Jump to MACRA

Physician payments are moving away from traditional models.
Are your customers prepared for the change?

Reimbursing doctors on the basis of quality and value of care is here, and it won’t be reversed, says Pamela Ballou-Nelson, RN, MSHP, PhD, PCMH CCE, senior consultant, Medical Group Management Association. Right now, it is the Centers for Medicare & Medicaid Services that is moving forward quickly with value-based programs, but private payers are following and creating programs of their own.

In January 2015, Health & Human Services Secretary Sylvia Mathews Burwell publicized her goals to improve the nation’s health delivery system. One of those goals is to tie 85 percent of all traditional Medicare payments to quality or value by 2016 and 90 percent by 2018.

The feds took a big step in that direction by passing the Medicare Access and CHIP Reauthorization Act of 2015, or MACRA, signed into law by President Obama in April 2015. The legislation repeals the Sustainable Growth Rate (SGR) formula and provides predictable payment increases, at least for awhile, points out the American Hospital Association in a recent Issue Brief. By 2019, CMS will have implemented a new two-track payment system for providers (Alternative Payment Models, or APMs; and the Merit-based Incentive Payment System, or MIPS), which continue the move away from fee-for-service reimbursement.

MIPS is based on the fee-for-service model, and is comprised of four performance categories: quality, resource use, clinical practice improvement and meaningful use of electronic health records. From 2019 onward, Medicare will provide additional incentives for providers to move to an Alternative Payment Model, such as an accountable care organization or patient-centered medical home.

“Some physician practices whose Medicare base is 25 or 30 percent might not be too excited by the changes,” says Ballou-Nelson. “Other practices might say ‘I’m 90 percent commercial pay, so this doesn’t pertain to me.’” But private insurers are watching what the Centers for Medicare & Medicaid Services is doing, and creating value-based programs of their own, she says. Physician practices need to get ready. And the reps who call on them can help.

What it’ll take
To be successful in the new payment models, physicians, staff and administrators will need to master a few skills, says Jerry Penso, M.D., MBA, chief medical and quality officer, American Medical Group Association, and president, AMGA Foundation. (AMGA and the American Hospital Association recently announced a learning fellowship on managing population health and succeeding under the new payment rules.) They must:

Understand alternative payment models or the merit-based incentive payment system required by 2019 because of the MACRA.
Build a business case for participation in a value-based payment contract.
Develop a successful culture that enables their organization to implement programs that promote quality and efficiency.
Leverage IT to achieve performance management goals that align with new physician payment models.

“More and more physicians are now practicing in health systems that will take on risk as part of outcomes-based contracts,” says Penso. “MACRA will add an additional push to risk by providing incentives to practices that adopt risk as part of alternative payment models. Risk and accountability for performance on quality, efficiency, and patient experience will require unprecedented collaboration among providers of care. Creating an organized, integrated delivery system is hard work, and will require both physician and hospital changes in existing processes.”

new take on ‘team’
Physicians will have to become more team-oriented in order to succeed in the new payment environment, says Ballou-Nelson.

“The premise of the physician shouldering all the burden and responsibility for what’s going on in the practice cannot continue,” she says. “It leads to high burnout. Everybody has to function in the office at the highest level. They have to be united on the common goals of quality measurement, outcomes orientation and total cost of care. When you look at the whole medical home concept, you’re looking at the doctor of tomorrow.”

Increasingly, the medical team will include the patient himself or herself.

“In a value-based world, the patient has to be a key part in order to achieve the outcomes on which the physician will get paid.” Traditionally, doctors were in charge, telling patients what to do and when. “There were no repercussions to the physician if the patient didn’t follow through,” she says.

Some physicians may balk at being held at least partially accountable for things their patients do – or don’t do. After all, the doctor can’t drive each patient to the imaging center for her mammogram. But the team has to know how to talk to patients and what motivates them, says Ballou-Nelson. They have to know each patient’s activation measure (PAM) – that is, the degree to which he or she is motivated to shoulder at least some responsibility for their own health – and adjust their workflow accordingly.

Medical suppliers can play a part by providing their customers products and services that can help patients manage their own care, she adds.

Successful physician groups will also understand that the extended healthcare “team” includes community or commercial resources, such as commercial weight loss programs (e.g., Weight Watchers), says Ballou-Nelson. In the past, many doctors were reluctant to advise their patients to seek such outside resources, for fear of losing control or concern about what might happen if the treatment should somehow harm the patient, she points out. “But you hardly hear that anymore. Those community resources can be great assets to physician practices, and practices can be great assets to those resources. I see that happening over and over again.”

Total cost of care
To succeed in tomorrow’s payment environment, physicians will have to balance bedside manner with the ability to understand and use data, adds Ballou-Nelson.

“They will be much more tech-savvy, and they will use the electronic health record in a way we can only dream of today,” she says. By analyzing data from the EHR, they will gain a frame of reference on which to operate day to day, which can help them answer the simple question, “What do I need to change in order to meet the outcomes on which my reimbursement is based?”

“We’re still struggling today, in 2016, to get data that informs us or gives us insight,” she says. “We’re struggling with how to pull the data together from disparate sources. Regarding analytics, we have only begun to scratch the surface. And that will be a challenge as we move into a value-based world, as we look for information to help us understand what we need to do to improve the total cost of care.”

Looking at the “total cost of care” requires that physicians and staff carefully define the population for whose health they are accountable, says Ballou-Nelson.

“So many physicians have an electronic health record with 4,000 names,” she says. “But when you sort them out, you have to ask, ‘How many are active?’” Not only does the physician practice need the names of active patients, but also information about their insurance contracts.

“Calculating the total cost of care in 2026 will be the norm,” she says. And that total cost of care will encompass outpatient visits, hospitalization and post-hospitalization. Physicians may argue that they can’t control what happens outside their office. “But the doctor in the practice of the future – even if he is independent or employed – will be part of a larger organization [whose members) integrate care, collaborate and seek to understand how the cost of care will impact value.

“It’s kind of like a snowflake, with many interdependent pieces.”

The challenge for physicians
Transitioning to new payment models will require substantial cultural changes in physician practices, says Penso. “New frameworks for leadership and governance that align shared system goals will need to be created that enable physician and care team performance.”

Says Ballou-Nelson, those practices that thought they could enter this new era with an inexpensive, first-generation electronic health record system may have problems. “They will find themselves in a bind getting the information needed to meet the basic requirements of the contract, let alone integrating that data with anyone else’s.”

The government is moving toward data transparency and alignment of data across the healthcare infrastructure, she points out. But inexpensive, early-stage EHR systems may not be able to deliver that. So there’s an investment needed.

With that in mind, Ballou-Nelson advises her physician practice clients to remember the story of the lumberjack who was given five minutes to cut down a tree, lest he face dire consequences. He spent the first three of those minutes sharpening his axe.

The good news is, many physicians have already begun to “sharpen their axes.”

“Many physician groups are investing heavily in information technology to facilitate data exchange between providers and sites of care,” says Penso. “They are also implementing population health analytics solutions to evaluate and target patients for care management and other clinical interventions.”

Practices that are heavily involved in the Patient Quality Reporting System, or PQRS, as well as Meaningful Use of electronic medical records, have a head start thriving in the new payment environment, says Ballou-Nelson.

“There are still physicians who say, ‘This is all going to go away.’ But three out of four hospitals have electronic health records. And why, in the age of automated banking and cars that can drive themselves, would we want to go backward in healthcare?”

Further reading on physician payment reform

MACRA is made easy in the American Hospital Association Issue Brief, Physician Payment Reform: What is the MACRA? at http://www.aha.org/content/16/16macraissuebrief.pdf

The Centers for Medicare & Medicaid Services provides informative Q&As at https://innovation.cms.gov/Files/x/macra-faq.pdf; and https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/MACRA-MIPS-and-APMs.html

The ‘activated’ patient

Your physician customers are being held accountable for the good health of their patients. But they can’t do it alone. Patients must help.

The Patient Activation Measure, or PAM, is a scale that reflects a developmental model of activation, according to research published by Health Services Research. To be highly “activated,” a patient must:

Believe the patient role is important
Have the confidence and knowledge necessary to take action
Actually take action to maintain and improve one’s health
Stay the course even under stress

Physician Payment Reform101

Questions and answers about MACRA

Q: What is the MACRA?

A: On April 14, 2015, Congress passed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). President Obama signed the MACRA into law on April 16, 2015. It repeals the Sustainable Growth Rate (SGR) formula, which linked Medicare annual payment updates for physicians and other professionals to prior year spending and gross domestic product (GDP) growth.

MACRA contains scheduled Physician Fee Schedule (PFS) updates, a new Merit-Based Incentive Payment System (MIPS), a new Technical Advisory Committee for assessing Physician Focused Payment Model (PFPM) proposals, and incentive payments for participation in Alternative Payment Models (APMs).

Q: What section of the MACRA addresses the new methods of payment for eligible professionals (EPs)?

A: Section 101 of the MACRA:

Repeals the Medicare SGR methodology for updates to the physician fee schedule and implements scheduled fee schedule updates, including a higher update rate for “qualifying APM participants” beginning in 2026.
Adds the new MIPS for eligible professionals (EPs).
Sunsets payment adjustments under the current Physician Quality Reporting System (PQRS), the Value-Based Payment Modifier (VM), and the Medicare Electronic Health Records (EHR) Incentive Program, often referred to as the Meaningful Use (MU) program; and consolidates aspects of those programs into the new MIPS.
Promotes the development of alternative payment models by providing incentive payments for certain eligible professionals who participate in APMs and by encouraging the creation of additional physician-focused payment models.

Q: What is the timeline for the MIPS program and incentive payments for participation in alternative payment models?

A: MIPS payment adjustments and APM incentive payments will begin in 2019, based on performance or APM participation, respectively, in a prior performance period.

Q: What are the options for eligible professionals (EPs) under the MACRA?

A: Eligible professionals can participate in MIPS or meet requirements to be a qualifying APM participant. Eligible professionals in MIPS can receive a positive, downward, or neutral payment adjustment, starting at plus-or-minus 4 percent in 2019 and growing to plus-or-minus 9 percent in 2022 and later. EPs who are determined to be qualifying APM participants for a given year will be excluded from MIPS and receive a 5 percent lump sum incentive payment for that year. The APM incentive payment will be available from 2019 through 2024. Beginning in 2026, qualifying participants will receive a 0.75 percent fee schedule update, and all other eligible professionals will receive a 0.25 percent fee schedule update.

Q: What is the Merit-Based Incentive Payment System, or MIPS?

A: The Merit-Based Incentive Payment System combines parts of the Physician Quality Reporting System, the Value Modifier (VM, or Value-based Payment Modifier) and the Medicare Electronic Health Record incentive program into one single program based on:

Quality
Resource use
Clinical practice improvement activities
Meaningful use of certified electronic health records

Based on the Composite Performance Score, eligible professionals may receive an upward payment adjustment, a downward payment adjustment, or no payment adjustment.

Q: How does MIPS relate to the goals of tying payment to quality and value?

A: In January 2015, Health & Human Services Secretary Sylvia Mathews Burwell publicized her goals to improve the nation’s health delivery system. One of those goals is to tie 85 percent of all traditional Medicare payments to quality or value by 2016 and 90 percent by 2018. MIPS helps to meet this goal by linking Medicare fee-for-service payments to quality and value.

Q: What is an alternative payment model, or APM?

A: A Medicare APM is one of the following:

A CMMI model under section 1115A (other than a Health Care Innovation Award). (CMMI is the Center for Medicare & Medicaid Innovation, part of CMS.)
Medicare Shared Savings Program (MSSP).
A demonstration under the Health Care Quality Demonstration Program.
A demonstration required by federal law.

Q: How do APMs under the MACRA relate to the Administration’s goals for tying payments to quality and value through APMs?

A: In January 2015, Secretary Burwell announced the Administration’s goals to improve our nation’s health delivery system that 30 percent of traditional Medicare payments would be tied to alternative payment models by the end of 2016, and 50 percent of such payments would be tied to these models by the end of 2018. The MACRA will encourage more eligible professionals to participate in APMs and eligible alternative payment entities, both of which link quality and value to payment. The payment incentive for eligible professionals who qualify as QPs will only be available through alternative payment entities, a subset of APMs, but it is a powerful incentive to increase participation in those entities. Eligible professionals in APMs who do not reach the qualifying APM participant standard will receive favorable scoring under certain MIPS categories.

Q: How can eligible professionals qualify for incentive payments for participation in APMs?

A: Eligible professionals must meet certain thresholds to be QPs and qualify for incentive payments. In 2019 and 2020, they must have 25 percent of their payments or patients through an eligible alternative payment entity. In 2021 and 2022, EPs must have 50 percent of their payments or patients through an eligible alternative payment entity, or through a combination of an eligible alternative payment entity and certain other payer arrangements. In 2023 and later, eligible professionals must have 75 percent of their payments or patients through an eligible alternative payment entity or through a combination of an eligible alternative payment entity and certain other payer arrangements.

Q: What other payer arrangements count towards becoming a qualifying APM participant (QP)?

A: Beginning in 2021, eligible professionals can also qualify as a QP based on thresholds for combined payments from Medicare and other payers. This is called the combination all-payer and Medicare payment threshold option. Under this option, eligible professionals must meet a minimum percentage (25 percent) of Medicare payments for covered professional services or patients through an eligible alternative payment entity and the overall threshold through other payer arrangements that have similar requirements to those for eligible alternative payment entities.

Source: Centers for Medicare & Medicaid Services, https://innovation.cms.gov/Files/x/macra-faq.pdf; and https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/MACRA-MIPS-and-APMs.html

MACRA: Fast facts

The Medicare Access & CHIP Reauthorization Act of 2015 makes three important changes to how Medicare pays providers:

Ending the Sustainable Growth Rate (SGR) formula for determining payment rates.
Making a new framework for rewarding health care providers for giving better care, not more just more care.
Combining existing quality reporting programs into one new system.

MACRA payment reforms are intended to make it easier for more healthcare providers to take part in CMS’s quality programs in one of two ways, which will go into effect over a timeline from 2015 through 2021 and beyond:

Merit-Based Incentive Payment System (MIPS).
Alternative Payment Models (APMs).

Alternative Payment Models (APMs) offer new ways to pay providers for the care they give Medicare beneficiaries. Examples include accountable care organizations, patient-centered medical homes, and bundled payment models.

From 2019-2024, APMs pay some participating healthcare providers a lump-sum incentive payment.
APMs encourage increased transparency of physician-focused payment models.
Starting in 2026, APMs offer some participating health care providers higher annual payments.

Source: Centers for Medicare & Medicaid Services, https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/MACRA-MIPS-and-APMs.html

Will your customers be winners?

Physician practices implementing the following clinical practice improvement activities can expect higher payments under the Merit-Based Incentive Payment System, or MIPS:

Expanded practice access, such as same-day appointments for urgent needs and after-hours access to clinician advice.
Population management, such as monitoring health conditions of individuals to provide timely healthcare interventions or participation in a qualified clinical data registry.
Care coordination, such as timely communication of test results, timely exchange of clinical information to patients and other providers, and use of remote monitoring or telehealth.
Beneficiary engagement, such as the establishment of care plans for individuals with complex care needs, beneficiary self-management assessment and training, and using shared decision-making mechanisms.
Patient safety and practice assessment, such as through use of clinical or surgical checklists and practice assessments related to maintaining certification.
Participation in an alternative payment model.

Source: “CMS Quality Reporting Programs under the 2016 Medicare Physician Fee Schedule Proposed Rule,” July 16, 2015, Medicare Learning Network, Centers for Medicare & Medicaid Services, https://www.cms.gov/Outreach-and-Education/Outreach/NPC/Downloads/2015-07-16-PQRS-Presentation.pdf