What does a nation do about runaway healthcare costs? Make more laws, of course. Legislation like MACRA, the Medicare Access and CHIP Reauthorization Act of 2015, (H.R.2) attempts to answer that question.

One of a slew of recent legislation enacted by congress to reform health care delivery and payment, MACRA shoves health care from fee-for-service to fee-for-value. It shifts the cost reform burden onto the healthcare system to develop solutions to the mounting national dilemma. Specifically, the law demands a new model of coordinated quality care at reduced cost—or else.

With MACRA, the industry is forced to keep their eyes on the quality of care vs. total cost equation. The intended outcome is, of course, to reduce health care spending without sacrificing valuable care. It’s essentially a carrot and stick approach: doctors are rewarded for fulfilling the equation—low cost, quality care—and punished for not.

This outcomes approach forces the industry—physicians, clinicians and health services—to reinvent their methodology somewhat to conform to the new law. Pay for quality services forces everyone—the entire team–to do better, play their A game, squeezing the most value by improving practices. That’s the intent, anyhow.

The Rewards

MIPS, or Merit-based Incentive Systems, governs Medicare payments to physicians per a pre-set fee schedule. Doctors are incented under this pay system to take advantage of APMS, Advanced Alternative Payment Models, which reward collective cost “risk-sharing” for packaged health services targeting quality outcomes.

The Penalties

Those opting out of APM’s must report their outcomes, which are evaluated based on factors, including outcome, improved practice and tapped resources, such as health information technology, to assess quality. Performance with resource use are measured against national benchmarks. Those falling below the standard must improve their methods or risk reduced payments and public exposure.

Those healthcare providers challenging findings may appeal, and CMS (Centers for Medicare and Medicaid Services) may audit to confirm reported data.

But all healthcare systems must develop initiatives that qualify under APM’s as sufficiently managing costs (building reserves), reducing financial risk, using IT/analytics, and building collaborative health networks (throughout the health chain) of information and cost sharing—all under the umbrella of cost reduction and quality increase.

The results

Greater coordination over the width and breadth of healthcare systems with a singular goal. Competition to control spending and increase payments foreseeably leads to more creativity and innovation in designing, utilizing and implementing systems—which can only help.

But most impactfully, the whole team needs to pull their weight. Those who don’t will be exposed publicly and rated accordingly internally and by the public.


BACPAC, or Bundling and Coordinating Post-Acute Care Act of 2015 or the BACPAC Act of 2015 (H.R. 1458), governs payments to post-acute services provided within 90 days of hospital release. One bundled payment covers all services for a specific “episode”: physicians, hospitals, and post-discharge care.

The incentive is the same as MACRA: cost savings without sacrificing quality care by promoting coordinated team work and financial risk allocation—through “gainsharing.”

Payments are based on a per episode (say an appendectomy) calculation taking into consideration factors like the patient’s age, health and condition, to measure the cost of treatment.

Again, this payment scrutiny forces health care systems—hospital and post-acute care—to improve care at lower cost through examining and changing practices that are wasteful, not optimally cost and time-saving efficient. It requires a review of practices and available resources to improve all the way around. The most probable outcome is increased standardization of practices and protocols for hospitalization, discharge, rehab and other post-acute care services.

Bundled payments incentivize creative solutions to administering care, forcing providers to access the abundant available care options. According to and analysis by the American Hospital Association:

…there are over 8,800 different patient pathways demonstrated within a 60 day window following hospital discharge… [and] over 1,000 unique clinical pathways following discharge.


Like MACRA, BACPAC moves healthcare away from fee-for-service into fee-for-value and forces cooperative efforts to improve systems. Despite the law’s relative newness, which often tests compliance with clarifying definitional terms, like “episode” or even “quality,” improving net outcomes benefits everyone. Some foreseeable challenges in forced teamwork—those not pulling their weight—lie ahead, however. The devil is definitely in the details but optimistically, more heads—healthcare workers, IT folks, admins, insurers, engineers, contractors–dedicated to the same goal often yield amazing results.