Managing the Ethical Aspects of MACRA

February 14, 2017 4:04 pm

A four-step model can help healthcare leaders recognize and solve the ethical dilemmas embedded in the law.

When the Medicare Access and CHIP Reauthorization Act (MACRA) was signed into law on April 16, 2015, the existing Medicare payment schedule came to an end. The former payment system revolved around fee-for-service models. In contrast, MACRA, with its Merit-Based Incentive Payment System (MIPS) and Alternative Payment Systems (APM) components, centers on pay for performance tied to value. In summary, value-based payment is now the new law of the land regarding Medicare payment. If history repeats itself, Medicaid and the commercial carriers will take Medicare’s lead in moving toward pay for performance.

Fundamentally, the two underlying payment systems associated with MACRA are MIPS and APMs. The structure of the payment system for eligible providers is a combination of performance-driven bonus payments, payment penalties, or no payment adjustments. The compensable factors include quality, resource use, clinical practice improvement activities, and meaningful use of certified electronic health record (EHR) technologies. By 2022, provider payments can swing from -9 percent to 27 percent based upon the MIPS score achieved. The good news is that Jan. 1, 2019, is the first time that qualifying, eligible providers can participate in either MIPS or APMs. This article will not focus on APMs because they are likely to be less common in the early years of MACRA.

Is Value in the Eye of the Beholder?

Value is the key driver and organizing principle of MACRA and MIPS. Therefore, it is critical to define value from the view of different stakeholders. For example, a medical group may define value as attaining the highest MIPS score possible for all eligible providers even if it means being selective about which patients it chooses to see. In this example, value from the medical group perspective is high performance that will maximize the financial incentive. The patients who were not seen by this medical group may define value as access to the closest physician in their locale. In this case, value is achieved by one stakeholder but not achieved by another stakeholder.

Ethical leaders and board members recognize that all stakeholders are not equal. As such, prioritization of stakeholders should be a disciplined ethical practice in executive suites and boardrooms. In for-profit organizations, shareholders are the primary stakeholders by law. This does not mean that they are the sole stakeholder. In contrast, not-for-profit hospitals do not have shareholders, and the community is generally regarded as the primary stakeholder and secondarily patients in most instances. The challenge in boardrooms, particularly if boards are largely composed of individuals with for-profit experience, is that these board members may not be used to making decisions in which the shareholder is not the primary decision maker. Different prioritization of stakeholders can result in strategies and policies that do not benefit communities, and in some cases, patients who are not covered by health insurance, Medicaid, or Medicare.

This clash of values among diverse stakeholders is problematic if core healthcare ethics principles are violated. These core principles include beneficence, nonmaleficence, autonomy, and justice and are referred to as principalism in healthcare ethics. By using these four principles as possible criteria to prioritize stakeholders, board members and leaders may avoid some of the ethical challenges stemming from MACRA and MIPS or at least attenuate their harmful consequences.

Beneficence: More than Avoiding Harm

Beneficence is more than avoiding harm. In fact, it suggests a level of altruism. It seems reasonable to conclude that emphasizing quality of care rather than the amount of care further extends the principle of beneficence. Yet, the metrics continue to be largely focused within the illness portion of the illness-wellness continuum. For example, a metric associated with quality of life is not part of the measurement system. Should the goal of healthcare be narrowly focused on only those criteria that are tied to financial incentives and disincentives? How should the financial incentives under fee for service be balanced with the financial incentives under value-based care?

Nonmaleficence: Medical Best Interest

The emphasis on quality and more fully leveraging electronic health records appears to embrace the principle of nonmaleficence by putting processes into place that seek to highlight patient safety. Well-organized, timely data systems used by providers have been shown to decrease medical mistakes. Should financial incentives or disincentives target individual physicians and providers who may make individual patient decisions related to their bonus compensation that is based on quality and cost criteria rather than what is in the medical best interest of the individual patient?

Autonomy: Patients and Physicians

It is safe to assume that the average patient will not be familiar with MACRA and MIPS. Furthermore, the average patient also does not know how provider performance is evaluated and ranked or how incentive compensation is earned. Given this unacceptable reality, the patient will lose autonomy with regard to their role and the role of their provider in the provision of care.

In addition, some providers may not know how their individual or group incentive compensation was paid out given the administrative and cultural nuances of their practices or organizations. As such, autonomy for providers may be at risk. Moreover, all incentives focus attention, energy, decision, and performance on desired outcomes. As such, the freedom to focus on other metrics may be compromised given performance-driven incentive systems. Should physicians and other providers be free from the motivational pulls of financial incentives and disincentives that may “crowd out” other motivational forces such as patient centeredness, improving the health status of a population, and lowering the per capita cost of care?

Justice: Patient-Care Rationale

Organizations and individual providers may “cherry pick” communities, patients, and even fellow providers who may make “their numbers look good” to trigger financial incentives. This poses ethical challenges for organizations and individuals because patient care rationales will be based more upon what is financially compelling than what is medically necessary. Should it be prohibited to “nudge” individual physicians and other providers to prioritize which patients they serve based upon patients’ underlying health status or health coverage or adherence to treatment regimens? Will certain healthcare organizations “cherry pick” patients who are more inclined to be good for the financial bottom line?

These questions should be openly discussed in the executive suite and the boardroom, including the board compensation committee, and not just in physician compensation committees or human resource management meetings. Ideally, after addressing these questions, the responses should be reflected in organizations’ written compensation philosophies. Compensation philosophies reflect organizational values, which in turn reflect board and senior leadership values. Be careful to not imitate what other organizations are doing with regard to these ethical issues confronting healthcare leaders. Moral and ethical courage may mean “swimming against the tide.”

Four-Step Model for Ethics and MIPS

Is MACRA and, more important, MIPS an ethical way to reimburse providers? To answer this question, healthcare leaders should first identify the ethical issue. The second step is to select a way to analyze the ethical issue. The third step is to make a decision based upon using the ethical analytic framework. Finally, the fourth step is to evaluate not just the process used to make the decision but the decision outcome.

The following four-step model offers guidance on assessing the ethical nature of compensation systems under MIPS. This approach embraces any duties (deontological perspective) such as the Hippocratic Oath and any outcomes (teleological perspective) such as excess mortality.

Step one: Recognize that MACRA and MIPs are not ethically neutral. The decision to select MIPS or APMs is in part an ethical decision. It is reasonable to assume and based upon empirical evidence that payment, compensation, and financial incentives result in the design and delivery of care that in turn results in specific outcomes. For example, fee-for-service systems present the risk of overutilization and fully capitated systems may encourage underutilization. Healthcare finance leaders should challenge themselves to throw these ethical aspects onto their agendas. Patient centered is more than measured patient satisfaction.

Step two: Analyze the ethical issues. Ethical reasoning is associated with solid decision-making processes. At a minimum, healthcare finance leaders should conduct analyses focusing upon the ethical issues of various stakeholder groups. These analyses should be conducted within broader groups of participants to avoid groupthink. To go one step further, leaders should apply the core principles (e.g., beneficence) mentioned earlier to how their organization will operate under MACRA and MIPS.

Step three: Make strategic and ethical decisions. In the law, there is a prudent person standard. This standard asks the question, “What would a prudent person do?” This notion of the prudent person standard falls under the category of being a fiduciary. Two cardinal concepts of a fiduciary revolve around the duty of care and the duty of loyalty. Examining both duties takes healthcare finance leaders back to their stakeholder analyses. To whom do their organizations owe fiduciary duties? How do organizational leaders reconcile these duties against other pressing priorities such as bond rating, reputation, and operating margin or EBIDA? The law may provide little guidance in reconciling these issues.

Step four: Evaluate the process and outcomes. Organizational leaders cannot control decision outcomes. Yet, they can control and should control the processes by which they make decisions. After making decisions, leaders should conduct debriefs—similar to those suggested by clinical quality experts—and ask these three questions:

  • What did we do well?
  • What should we have done better?
  • What is one action we shall hold ourselves accountable for the next time we make a decision?

Prior to making decisions, leaders should develop metrics to evaluate outcomes. Metrics can include physician satisfaction, patient satisfaction, medical mistakes, utilization, lawsuits, and other metrics.

Uncharted Territory

Preparing for MACRA and MIPS is largely new territory for healthcare leaders. Yet, it is during uncertain times that ethical decision making takes a front seat. Politicians, lobbyists, policy makers, and legislators passed MACRA to achieve larger health policy goals. Once legislators do their work, it is incumbent upon healthcare leaders to implement those policy goals and comply with legislation legally and ethically.

No one knows what the future may bring. However, how healthcare leaders approach MACRA and MIPS ethically may be the litmus test for how they ethically implement changes to the Affordable Care Act, ranging from a simple name change to a complete throwback into the unknown.


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