MACRA Roadmap: 9 questions on a post-SGR world, answered

Last April, to the relief of many providers, Congress passed the permanent "doc-fix" to repeal the flawed sustainable growth rate formula that determined Medicare physician fees. It was replaced with legislation — the Medicare Access and CHIP Reauthorization Act, or MACRA — that promises to pay physicians for value over volume in a way that jells with the goals of individual medical practices and patient-centered care.

"It's unique — it enjoys strong bipartisan support, unlike other healthcare proposals in the past few years," says Igor Belokrinitsky, partner at PwC Strategy&. "CMS is really taking the lead in transforming healthcare in a way that helps stakeholders, as opposed to kicking the can down the road."

Comments from CMS Acting Administrator Andy Slavitt indicate the administration is truly trying to get it right this time. "The stakes are high for this program. As any physician will tell you, physician burden and frustration levels are real," Mr. Slavitt said in January at the J.P. Morgan Annual Health Care Conference. "Programs designed to improve often distract. Done poorly, measures are divorced from how physicians practice and add to the cynicism that people who build these programs just don't get it.”

MACRA is set to roll out in 2019, but 2017 could mark the start of performance measurements that will determine reimbursement in 2019. For physician practices that have been sitting back — it's time to assemble a preparation plan and put it in motion.

Here are answers to nine questions on MACRA basics.

1. What does MACRA entail?
At its simplest, MACRA makes three major changes to Medicare reimbursements. First, it ends the SGR formula. Second, in its place it establishes a new framework to reward physicians based on performance and health outcomes other than volume. Lastly, it aims to combine existing quality reporting programs into one streamlined system.

As part of this, it establishes an annual physician fee schedule update of 0.5 percent from 2016 to 2019. After that, the Medicare physician fee schedule will remain at 2019 levels through 2025. Beginning in 2019, qualified physicians and physician groups will opt to enter one of two new tracks for payment: the Merit-based Incentive Payment System or Alternative Payment Models.

However, Rivka Friedman, practice manager of research and insights at The Advisory Board Company cautions providers that MACRA will not be a panacea for low reimbursements. "The biggest thing we have been telling providers is while SGR wasn't a wonderful architecture for payments, MACRA doesn't provide all that much relief in how much increase in payments providers will see," says Ms. Friedman.

2. How will physicians get paid under MIPS?
MIPS will likely be the preferred choice of the two programs due to its familiarity, according to Mr. Belokrinitsky. Under this program, CMS is taking an incremental approach to linking fee-for-service payments to quality and value. MIPS will subsume the Physician Quality Reporting System, the Value-based Payment Modifier and the Medicare Electronic Health Record incentive program for eligible providers.

These payment adjustments will be rolled into one program with four categories: quality, resource use, clinical practice improvement and meaningful use of EHRs. Clinicians' performance in each category will be compiled into a composite performance score that will ultimately determine their payment adjustment. Composite scores above or below the mean will translate into positive or negative payment adjustments to the base rate of Medicare Part B payments accordingly. The potential maximum adjustment increases each year from 2019 to 2022, when the maximum adjustment is a gain or loss of 9 percent. To keep MACRA budget neutral, it will allow the positive adjustment to be scaled up to three times greater.

This means the swing — how much a provider can lose or gain under MIPS — ranges from gains of up to 27 percent to losses of up to 9 percent on payment adjustments by 2022, according to Ms. Friedman.

What makes MIPS unique from prior programs is providers whose composite score is at the threshold will not have payment adjusted at all. This effectively eliminates the pass-fail, all-or-nothing approach of the old payment adjustments, as American Medical Association Board Chair Stephen Permut, MD, notes. "Under the MIPS, the aggregate financial risk is less than under the previous Medicare quality and reporting programs," Dr. Permut wrote in an AMA blog.

The MIPS program may feel safer because it eliminates the pass-fail approach to payment adjustments and because providers are already familiar with the payment adjustment systems that make its foundation, but physicians should note lower risk does not necessarily make for higher payments. In particular for physicians who currently don't do well in PQRS, MU or other existing payment adjustments, MIPS may not be the breath of fresh air they expect.

3. How are payments determined for APM?
"From a strategic perspective, everyone has to do some form of MIPS," says Mr. Belokrinitsky. "APM is more of a leap forward than an incremental step."

APM builds off of existing value-based alternative payment programs like accountable care organizations, patient-centered medical homes and bundled payment programs. Under this track there are "APMs" and "eligible APMs." The key difference here is "eligible APMs" are more advanced, meet several criteria under MACRA and have a certain percentage of patients who are treated as part of the ACO, PCMH or alternative program of choice.

Those eligible APMs, also called qualifying APM participants, do not receive MIPS adjustments and instead receive a lump-sum bonus for years 2019 to 2024. This lump sum will be 5 percent of the estimated aggregate expenditures under the fee schedule for the prior year. The lump sum will transition into a higher fee schedule update starting in 2026 and beyond. In 2025, eligible APMs do not receive a lump payment or higher fee schedule, according to CMS.  

APMs continue using their own method of rewarding value, making this the more lucrative track compared to MIPS. "Risk-based models have performance incentives baked into them. APM doesn't need to double those incentives, so the lump sum is meant to be a reward for qualifying as an APM," says Ms. Friedman, who describes the lump sum as a "bump for being at risk."

That said, CMS says most physicians will be considered less-advanced APMs. Those participants will still receive their APM-specific rewards and will also be subject to MIPS payment adjustments. They receive favorable scoring for the clinical practice improvement category, of the four categories in the MIPS composite score, according to CMS.

"APM encourages providers to take on more risk. And it's no small undertaking — the average provider is still trying to figure out how to succeed under risk-based models," says Ms. Friedman.

4. Which track should my practice pick?
This is a trick question. "An important thing to know — and a source of misconception among many providers — is you can't pick between the two models," says Ms. Friedman. "You have to qualify based on your book of business."

Details are yet to come on what will categorize a provider as an APM or an advanced APM, but once those come out, organizations will be assessed to determine if they fall into one of those two categories. The rest of providers will fall into MIPS, according to Ms. Friedman. "Providers do still need to get educated about what each of the tracks entail and which they are qualified for because the payment schemes are meaningfully different," she says.

5. How does it affect meaningful use?
Many providers were excited when Mr. Slavitt announced the end of MU in January. "We are now in the process of ending meaningful use and moving to a new regime culminating with the MACRA implementation," he said at the J.P. Morgan Annual Health Care Conference. "The meaningful use program as it has existed, will now be effectively over and replaced with something better."

This statement was tempered a few days later in a CMS blog post Mr. Slavitt authored jointly with Karen DeSalvo, MD, acting assistant secretary of HHS. They wrote that MACRA is an opportunity to adjust EHR-related payment incentives, but it does not eliminate EHR-related payment systems, nor will it eliminate meaningful use woes overnight. While MACRA details are hammered out, meaningful use Stage 3 is still in effect.

Mr. Slavitt and Dr. DeSalvo also underlined the fact that any changes to meaningful use under MACRA apply only to physicians and clinicians, not hospitals, as MACRA applies only to Medicare physician payments. EHR incentive programs for Medicaid and Medicare hospitals will not change as a result of this program, though CMS is working to improve them.

6. What are some other unforeseen impacts of MACRA?
Some physicians may be bewildered at the thought of adding MACRA to the mix of payment frameworks they already deal with, including those from commercial payers, according to Mr. Belokrinitsky. "They will be saying, 'I wish these guys would all figure it out. Everyone has their own metrics and I wish it was a little bit simpler.'"

Luckily for those providers, Mr. Belokrintisky sees MACRA as a future standard framework for payers to hang their metrics on. "I think [commercial payers] are happy it's happening. MACRA is putting more pressure on providers to use alternative payment instruments," he says. "The next step is how they can bring commercial reimbursement closer in line with what's being proposed here." He says CMS' newest initiative — the Comprehensive Primary Care Plus model — requires commercial payers to partner with CMS and Medicaid agencies, indicating more collaboration between private payers and CMS could be on the horizon

However, Ms. Friedman disagrees. When asked if MACRA would inspire changes among commercial payers, she says, "Five years ago I might have said yes. We really expected private payers to follow Medicare's move to risk, and we have seen that to some extent…but generally speaking we have not seen a move to risk-based contracting on the private side to the extent we have seen it in Medicare." She says it's possible, but unlikely based on past behavior.

7. What does MACRA mean for smaller providers?
Smaller providers may face more difficulty complying with MACRA metrics, in particular the EHR and technology-based requirements or some of the qualifying APMs that require greater capital or a patient population. Mr. Belokrinitsky says MACRA does not necessarily exclude smaller practices, though it could create an impetus for more provider affiliations.

"What we've seen in our research is the larger organizations have not created the savings that everyone is hoping for," he says, also referring to research that shows physician-based ACOs tend to achieve more savings than those led by hospitals. "We do anticipate more consolidation, but more along the lines of loose affiliations," Mr. Belokrinitsky adds, noting that consolidation purely for the purpose of getting bigger will likely not be the answer. Future provider affiliations will be characterized by tight partnerships through which the entities can share capabilities, but not necessarily exchange capital, he says.

Ms. Friedman agrees that MACRA does not necessarily pose challenges for smaller providers. Instead, smaller, independent practices may actually have more agility as the sole authority in crafting their MACRA strategy. "Independent medical groups have a degree more agency in what they do to respond to MACRA that medical groups associated with hospitals or health systems won't have," she says.  

8. What can organizations do now to prepare?
Mr. Belokrinitsky advises putting together a team of administrative, financial, IT and clinical staff to prepare. Though these are reimbursement models, all decisions have to lead with quality, he says.

"That has to be reflected in the team you put together to do this. If your organization is trying to figure out how to move to these new models and no physician leadership is in the room, you are probably doing it wrong." He adds, "The second component is having tech leadership in the room. In some respect, moving to new reimbursement models requires determining your organization's technology roadmap, such as what new tech capabilities you are going to need to stand up to interoperability."  

As to what these parties should do once they come to the table, Ms. Friedman says she tells medical groups there are five key things to start with:

  • First, medical groups should be participating, or at the very least, getting ready to participate in existing quality and EHR programs that create the baseline of MACRA. That includes PQRS, MU and VPM. "Those programs will be rolled into MACRA; they are not going away," she says.
  • Second, she says the existence of APM and the associated bonus should be a major factor in medical groups' decisions to participate in risk-based models.
  • Third, she again stresses the need for physician groups to get educated on which track they are likely to fall into. While not all the information is available yet, there is plenty to get started on.
  • Fourth, Ms. Friedman recommends executives get involved. "Executives and folks steeped in policy are likely to dig into the details. Rank-and-file clinicians are not spending all their time digesting policy," she says. For this reason, a good part of the responsibility of education falls on executives' shoulders. It is their job to pass this knowledge on to clinicians because it will change the provider payment landscape.
  • Fifth and lastly, Ms. Friedman says, "Stay tuned." There is still a considerable amount of information to come.

9. What details have yet to come out?
Much of MACRA has yet to be fleshed out at a regulatory level. Once the final rule drops, a few details to look for include which exact measures will be included in MIPS and which risk-based models will be characterized as APM, according to Ms. Friedman.

For example, while we do know the four categories of performance for MIPS, we don't know specifically within these categories which metrics CMS will choose to include, which will ultimately have meaningful implications on the payments a physician will receive, according to Ms. Friedman.

Second, she says we still don't know all the requirements to be an advanced APM. According to CMS, MACRA defines an APM in general as a model under section 1115A or 1866C of the Social Security Act, or a shared savings program model under section 1899 of the Social Security Act. It says eligible APMs must have quality measures comparable to MIPS measures, use certified electronic health record technology and either bear more than nominal financial risk for monetary losses or be a medical home model expanded under the Center for Medicare and Medicaid Innovation.

In other words, while we know what is generally required to be an APM, we don't know yet with absolute certainty which types of risk-based models will be considered advanced APMs. However, some of what is published suggests that one-sided ACO programs, like the Medicare Shared Savings Program, won't count due to a lack of downside risk exposure, according to Ms. Friedman.

These details will be in the final rule, which does not yet have an expected rollout date, according to CMS.

 

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