MGMA on the Dire Straits of Independent Practices
Health Law article by Lamb McErlane attorneys Vasilios J. Kalogredis, Esq. and Sonal Parekh, Esq.
On May 23, 2024, the Medical Group Management Association (MGMA) issued a detailed statement to the House Committee on Ways and Means, Subcommittee on Health, in D.C. It examined the current challenges faced by independent physician practices and offered key recommendations to alleviate these burdens. This has caused many physicians to sell to health systems, hospitals, insurers and private equity firms. The MGMA underscored the critical role of independent practices in delivering high-quality care to communities. Here’s a summary of their position and key recommendations:
MGMA’s Position
Independent physician practices are crucial yet increasingly vulnerable due to several factors:
- Economic Challenges: Independent practices operate on thin margins and cannot match the financial resilience of larger health systems.
- Regulatory Burdens: Excessive government regulation, payer red tape, and declining reimbursements have led many physicians to sell (and in some cases, close) their practices.
- Impact of COVID-19: The pandemic exacerbated financial and operational stresses on these practices.
- Cybersecurity Threats: The Change Healthcare cyberattack disrupted operations significantly, highlighting the precariousness of smaller practices.
The MGMA highlights that these issues contribute to an environment where independent practices struggle to stay afloat, thereby threatening their existence and the quality of care they provide.
Key Recommendations
To support the survival and success of independent practices, the MGMA proposes several policy changes.
- Annual Inflation-Based Physician Payment Updates. MGMA highlights the financial strain on practices due to the lack of annual inflation-based updates to Medicare physician payments.
a. Proposal: Implement an annual payment update based on the Medicare Economic Index (MEI) and modernize the budget neutrality requirements of the Medicare Physician Fee Schedule (PFS).
b. Legislation: Pass the Strengthening Medicare for Patients and Providers Act of 2023 for annual updates and the Provider Reimbursement Stability Act of 2023 to modernize budget neutrality.
2. Merit-based Incentive Payment System (MIPS) Reform. The Merit-based Incentive Payment System (MIPS) under the Medicare Access and CHIP Reauthorization Act (MACRA) has been problematic for many practices due to its complex, resource-intensive, and costly reporting requirements.
a. Proposal: Alleviate reporting burdens and extend the Small, Underserved, and Rural Support (SURS) program, which expired in 2022. The MGMA also emphasizes the need to extend the MIPS exceptional performance bonus to support practices in compliance.
- Prior Authorization Reform. One of the most burdensome aspects of running a medical practice, according to MGMA, is the prior authorization process. This requirement significantly disrupts workflow, increases costs, and can result in dangerous delays in patient care. Despite efforts to improve this process, little progress has been reported.
a. Proposal: Enact legislation to ease prior authorization burdens, which disproportionately affect independent practices.
b. Legislation: Support the Improving Seniors’ Timely Access to Care Act and other similar legislative measures to (i) streamline prior authorization and (ii) lessen delays and administrative costs associated with them.
4. Support for Alternative Payment Models (APMs). MGMA is concerned about the shifting financial incentives and requirements under MACRA.
a. Proposal: Reinstate the full 5% APM incentive payment and adjust the qualifying participation (QP) threshold to more reasonable levels.
b. Legislation: Advocate for the Value in Health Care Act of 2023 to address incentive and threshold issues.
- Healthcare Workforce Improvement. Addressing the healthcare workforce shortage is another critical issue. MGMA stresses the need for comprehensive solutions to address clinical and non-clinical staffing shortages, which are major productivity roadblocks for medical groups.
a. Proposal: Increase funding and improvements for the Graduate Medical Education (GME) program to address physician shortages.
b. Legislation: Support the Resident Physician Shortage Reduction Act of 2023 to expand the physician workforce, particularly in rural and underserving areas.
Conclusion
The MGMA’s statement underscores the urgent need for legislative action to support independent medical practices. By addressing financial incentives, reforming prior authorization, updating Medicare payments, simplifying MIPS requirements, and bolstering the healthcare workforce, Congress can help ensure that these practices remain viable and capable of delivering high-quality care to their communities. The MGMA remains a vocal advocate for policies that reduce administrative burdens and enhance the operational sustainability of medical groups.
For more detailed information on the MGMA’s position and recommendations, you can refer to their full statement here.
If you have any questions or if we may be of further assistance regarding legislation, policy, compliance, or other health law matters, please feel free to contact Bill Kalogredis, Esq. or Sonal Parekh, Esq.
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Vasilios J. (Bill) Kalogredis, Esq. is a health law attorney advising physicians, dentists, and other healthcare professionals and their businesses as to contractual, regulatory and transactional matters for 50 years. He is Chairman of Lamb McErlane PC’s Health Law Department. Bill can be reached by email at bkalogredis@lambmcerlane.com or by phone at
610-701-4402.
Sonal Parekh, Esq., is an associate attorney at Lamb McErlane PC who focuses on healthcare transactional matters and a broad range of healthcare regulatory-related issues on behalf of healthcare systems, physicians, dentists, and other healthcare providers, and is a pharmacist by education and training. Sonal can be reached by email at sparekh@lambmcerlane.com or by phone at 610-701-4416.
*This alert is for educational purposes only and is not intended to be legal advice. Should you require legal advice on this topic, any health care matter, or have any questions or concerns, please contact Vasilios J. (Bill) Kalogredis, Esq. or Sonal Parekh, Esq.