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MACRA: The Reality, Part One

MACRA: The Reality, Part One

This is the first blog of a three-part series on MACRA, Medicare’s new payment system for physicians. In it, we describe the realities of MACRA for providers. These are significant and somewhat over-whelming for many. Part 2 will be “MACRA – The Critical Success Factors”, followed by Part 3 “MACRA - The Toxic Side Effects”.

In the most simplistic terms, MACRA (Medicare Access & CHIP Reimbursement Act of 2015) is Medicare’s new incentive payment program driven by the Value Equation, which we have discussed and defined in previous blogs:

VALUE = Clinical Quality + Service Quality divided by Cost

Providers, based on their performance data, will be paid more or less, depending on their abilities to enhance the quality, safety, and satisfaction of their care, while simultaneously controlling or reducing the cost of their services. In addition, physicians will qualify for the greatest revenue enhancement by having a substantial amount of their revenue at risk.

Although CMS does not expect to publish the final regulations concerning MACRA until November of 2016, and do not plan to implement them fully until 2018, they are causing much anxiety among physicians because of the amount of infrastructure that must be put into place to be successful. While many physicians are hoping that MACRA will go away, the reality is that even today Medicare reports that 30% of physician payments are already based on value, including bundled payments, readmission rates, and hospital acquired infections. In addition, most commercial payers are following Medicare's lead with their more recent provider contracts. It is important to note that this payment change is occurring unrelated to the Accountable Care Act (Obamacare), and, hence, will not be reversed by the upcoming elections. Payment Reform is here to stay!

To be more specific, MACRA has two payment options:

  • MIPS – Merit-Based Incentive Payment System
  • APM - Alternative Payment Model

CMS eventually wants all providers to be successful in the APM options in which physicians assume a downside risk, but have an upside potential up to a 4% payment increase in 2019. This upside will increase annually until it reaches a cap in 3 or 4 years. Why? Because APM provides the greatest savings for Medicare, has high physician accountability, and has proven- in the small number of practices that now qualify for APM- that the clinical performance improvements are more likely to be sustained. This preference is highlighted in an article in Modern Healthcare by Gregg Blesih in the September 19th issue entitled, “Providers shouldn’t worry about getting good at MIPS. They should get out of it”. The author emphasizes, because of the potential upsides, that getting prepared to be successful under APM should be the goal of every physician in solo or group practice. But he quickly acknowledges that most practices today are not ready “for the victory lap”.

So if physicians do not qualify for the APM payment option, then what? They must participate in the MIPS program, or face a 4% reduction in their Medicare payments, starting in 2019. It is important to note that MIPS is budget neutral, the money saved from those who perform poorly will be given to those who meet or exceed the value metrics. In Gregg’s article he describes MIPS as CMS’s “value based training wheels”. Because this option will not save Medicare money, CMS is committed to weaning physicians off of fee-for-service reimbursement and move them to the APM model as quickly as possible.

CMS has been flooded with comment letters after issuing the draft rules for MACRA. Andy Slavitt, the acting CMS administrator, wrote a short article in the September 12th issue of Modern Healthcare entitled: “CMS to make MACRA less painful with ‘pick your pace’ options”. He indicated that if physicians do not qualify for APM in 2017, they will be able to avoid the penalty in MIPS by submitting a limited amount of data next year to ensure that their system is working. Of course these physicians will not qualify for the 2% performance-based increases. In addition, he said another option would allow the providers to start submitting MIPS data later in the year and still qualify of small pay increases.

So, in summary the realities of MACRA include:

  • The demise of fee-for-service reimbursements
  • The transition to a value based payment model with downside financial risk, quality measures, requirements for an EHR, and ability to analyze “actionable data to drive performance improvements"
  • Some flexibility regarding the timeline for participation in MIPS if the physicians' practice does not qualify for APM and before the penalty is applied.
  • The payment reform transition will be a heavy lift for some physicians, especially those that do not have a robust EHR, or haven’t previously collected or reported performance and clinical outcome data.

What physician practices need to do to be successful under MACRA will be discussed MACRA-Part 2: The Critical Success Factors.