The Medicare Access and CHIP Reauthorization Act (MACRA) is aimed at physicians and their reimbursement, but hospitals will be affected by the implementation of this law as well. Many hospitals are not prepared for the increased data collection and quality assessments MACRA will bring, experts say.
MACRA was signed into law on April 16, 2015, and was heralded at the time for ending the reviled Sustainable Growth Rate (SGR) formula that threatened every year to drastically cut physician compensation. It also is seen as another way Medicare is moving away from traditional fee-for-service payments. MACRA limits aggregate Medicare physician payments to a 0.5% increase per year through 2019, and 4% of a physician’s annual Medicare payments will be tied to one of two paths: either the Merit-Based Incentive Payment System (MIPS), or participation in Alternative Payment Models (APMs). (The rule is available online at http://bit.ly/1VCRVQn.)
With the trend in recent years for physicians to be employed or affiliated with hospitals, MACRA affects most of them to some degree. MACRA’s bureaucratic burden may drive physicians further to sign up with hospitals.
The original plan was for the new system to be effective January 1, 2017, with physician performance that year determining bonus and penalty payments effective in 2019. However, CMS announced in September that though the January start date is still in place, it is providing four options that will allow providers some choice in how quickly they enter the new system. One of the options is the ability to choose an alternative payment model such as a Medicare Shared Savings accountable care organization (ACO).
CMS Acting Administrator Andy Slavitt wrote in a blog post that physicians will be able to “pick their pace” for how quickly they comply with the data requirements and have their payments adjusted accordingly. “In recognition of the wide diversity of physician practices, we intend for the Quality Payment Program to allow physicians to pick their pace of participation for the first performance period that begins January 1, 2017,” he wrote. “During 2017, eligible physicians and other clinicians will have multiple options for participation. Choosing one of these options would ensure you do not receive a negative payment adjustment in 2019.” (Slavitt’s full post is available online at http://bit.ly/2comQzM.)
Slavitt outlined four options. In the first, the physician can choose to “test” the new quality payment program. Physicians will not be hit with a negative payment adjustment if they submit “some data” to the Quality Payment program, including data collected after the January start date. “This first option is designed to ensure that your system is working and that you are prepared for broader participation in 2018 and 2019 as you learn more,” Slavitt wrote.
The second option allows the physician to participate for only part of 2017. Under this option, the physician’s first performance period does not necessarily have to begin on January 1, 2017, and does not have to constitute a full year of data. Depending on the data submitted, the physician could still quality for a “small positive payment adjustment,” Slavitt said. “For example, if you submit information for part of the calendar year for quality measures, how your practice uses technology, and what improvement activities your practice is undertaking, you could qualify for a small positive payment adjustment,” he wrote. Physicians can choose from the list of quality measures and improvement activities available under the Quality Payment Program when deciding what data to report, giving them the opportunity to report the data most beneficial to them.
The third option is for physician practices that are more confident about their ability to report data immediately on January 1 and who expect the resulting payment adjustment to be neutral or in their favor. Those practices will submit data on quality measures, how the practice uses technology, and what improvement activities the practice is undertaking for a full calendar year beginning January 1. The data could qualify those choosing this option for “a modest positive payment adjustment.”
The fourth option is the most divergent from past CMS statements on MACRA requirements. Physicians can opt out of reporting quality data and other information altogether if they participate in an Advanced Alternative Payment Model in 2017. Slavitt mentioned Medicare Shared Savings Track 2 or 3 as examples. Track 2 is a two-sided model, meaning physicians share losses but also can earn a higher share of savings. Track 3, added in 2015, offers a higher sharing rate than Tracks 1 and 2. For Track 3, CMS prospectively assigns practices to the ACO rather than using retrospective reconciliation for preliminary assignments. Physicians who receive enough of their Medicare payments through the Advanced Alternative Payment Model in 2017 or whose Medicare patients make up a large enough part of the practice that year would qualify for a 5% incentive payment in 2019.
Even with these changes, “the time to start planning for MACRA was yesterday,” says Marc Mertz, MHA, FACMPE, vice president of GE Healthcare Camden Group, a consulting company in Los Angeles. A delay in MACRA implementation Is still possible but unlikely. (See the story in this issue for the five top things to know about MACRA, and the story also in this issue for the rule’s relationship to Meaningful Use.)
Leadership should be evaluating the group’s current performance under the proposed MACRA measures, and Mertz says the Medicare Quality and Resource Use Report (QRUR) is a good place to start because it shows how physicians compare to their peers on quality and cost measures. engagement and participation will be vital to groups’ success under MACRA. Leaders of hospital-affiliated medical groups should be educating physicians on MACRA and the vital role they play in ensuring the group’s success,” Mertz says. “Regardless of whether the group falls under MIPS or APM, it will be imperative that individual physician and group performance be monitored on a monthly basis.”
Share performance data with physicians and address underperformance, Mertz advises, and consider modifying physician compensation plans to include incentives for performance on MACRA-related measures.
Independent non-hospital employed physicians, especially solo physicians or those in small groups, will be most challenged by MACRA, Mertz says. Many of these groups lack the information technology or staffing resources to ensure success under MACRA. Most physicians will fall under MIPS, and they are likely to be the least able to absorb any reductions to their Medicare reimbursement, he says.
“Hospitals should be working now to educate the independent members of their medical staff on MACRA and its implications,” he says.
Mertz also suggests considering the development of population health support organization (PHSO) services that can support these physicians with subsidized access to electronic health records, population health tools, and other resources to help them prepare for and succeed under MACRA.
CMS estimates in the rule that 87% of solo practitioners will see their payments decrease in 2019, the first year rates will be affected.
“For some independent physicians, MACRA may be the final straw that drives them to explore affiliation options,” Mertz says. “Hospitals and health systems should expect to receive inquiries from physicians interested in employment and should have a strategy for responding to these requests.”
MACRA allows solo practitioners to form “virtual groups” so they can share the technological and administrative burden, but CMS has disallowed them for 2017 because it is not yet ready to oversee the groups.
Richard F. Bajner Jr., managing director of Chicago consulting firm Navigant, agrees that more physicians will seek shelter in hospitals when faced with the MACRA burden. Many hospitals have been aggressively marketing to physicians and practices, so it is likely they will find physicians more receptive to the idea of hospital employment or affiliation. Hospitals will have to rethink the way they show physicians the value of joining, with MACRA as a key point, Bajner says.
Smaller physician practices and solo practitioners will be most interested in avoiding the extra work and expense that MACRA will impose, so Bajner suggests that will become the best targets for marketing efforts.
“With larger hospitals, I’m more concerned that they will miss this opportunity to create a value proposition and use MACRA to their benefit. Smaller organizations will have to worry about having the systems in place to work with MACRA, but larger hospitals and health systems have an opportunity here,” Bajner says.
At least half of hospitals and physician practices are not ready to comply with MACRA, says Richard J. Zall, JD, partner and chair of the healthcare department at the Proskauer law firm in New York City. MACRA is one of the most significant changes to healthcare in years, he says, and it will significantly influence quality improvement efforts and data collection at hospitals. Where, previously, physicians could earn bonuses and other incentives through various programs, MACRA now provides a more unified way to link quality to payment, he says.
“This was an effort to put together in one payment framework both the payment policies, quality improvement, and incentives around patient care management,” Zall says. “We can see in the structure of MACRA where CMS is going, with incentives for physicians to move away from episodic fee-for-service payments that turn on what they do and how much they do, to value-based models in which the payment they receive depends on outcomes, quality measurements, and the total cost of care.”
Quality professionals in hospitals have worried that MACRA would impose more data collection on top of the already overwhelming demand for metrics, and Zall says those fears are well-founded. To submit the periodic reports that are required to determine whether and how Medicare alters the reimbursement rate, hospitals and physician practices must collect a range of measurements in four areas. The first is quality of care and outcomes, followed by use of information health systems (similar to the Meaningful Use program), costs, and clinical practice improvement
“I don’t think many physician practices or even hospitals are equipped to collect that information and be able to report it,” Zall says. “The concerns about the administrative burdens of this are very real. It’s one of the reasons there has been some talk of delaying it, but as of now it’s starting in 2017 and a lot of people have a lot of ground to cover in order to be prepared.”
Since most hospitals have a variety of arrangements with physicians, with some employed by the hospital, others employed by practices affiliated with the hospital, and some independent, decisions must be made about who is responsible for reporting MACRA data, Zall says. The hospital also must assess its information systems to determine if they are capable of organizing and transmitting MACRA data in the way CMS demands.
The hospital also must project the impact of MACRA.
“There will be winners and losers in this,” Zall says. “The legislation requires MACRA to be budget neutral, so if some hospitals get more for meeting the data and quality requirements, other hospitals are going to get less. The spread is expected to be as much as 9% either way, getting that much less or that much more.”
Assessing a hospital’s potential performance under MACRA can seem daunting, but Bajner says the data in quality review and utilization review reports can useful.
“There is a lot of good detail in those reports, including performance on key quality and efficiency metrics that likely will correlate very strongly with performance under MIPS,” Bajner says. “The next step is understanding what you can do to improve that so that you’re receiving bonuses under MACRA instead of penalties.”
Bajner sees an opportunity for quality leaders in hospitals to become the in-house “MACRA expert,” a position that will bring attention from top hospital leadership because the facility’s performance will have such a direct effect on the hospital or health system’s bottom line. That effect also should lead to the in-house expert having considerable influence on any decision or quality improvement effort that affects MACRA performance.
MACRA will require healthcare organizations to use EHRs more effectively, says Wayne Dix, vice president for healthcare management at the consulting firm SSA & Company in New York City.
“It’s going to have to be a broader use of electronic records in a way that captures the costs more effectively, to demonstrate resource consumption, outcomes, and value creation,” Dix says. “There will have to be an increased investment in recordkeeping and the underlying technologies.”
Dix questions whether MACRA will be in place long enough for hospitals to invest in a long-term strategy that may involve substantial investment in technology and other resources. Doubt about the longevity of the rule could make healthcare organizations hesitate, he says.
“They will want to know they can build toward something and that their investments are not in vain,” Dix says.
Richard F. Bajner Jr., Managing Director, Navigant, Chicago. Telephone: (312) 583-3740.
- Wayne Dix, Vice President for Healthcare Management, SSA & Company, New York City. Telephone: (914) 483-7752.Email: firstname.lastname@example.org.
- Marc Mertz, MHA, FACMPE, Vice President, GE Healthcare Camden Group, Los Angeles. Telephone: (310) 320-3990. Email: email@example.com.
- Richard J. Zall, JD, Partner, Proskauer, New York City. Telephone: (212) 969-3945. Email: firstname.lastname@example.org.