MORE BUREAUCRACY UNBUNDLED.

• Author: Riczo, Steve
• Position: MEDICINE & HEALTH

ENORMOUS inefficiencies cause the U.S. health-care system to be twice as expensive, per capita, on average, than other industrialized countries. According to the Institute of Medicine, a branch of the National Academy of Sciences, Americans incur $250,000,000,000 of unnecessary medical tests and procedures each year, which contributes to an annual $750,000,000,000 worth of inefficiencies, waste, fraud, and abuse.

Economists long have pointed to the need to control health-care costs if the U.S. economy is going to reach its potential. The system strains state and Federal budgets, and adds costs to employers who are trying to compete in a global marketplace. Medical expenses are the No. 1 cause of personal bankruptcy in the U.S.

On the quality front, while some fortunate Americans receive great medical care, many do not. The U.S.'s two-tier medical delivery system produces medical errors contributing to tens of thousands of patient deaths each year--250,000, according to Johns Hopkins Medicine, making it the seventh-leading cause of death in the U.S.

Given the significance of the problem, in 2015, Congress passed the Medicare Access and CHIP Reauthorization Act (MACRA), which, subsequent to regulation development, is in the very early stages of implementation. While the new law created a three-year extension of the Children's Health Insurance Program (CHIP)--although, as of this writing, it had yet to be re-funded--the bulk of it is designed to address high medical costs and the need to improve quality of care. The legislation is very complex, containing even more pages than the Patient Protection and Affordable Care Act (ObamaCare) that passed in 2010.

With the word "Medicare" in the title of the law, one should not be misled that this will affect Medicare patients only. Once the practice patterns of physicians are improved and firmly established for Medicare patients, it will carry over to all of their patients. The vast majority of physicians who see Medicare patients also care for patients from a variety of other health plans. The new law will impact an estimated 600,000 providers, including almost all of the nation's physicians who provide face-to-face medical care, as well as some other categories of providers, such as nurse practitioners and physician assistants.

MACRA attempts to change the fee-for-service system through an array of financial incentives and disincentives. Physicians who meet specific goals will be rewarded with...