MACRA-economics 101: Prepare today for tomorrow's outcomes

Together, MIPS and APMs establish a new framework that streamlines existing quality reporting programs into one system and, in doing so, fundamentally changes how clinicians get paid.
By Arien Malec
10:32 AM
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Starting in 2019, Centers for Medicare & Medicaid Services, will change how they pay physicians in a profound way. Unfortunately, the details are complicated and confusing, and many of the particulars have yet to be worked out, which has led many healthcare leaders to glaze over the details and focus on more immediate concerns.

However, disengagement is a strategic mistake because while the Medicare Access & CHIP Reauthorization Act of 2015, or MACRA, details are intricate, the outline is clear. Providers and healthcare organizations must begin now to prepare for advanced value-based care models to maximize the benefits from MACRA.

MACRA's repeal of the Medicare Sustainable Growth Rate, the prior standard set of changes used to implement the physician fee schedule, was an attempt by Congress to control ever-rising medical costs. In SGR's stead, Congress has implemented the MACRA, which consists of the Merit-based Incentive Payment System, or MIPS, and Alternative Payment Models, APMs.

Together, MIPS and APMs establish a new framework that streamlines existing quality reporting programs into one system and, in doing so, fundamentally changes how clinicians get paid.

The MACRA track differential
At its core, MACRA seeks to tie 90 percent of reimbursement to quality by 2018 and gives health care providers two payment tracks or options: The Merit-Based Incentive Payment System, Track 1, and the Alternative Payment Models, Track 2.

Track 1: Merit-Based Incentive Payment System (MIPS)
The MIPS track combines the Physician Quality Reporting System, the Value-based Payment Modifier, and the Medicare electronic health record incentive program into a single consolidated program with the four categories generating a composite performance score. The CPS determines whether a clinician receives a greater or smaller fee or no fee adjustment.

Important Considerations
From 2019 to 2025, the base physician fee schedule is frozen, which means clinicians' fees in 2019 are the base rate pay through 2025. In post-inflation terms, that means clinicians will be making less in fee-for-service base rates.

With few exceptions, clinicians must participate in the MIPS incentive program, which means a provider must report quality measures, demonstrate outcomes for quality measures, and demonstrate meaningful use. Depending on performance and the MACRA year, clinicians will receive a 4-9 percent increase or a 4-9 percent decrease in their year-over-year fee-for-service payment.

MIPS is revenue-neutral, which means if one clinician is making more in fees, another is making less. In a sense, Track 1 puts all providers in a race against each other to improve quality, and it raises the stakes for continual year-over-year quality improvement.

Track 2: Alternative Payment Methods (APMs)
The APM track is geared towards advanced accountable care organizations, patient-centered medical homes, and the like, and while CMS has yet to issue a regulation on the details, the legislation makes it clear that only the most advanced forms that expose providers to both upside and downside financial risk will qualify.

Providers who choose the APM track are excluded from MIPS adjustments and will instead receive a lump sum incentive payment equal to 5 percent of the prior year's estimated aggregate expenditures under the fee schedule. The 5 percent incentive payment is in effect from 2019 to 2024. Also, providers can retain savings from improved quality and efficiency of care under the advanced APM program. If organizations provide high quality at a low cost, they get more money. If organizations do poorly, they receive less money.

Important considerations
There are different forms of ACOs. For example, in a one-sided ACO if a clinician does well, he or she receives a bonus, but if the clinician does poorly, there is no fee reduction. In a two-sided ACO, clinicians that do well get higher fees and those that do poorly receive less fees, and the reduced fee is a combination of both quality and cost.  

MACRA encourages expansion of the APM options available to physicians, most notably specialists, through Physician Focused Payment Models. From 2026, the fee schedule growth rate will be higher for qualifying APM participants than for other providers.

APMs are a cost-effective model because clinicians are signing up for more efficient care along with more financial risk, and CMS benefits because the overall care costs less. In the best sense, APM provides the tools for clinicians to reap greater rewards for quality care at a lower cost.

Get ready: Prepare with education, analytics and a focus on quality
Providers' quality of care will be measured, and it's going to have a much larger impact than the meaningful use incentive program. Here are tips for how you should prepare:

Educate. Providers need a firm understanding of their population health approach, robust productivity strategy, and an awareness that use of certified EHR technology is written into legislation. Clinicians choosing the MIPS track must recognize that 25 percent of the total adjustment is based on meaningful use. Nothing has changed for eligible hospitals and critical access hospitals, that are still subject to the MU penalty phase. MACRA only changes the Medicare track for eligible providers, so it does not change MU for those who are using the Medicaid track. That being said, now is the time to be proactive, investigate APM methodologies, and join a local ACO or start a patient-centered medical practice to measure and improve quality. Perhaps, most importantly, providers should be aware that the CMS measurement year begins in 2017, and while it won't significantly impact pay until 2019, it will be based on performance in 2017.

Incorporate data & analytics. Annually, the amount of healthcare data grows by 48 percent. Clinicians need to think about how they are acquiring and aggregating the data they need to get the full view and manage the whole patient.  ACOs need the analytics capabilities to measure quality at the population level, not just the individual patient level, and the work of assembling and aggregating data takes time. Providers need to start thinking about existing tools – do you have the tools to understand quality metrics? How are you getting the data from the EHR, and is your data platform model flexible (data can be unstructured and granular), scalable, accessible, and transparent (data flow and data quality is visible to you)? How you analyze and aggregate the data will determine what tools can help you evolve your processes. Providers must meet certain requirements that involve quality measures, the use of certified EHR technology and their revenue and payer mix.  To achieve value in the short term, providers should establish clarity on your strategy, create a technology roadmap, and recognize that a different set of tools will all be essential to stay profitable.

Preplan and refocus on clinical quality. If not already part of an ACO, providers should put together an application for one of the CMS models. If you already have strong analytics, identify the areas you need to improve. In a value-based environment, the focus must shift to cost structure rather than revenue increases, and a strategy must be in place to lower costs without sacrificing quality. While a variety of details still need to be worked out with the structure of provider pay and a lot of enabling regulation needs to occur, the key is to understand that we are moving toward a more outcomes measurement approach.  Unlike Stage 1 and Stage 2 of MU, where providers were measured on whether they updated their processes, CMS is making quality of life and clinical outcomes fundamental, and that's good news for patients and providers alike.

As the industry wades deeper into MACRA and value-based reimbursement, how physicians get paid and whether they'll earn enough to sustain a viable practice will be the primary concerns. My advice is to proceed thoughtfully as you restructure your business to mirror a value-based approach. As the healthcare landscape transforms, your practice needs to change with it. But act swiftly because the effectiveness of any strategy depends on preparation. The ability to shift your focus to the new structure required by value-based reimbursement is essential because you'll be measured based on activity in 2017, and that's right around the corner.