The Medicare Access and Children's Health Insurance Program Reauthorization Act of 2015 (MACRA) has been widely discussed since CMS published proposed rules in May 2016..
MACRA replaces the Sustainable Growth Rate for Medicare Part B professional fee reimbursement, and it will be a disruptive force pushing the market away from volume-based fee for service reimbursement models. The proposed MACRA rules have made it clear that CMS is serious about its goal to tie at least 50% of CMS' reimbursement models to two new Quality Payment Programs (QPPs) by 2018. These models are known as Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Model (APM). Both models favor quality and value over volume.
There is no question that MACRA will have a deep impact on how healthcare is delivered, measured, and paid for in the coming years. It will affect the various segments of the healthcare provider spectrum in materially different ways. We believe that Academic Health Systems (AHSs) and their affiliated Faculty Practices Plans (FPPs) will be disproportionately affected by MACRA.
This article addresses how AHS leadership can take action now to assess and plan the steps necessary to prepare for MACRA's impacts and lays out four key priorities to address the issues.
Why will MACRA impact AHSs so much?
Due to clinical complexity and the teaching mission, academic health systems struggle with higher costs of care. Referrals frequently come from non-aligned primary care networks which are distributed over a wider geographic area than typical community-based health systems. As a result, AHSs are likely to have difficulty managing the data to demonstrate quality with such a high-acuity patient population, and could be poorly positioned to hit the metrics of success under MACRA. Furthermore, FPPs are often loosely structured confederations of clinical services, and, as currently constructed, FPPs may have limited resources to manage cost, align clinical performance, and effectively coordinate patient care across the continuum.
We believe that most AHSs' FPPs will participate in the Quality Payment Program MIPS track, at least for the early years that the new program comes into effect. This track, by definition will provide lower reimbursement than institutions that choose APM . The transition to APM will be resource intensive and, as currently designed, will create a great deal risk for AHSs due to the current definitions requiring "nominal risk" to the provider to achieve the improved reimbursement attainable by APM involvement. Furthermore, APM qualification for enhanced reimbursement is measured at the entity level. This means that due to the decentralized nature of the average FPP, a given clinical department or division could have high quality, but due to overall performance of the FPP, the APM entity may not. AHSs have a steep hill to climb in order to successfully participate in the APM track and thus receive the proposed performance bonus of this track of the QPP.
Another dimension that disproportionately affects AHSs is that, even though MACRA is described as a Part B payment mechanism, the resource-usage metric increases in value over time so it will be affected by a system's Part A and Part B total beneficiary cost. This will require the AHS and FPP to work together and think much more carefully about how they manage cost and coordination of care to Medicare recipients. We should note that this is something that hospital systems should be doing all along, but under MACRA as much as 25 percent of reimbursement could be at risk over time. Perhaps more importantly, more payors will adopt the MACRA Quality Payment Program as CMS continues its push to move all providers into two-sided risk arrangements like the initial group of APMs.
MACRA is widely expected to make it increasingly difficult for physicians to remain independent. AHSs are also likely to see heightened interest on the part of remaining independent community physicians to become employed. That will put additional stress on the integration of community physicians into the AHS delivery model, and will increase pressure on addressing how AHSs' traditional faculty collaborate and integrate effectively with community practitioners. Peaceful coexistence among community-based and faculty practices will not work as well in a post-MACRA world. Instead, a better-aligned, clinically integrated structure that delivers care in the most cost-effective manner will be essential.
Three priorities to address MACRA
We believe that AHSs need to pursue the following priorities to prepare now for MACRA.
• The top priority is to gain a full understanding of an AHS' current readiness for MACRA requirements. This means deep assessments of group structure, operations, and financial support infrastructure. EHR and practice management systems need close review, as quality measures will also be captured in the EHR and separately reported via the Group Practice Reporting Option (GPRO). The assessments must include an understanding of how quality metrics will be reported; which vendor or "conduit" of reporting will be used; and the revenue cycle's claims filing process.
• The second priority is to determine a specific action plan for efficiently aligning quality metrics and outcomes reporting across the ambulatory/outpatient and post-acute care continuum. To a large extent, this will help determine the appropriate way to report data for MACRA participation purposes. This needs to be integrated with inpatient reporting and measurement activities, and, if they exist, service lines, with an equal focus on ambulatory and inpatient coordination of care. Having a separate group for community-based physicians versus those in the tertiary AHS setting may no longer work, and this has important implications for revenues and cost reporting. Additionally, carefully considering provider based status and the related revenue that is derived from this separate Medicare program should be evaluated if the AHS is a participant.
• The third priority, but perhaps the most important, is for AHSs to begin this work immediately. MACRA does not go into full effect until 2019, but the measurement of quality and outcomes begins in 2017 and 2018. Waiting to begin the necessary assessments and strategic planning could magnify the ultimate impact on the AHS. For example, bringing together Part A and Part B costs and resource usage will not be a big issue in the first year or two under MACRA, but as the Resource Use weighting in the CPS increases over the next three to five years it has the potential to become a deeper and bigger hole for an AHS that neglects it. It also requires greater control over patient-access infrastructure including the referral management process, and has implications for AHSs that are regional or national in scope and reach, such as those focused on transplants, oncology, or other highly specialized care. Having a strong cost management toolset is a critical consideration for all MIPS participants and given the cost structure issues mentioned earlier, it is a critical need for AHSs and their Faculty Practice Plans.
MACRA is a very complicated set of requirements, and it is still in flux. The comment period for stakeholders closed in late June, and there will likely be some changes as a result. However, one certainty today is that no AHS can ignore MACRA. More importantly, planning must start now in order to gain a full appreciation of a given AHS' actual readiness for MIPS and AMP.
We believe that AHSs that adopt best practices early will be in a better position than those that take a wait and see attitude. We also believe that AHSs that carefully plan and link their MACRA adoption process to their overall strategic planning around the shift of the AHS reimbursement to value based reimbursement models will have a clear advantage. AHSs that focus on patient engagement and patient safety, and can demonstrate real cost and quality outcomes across the full continuum of care, will be the best positioned for the future.
About the authors
Andrew A. Ziskind, M.D., Managing Director, Huron
Dr. Ziskind has more than 25 years of experience in clinical care and academic health system leadership. He is an MGH-trained interventional cardiologist with extensive clinical and administrative experience. He has developed and led innovative primary care and specialty delivery systems that span both academic medical centers and community hospitals, and has vast knowledge and leadership involvement in accountable care, payment reform and population health. Dr. Ziskind has experience in national and international consulting and was recognized by Consulting Magazine as one of the 25 most influential consultants in 2013. During his career, Dr. Ziskind has served as Vice Dean for Clinical Affairs and Health System Vice President at the University of Washington and served as President of Barnes-Jewish Hospital, and Group President at BJC Healthcare. At Huron Healthcare, he leads Healthcare Transformation and Physician Solutions groups focused on strategy, building clinical performance, supporting ambulatory operations, physician alignment, and care continuum optimization at hospitals, health systems and academic medical centers.
Victor Arnold, Managing Director, Huron
Victor has more than 25 years of executive industry and consulting experience spanning academic healthcare, senior management, and consulting services for large academic healthcare systems, private healthcare systems, and government healthcare programs. Additionally, he has served as a senior leader for large healthcare management information systems vendors. At Huron he has led large, complex engagements for AMC, Regional and National clients. These projects have focused on clinical and academic funding and cost analysis, clinical practice efficiency and expense optimization, specialty and primary care staffing and team based care models including patient centered medical homes along with physician/faculty total compensation plans and implementation. During his career Mr. Arnold has served as a Chief Operating Officer, Chief Information Officer and Chief Executive Officer for large private and public Faculty Practice Plans.
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