How MACRA Implementation Rules Affect Provider Profitability

October 19, 2016 - New value-based reimbursement models under the Quality Payment Program will launch on Jan. 1, 2017, leaving a couple of months for providers to educate themselves on MACRA implementation rules and prepare their practices for the shift.

But taking the time to understand MACRA and its healthcare revenue cycle implications may better position eligible clinicians for value-based incentive payments, Dorrie Guest, Managing Director and Physician Enterprise and Ambulatory Services leader at Deloitte Consulting LLP, recently told RevCycleIntelligence.com.

“The first thing that physicians need to do, as well as the executive and administrative structures around them, is to understand the law and the implications to their financial, clinical, and business operations,” said Guest, a former vice president at a 600-physician faculty practice group.

Education is a crucial first step for many providers, especially since a July survey from the Deloitte Center for Health Solutions found that half of non-pediatric physicians had never heard of MACRA and only 32 percent of the 600 physicians surveyed recognized the name of the legislation.

At this point, Guest added, eligible clinicians, especially those who are unfamiliar with MACRA implementation rules, need to understand how the Merit-Based Incentive Payment System (MIPS) will affect their Medicare payments based on their 2017 performance.

“Those physicians who don’t know about MACRA and its financial, clinical, operational, reputational impact, need to educate themselves,” said Guest. “They need to know what their vulnerabilities are under the MIPS program because that’s likely to apply to them unless they are part of a large group that has taken care of it for them and they’re just unaware.”

Provider profitability will also depend on how eligible clinicians are preparing for the shift to the Quality Payment Program, Guest contended.

“There’s the potential for the upside in MIPS or in the Advanced Alternative Payment Models (APMs) for eligible clinicians who are meeting the quality- and cost-based performance standards and demonstrating the behavior that is intended to be driven by the MACRA regulation,” she said.

Eligible clinicians may boost their profitability under the Quality Payment Program by aligning their care delivery and operational strategies with MACRA objectives.

“Their profitability will go up, especially if they are doing the things that MACRA is intending, which is driving better care coordination, transitions of care, chronic disease management, quality, and outcomes as well as lower costs and less duplicative services,” Guest asserted. “Not only do you have the benefit of potentially getting the payment bonuses under MIPS or the shared savings bonuses under Advanced APMs, but you’re likely doing things that allow you to tap into the additional reimbursement made available for the chronic condition, care management, and care transition codes.”

On the other side, providers who are still struggling with Meaningful Use requirements or have not invested in population health management, clinical practice improvement activities, and reporting capabilities may experience significant decreases in profitability, Guest added.

While the Quality Payment Program offers possible profitability boosts, Guest noted that some providers will still need to invest in infrastructure and practice transformation projects.

“There’s a revenue pick-up, but there’s also an expense to net out against that to meet the requirements,” she said. “For those physicians who are still behind the eight-ball and they aren’t where they need to be with meeting Meaningful Use, the lift is going to be heavier. They are going to have to invest in infrastructure that will net against their one to three years of profitability.”

In particular, profitability under the Quality Payment Program may be an issue for providers in small and independent practices. The Deloitte survey from July also found that 58 percent of providers would consider joining a larger healthcare organization to gain access to more value-based care capabilities and better manage financial risk under alternative payment models.

However, Guest pointed out that small practices already participating in Medicare payment reform programs may be equipped to succeed in the Quality Payment Program while remaining autonomous.

“While those smaller practices that are ill-prepared may find themselves in a situation where chopping themselves for an acquisition might be attractive, others have been preparing along the way by participating in Physician Quality Reporting System, having their eye on the ball with the Value-Based Modifier, and toe-dipping with commercial payers into shared savings or other risk arrangements,” she said.

Guest also remarked that small, independent practices that have forged partnerships with other healthcare providers or stakeholders may also be more prepared for new value-based reimbursement models.

“Many small practices are very sophisticated in their use of data, technology, EMR systems, and financial systems,” Guest continued. “They may be independent, but they are part of an IPA [independent practice association] or they collaborate in a clinically integrated network with other physicians and other health systems.”

Guest stated that being financially viable and autonomous under the Quality Payment Program is possible and she predicted that small, independent practices will develop innovative networks to share the burden of the infrastructure, while still promoting independence.

Fortunately for providers, the final MACRA implementation rule codified several transitional pathways to ease eligible clinicians into the Quality Payment Program.  The flexible attestation options range from testing the program by submitting some data to MIPS to fully partaking in an Advanced APM.

“I do think that there needs to be some options given the level of awareness that not only our Deloitte survey, but others have seen,” Guest said before the final rule was released. “The intent is not to penalize physicians, but to get them focused on the things that they went to medical school for in the first place, which is to improve quality and health status in patient panels. We don’t want to overly penalize them for not having gotten prepared as fast as some of their other colleagues.”

MACRA implementation rules should also ease administrative burdens by standardizing quality measures and reporting, Guest added.

“Back before the HIPAA transaction, we in revenue cycle practices had tremendous variation in how we filed claims, got information back in terms of explanations and benefits, and managed authorizations,” Guest explained. “Standardizing all of that through HIPAA transactions has really eased the administrative burden and brought consistency to the revenue cycle.”

“I’m hopeful that the MACRA rules and regulations will help to bring that same kind of consistency and ease of burden as it relates to quality and cost reporting.”

Oftentimes providers navigate thousands of quality measures and measure specifications for quality reporting depending on their payer mix, but MACRA may encourage other payers to adopt a common set of measures.

“As the legislation takes hold, I’m hopeful that there is a migration to standardization and consistency across metrics and reporting mechanisms that allow that to be applied across all payer-provider relationships rather than just Medicare,” she continued. “There’s a significant benefit to standardizing that so you can get back to the business of actually proving the quality as opposed to spending a lot of time and resources figuring out how to report upwards of 2,000 different metrics.”

Dig Deeper:

• CMS Timelines for Stage 3 Meaningful Use, MACRA Implementation

• What We Know About Value-Based Care Under MACRA, MIPS, APMs