We expect to see ongoing shifts with the Medicare Access and CHIP Reauthorization Act's Quality Payment Program as feedback is received from stakeholders regarding implications. Regardless of these shifts, MACRA continues to drive changes in how care is delivered, improve patient health and increase care efficiency over time. QPP policy changes and newly proposed adjustments continue to restructure how eligible clinicians are paid under Medicare. These changes can pose both threats and opportunities to future payer and provider revenue.
With the first reporting year of the QPP already underway, crafting a MACRA strategy can't be avoided. Although the QPP's Merit-based Incentive Payment System allows eligible physicians to opt out of reporting, they will take a 4 percent hit on 2019 Medicare reimbursements if they do so, and perhaps more importantly, be at a disadvantage by not evaluating, planning and testing their MACRA strategy for future years. Hospitals and payers are not exempt from MACRA either — to be successful under the law, hospitals and payers need to stay ahead of changes and lay the groundwork as early as possible, according to experts from Optum.
This content is sponsored by Optum.
"MACRA is a zero-sum game. There will be winners and there will be losers," Jim Dolstad, Optum's senior director of actuarial consulting, said in an interview with Becker's Hospital Review.
This article is the first in a 3-part series looking at the short- and long-term impact of MACRA from the perspective of physicians, hospitals and payers. Part one discusses how MACRA can impact long-term financial success and how each of the major industry stakeholders — physicians, hospitals and payers — can position themselves to thrive with their patients in the future.
Financial implications of MACRA strategy
The best long-term financial strategy for providers looking to succeed, based on MACRA's intent and policies, is to work toward qualifying for the Advanced Alternative Payment Model track, according to Erik Johnson, vice president of Optum's value-based care practice. Advanced APMs, which offer physicians the potential to earn a 5 percent bonus on top of shared savings, provide a more stable path than MIPS and greater opportunity for financial rewards.
"MIPS is inherently unstable. It already has physician groups nervous," he says. "Our recommendation is to move into the Advanced APM world, but that takes time. Quality is hard. Advanced APMs are hard. Otherwise everybody would already be doing it."
The current reality is most physician practices do not qualify as advanced APMs and are subject to MIPS reporting requirements for the 2017 performance year. Even if MIPS is only a temporary challenge, it's a significant one. Positive payments awarded to physicians with stronger performance are funded by payment reductions other physicians incur, meaning it's all relative — the program is designed to be budget-neutral, ranking physicians on a curve. This poses both an opportunity and a threat to physician Medicare revenue, depending largely on three factors, according to Mr. Johnson — the measures physicians choose to report on, how well they perform on those measures and how well their peers perform in comparison.
Implementation of the QPP will not only impact physicians, but also the hospitals and health systems with whom they partner. Hospitals that employ physicians directly may bear the cost of ongoing compliance requirements and additional physician performance reporting, as well as be at risk for payment adjustments. Moreover, hospitals' inpatient revenue may be in danger as MACRA encourages physicians to lower the costs of care. In fact, Jay Hazelrigs, vice president of Optum's provider risk advisory consulting practice, urges hospitals to think about MIPS as a large, informal ACO.
To succeed in the program, physicians will be increasingly pushed to manage not only the quality of care, but also the cost of care through one of the track's four performance categories — resource use. In the first performance year, resource use will not be a factor in MIPS composite scores, but its weight is expected to increase to 10 percent in the 2018 performance year and then up to 30 percent in the 2019 performance year. Increasingly, physicians will be looking to eliminate inefficiencies and excess costs throughout the care continuum in ways that could reduce the use of hospital care, such as avoiding hospital admissions and readmissions and moving patients to lower-cost settings, thereby putting hospital revenue at risk, according to Mr. Hazelrigs.
Levers for success
MACRA has financial implications for healthcare stakeholders across the board. Despite the many challenges of participating in MIPS or an AAPM, physicians, hospitals and even payers can come out on top in a MACRA world with careful planning and strategy. Here are four tactics healthcare stakeholders can use to position themselves for success.
1. Evaluate past performance metrics. Physicians should start by taking an honest look at past Quality and Resource Use Reports to gain a better understanding of where they excelled previously in the Physician Quality Reporting System and the Value Modifier Program, which should be fairly similar to MIPS quality and resource use measures, and to identify how much more administrative work they need to take on to comply with requirements. This historical look — plus a little game theory — can help guide physicians to select the best measures for their practice.
"Picking easier measures has an intuitive attraction. But if it's easy to aggregate data and fairly easy [to perform well], a lot of folks will end up choosing them, and it will be hard to score well because the bar will be set so high," says Mr. Johnson.
Health plans should assess STARs and other quality program market place trends to consider regional impacts and adjustments. Where volume is exceeding value, plans should be prepared to address potential decreases in Medicare Advantage county benchmark rates. These may also be regions where providers are more likely to consider shifting costs to commercial contracts or to Medicare Advantage from Medicare fee-for-service.
2. Consider market peers. Mr. Dolstad also cautions both payers and providers to consider how geography can impact success in either track of the program because quality and cost vary regionally. The biggest blind spot in MIPS, especially in the early years of the program, is gauging how well other practices are doing. And in the Advanced APM track, regional variance in spending drives how CMS sets expenditure baselines for ACO models, Mr. Johnson adds. "You need to look at marketwide dynamics in addition to your own performance," he says.
3. Increased hospital consolidation and employment. As physicians go through the MACRA impacts and planning process, they will be looking to hospitals and health systems for a leg up. Larger provider entities tend to have more data and more practice with that data, which is attractive to smaller physician groups with less reporting experience. "[Hospitals] are increasingly being put on the spot by employed and affiliated physicians asking, 'What can you do to help me here? Can you get me out of MIPS to bundles or a risk-bearing ACO model?'"
While this puts the onus on hospitals to provide resources for physicians, it also puts them in the driver's seat for consolidation. "Health systems can help quantify some of the opportunity and risk physicians might face, which is why there is going to be some implicit pressure for greater M&A activity in these markets," Mr. Johnson says.
Hospitals also control a significant portion of the healthcare dollar through acute and post-acute care, which will play a large role in success under value-based care programs. "Hospitals have the ability to help aggregate physicians, provide that capital and that risk shelter area to help physicians move along and be able to manage populations and manage risk, which is required under both the MIPS and Advanced APM tracks," Mr. Hazelrigs says.
4. Plan for MACRA's affect on commercial business. Physicians trying to avoid MIPS reporting may also try to refocus their patient base in Medicare Advantage — a trend payers need to be aware of and prepared for, Mr. Dolstad says. However, beyond the initial shift to Medicare Advantage, payers should tune in and consider how MACRA will shape future commercial business. "As we think about Medicare and what it's done historically — DRGs and risk adjustment — ultimately all of those concepts made their way into commercial plans and Medicaid," Mr. Dolstad says. "As a result of that, we think it's likely MACRA has the potential to have that same cascading impact into commercial business."
In particular, Mr. Dolstad believes MACRA, "There is that natural friction right now. This could bring the wheels to a halt, or be the lubricant that streamlines everything," he says.
Conclusion
MACRA and QPP will continue to shift and evolve as feedback is received, but regardless of the current policy or pace of change, MACRA's objectives remain clear and consistent. And while there is no one surefire way to win or lose under MACRA, Optum's experts advise payers and providers to simply understand the impacts and stay ahead of the changes. "Understand where you are today based on data driven analyses, not assumptions. Understand what your options are and the resulting implications of changes, including partnering with other physicians, health systems or gaining alignment between providers and payers to understand how you can be successful," Mr. Hazelrigs says.
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