under direct control of the incentive recipient
  4. Followed very quickly, frequently and variably by the incentive (or at least a notice of the incentive)

Number one on this list ought to be a slam dunk, in principle and over the long term (see blog). Number two and number three are part of what make the whole endeavor of incenting physicians (and other providers of physician services) so difficult. Unfortunately, MACRA proposed incentives are not simple. And the outcomes being incented are often not directly controlled by the physician. But these issues are at least potentially solvable at the provider level.

Number four, on the other hand, is clearly a fatal flaw as currently designed, at least to the extent that the payment adjustments are meant to drive change and not to just punish and reward. Physicians (and other providers of physician services) will get their carrot or their stick one to three years after their performance. Provider payments in December of 2019 will have adjustments based in part on performance in January of 2017, just about three years later. That is far too long for any human. Even institutions have a hard time responding to financial incentives that are years away. The solution is tough, though not impossible with the right investments: massively scaling data analytic capabilities to provide quick (e.g. monthly) feedback and adjustments for quality and cost, with an emphasis on incremental improvement. If we are going to use carrots and sticks with physicians, we ought to use them in a way that works to catalyze continued improvement.

Do you need help responding to MACRA implications? Do you need expert physicians and clinician-leaders to share the meaning and importance of MACRA within your organization? HMA can help.

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