Last spring, Congress passed a sweeping law overhauling the way Medicare pays physicians. The Medicare Access and CHIP Reauthorization Act of 2015 put an end to the flawed formula used to set physician payments and put them on a path toward value-based payment by tying an increasing percentage of physician pay to value and encouraging participation in alternative payment models.

These changes will have a significant impact not only on physicians, but also on the hospitals with whom they partner.

Hospitals that employ physicians directly may bear the cost of implementing and complying with the new physician performance reporting requirements as well as face risk for any payment adjustments.

Moreover, hospitals may be called upon to participate in alternative payment models so the physicians with whom they partner can qualify for bonus payments and exemption from some reporting requirements.

The new payment system will be phased in beginning in 2019.

In the March 2016 issue of Trustee, you’ll find an Executive Briefing, “The Ins and Outs of Physician Payment After Medicare Sustainable Growth Rate Reform,” prepared by the American Hospital Association, detailing the changes and what they mean for physicians and hospitals. I encourage you to read it carefully and share it with your board as you think about the implications for your organization.

You can find additional resources to use at future board meetings or for more board education, including an archived webinar explaining the changes and a detailed timeline of key changes and milestones, at

The Centers for Medicare & Medicaid Services is the government agency responsible for writing the regulations that will govern the new payment system and has begun the work of fleshing out how the program will work. The AHA is working with the agency to ensure that hospitals’ and hospital-based physicians’ feedback is taken into account as CMS implements the new program.

The AHA also will continue to provide educational resources for hospital leaders throughout the development process to keep them abreast of CMS’ proposals and solicit feedback.

This new physician payment system reflects the broader changes happening in health care. Working with physicians to make the transition smoothly isn’t just a nice to-do. It’s essential to building the health care delivery system of the future.

Margaret Dahl ( is COG chair and a trustee of WellStar Health Network ACO in Marietta, Ga.