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In the next few weeks, we expect the Centers for Medicare and Medicaid Services (CMS) to release a proposed rule detailing their proposal for how physicians will be paid under the Medicare program. The new rules, authorized by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), will change how Medicare will pay physicians (and certain other providers) starting in 2019.

The current system for physician payment works in a relatively straightforward manner. A physician provides a service (such as an office visit) to a Medicare beneficiary, sends a bill to Medicare, and Medicare pays the physician the defined rate for that service (“fee for service”).

Under the new system, when a physician provides a service to a Medicare beneficiary, Medicare’s payment to the physician will depend on a number of additional factors, such as whether the physician meets certain quality benchmarks or participates in an “Alternative Payment Model,” such as an accountable care organization (ACO).

MACRA creates two payment pathways. The first is the Alternative Payment Model (APM) pathway. A physician can qualify for this pathway by having a certain percentage of payments under alternative payment model arrangements, to be defined by CMS. These alternative payment arrangements require physicians to take on some level of risk for the financial and quality outcomes of their patients’ care. The second is the Merit-based Incentive Payment System (MIPS) pathway, which retains more of the existing fee-for-service structure, but adds in quality incentives and penalties. The two different payment pathways are calibrated in order to push physicians into the APM pathway.

From the consumer perspective, MACRA matters because, if implemented carefully, it can promote more flexible care that is tailored to the needs of patients. And, because Medicare is the 800-pound gorilla in the health care system, MACRA’s payment incentives will likely drive physician and health care organization behavior nationwide. Specifically, by defining which APMs “count” toward the APM pathway participation requirements, MACRA will strongly influence the kinds of payment and care delivery models that are created in this country and define a set of quality measures that physicians need to meet.

While MACRA can drive the move toward “value-based payments,” the push for innovation must be carefully balanced against the need to smooth implementation. From a consumer perspective, the push toward risk-based payments must be balanced with strong consumer protections, and structures for meaningful consumer engagement in the design, implementation and oversight of these payment models. It is also important that the quality measures selected for both the MIPS and APM pathways reflect patient-centered priorities, such as patient experience and patient reported outcomes.

We have been keeping a close eye on MACRA developments. In December of 2015, CMS released a draft of its plan for developing the measures to be used under MIPS. We submitted comments, emphasizing the importance of measures that reflect patient experience and the importance of payment models that make sure providers who care for patients with complex social and medical needs will not be disadvantaged. We will be taking a close look at the forthcoming proposed rule which will be followed by a public comment period, to make sure that it is as consumer-protective as possible (our previous comments on MACRA can be found here). We expect a final rule in November of this year. We encourage Hub readers to keep an eye out for MACRA-related developments, to understand the impacts of this sweeping new program.