macra

Analysis

MACRA: Disrupting the health care system at every level

Medicare Access and CHIP Reauthorization Act of 2015

MACRA is expected to drive care delivery and payment reform across the US health care system for the foreseeable future. Congress intended MACRA to be a transformative law that constructs a new, fast-speed highway to transport the health care system from its traditional fee-for-service payment model to new risk-bearing, coordinated care models. It has the potential to be a game-changer at all levels of our health care system. This page serves to be a one-stop shop for the latest on the legislation, including what the MACRA final rule means for you.

The MACRA final rule

Going to school on MACRA: Building a foundation for success

CMS released its eagerly anticipated final rule outlining the new payment programs under MACRA. At nearly 2,400 pages, even for the most “schooled” in the health policy world, who are used to reading lots of health care regulations, this is a big one.

A rule of this size and the focus of the first performance year as one of transition is entirely appropriate. The enormity of the new rules reflect the transformative intent of the law. The transition time given is an acknowledgement that the industry shift from volume to value will not happen overnight.

As we’ve said many times, MACRA is disruptive by design. Congress intended the law to put the industry on a path toward delivering much more cost-effective and outcomes-based health care. Congress and the Administration have made it clear that it will be an evolutionary process and will take place over many years. But, do not mistake this transition year as similar to past laws or policy changes that have been more about delays and “kicking the can” down the road. The MACRA journey is underway; we are full speed ahead.

Read the full article on our blog

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Are physicians ready for new value-based payment models?

"A year from now you may wish you had started today."

– Karen Lamb, PhD*

The Deloitte Center for Health Solutions 2016 Survey of US Physicians sheds light on physicians’ awareness of MACRA, their perspectives on its implications, and their readiness for change. The survey is a nationally representative sample of 600 primary care and specialty physicians who were asked about a range of topics on value-based payment models, consolidation, and health information technology. This year, we queried a subsample of 523 physicians (nonpediatric specialties) about their familiarity with the legislation.

Our survey found that many physicians are unaware of MACRA. Many also realize they likely will have to make changes to their practice to succeed under it; recognize they will need to bear increased financial risk, and understand they will require resources and support to develop the capabilities to do so.

Of the surveyed physicians:
  • Fifty percent say they have never heard of the law and 32 percent recognize it by name but are not familiar with its requirements.
  • Twenty-one percent of self-employed or independent physicians say they are somewhat familiar with the law, compared to nine percent of physicians employed by hospitals, health systems, or medical groups owned by them.
  • Eight-in-ten say they prefer traditional fee-for-service (FFS) or salary-based compensation as opposed to value-based payment models, some of which qualify under the Act’s alternative payment model (APM) track.
  • Seventy-four percent of surveyed physicians believe that performance reporting is burdensome and 79 percent do not support tying compensation to quality, both requirements under the payment reform legislation. 
  • Fifty-eight percent of physicians say they would opt to be part of a larger organization to reduce individual increased financial risk and have access to supporting resources and capabilities.

MACRA is designed to be an opportunity to get better value from health care. But as the survey results show, stakeholders—health systems, payers, and other organizations—need to work with physicians to prepare for the law’s changes. Download the report for the full findings of the survey, or view the infographic for an overview below.

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*Karen Lamb, PhD, is a senior lecturer at the School of Arts at Australian Catholic University. She is a literary journalist who specializes in life writing and the cultural context of authorship. She attributes this quote to a book of short stories that she edited earlier in her career.

Physician awareness, perspectives, and readiness

A pulse on the industry

In addition to understanding physicians’ readiness for MACRA, the Deloitte Center for Health Solutions also took a pulse on where health care industry stakeholders are in their progress toward preparing for the law.

To gauge awareness, preparedness, and perceptions about MACRA, we performed a brief online survey of 61 executives who lead or are key decision-makers with value-based care initiatives at:

  • Hospital/health systems (referenced together as health systems heretofore, 29 respondents)
  • Health plans (18 respondents)
  • Life sciences companies
    • Biopharmaceutical (biopharma) companies (eight respondents)
    • Medical technology (medtech) companies (six respondents)

We found that most organizations are familiar with some of the Act’s components and requirements, and most are beginning to prepare. The findings suggest that many executives believe MACRA is poised to disrupt relationships and in some cases, the way their business operates on a fundamental level. Some are speeding up their plans for value-based care payment arrangements due to the law. Health care organizations have a lot of work ahead of them to prepare, but developing strategies for MACRA could set them on the path toward success with value-based care.

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What is MACRA?

The Medicare Access and CHIP Reauthorization Act of 2015 is poised to drive health care delivery and payment reform across clinicians, health systems, Medicare, and other government and commercial payers.

On October 14, 2016, the US Centers for Medicare and Medicaid Services (CMS) published the final rule that will implement key features of this law: the Merit-based Incentive Payment System (MIPS), which would apply to all eligible clinicians that Medicare pays under the Physician Fee Schedule (PFS), as well as the incentives for these clinicians to participate in Advanced Alternative Payment Models (APMs). The final rule’s release gives stakeholders more information to assist in planning their strategies around the law.

Among questions facing clinicians and health systems:

  • Which payment track will be the best fit for our practice/organization now? In five years? In 10 years?
  • If organizations opt for MIPS: Do we have the people, processes, and technology in place to accurately collect and report data on the MIPS measures? How can we help clinicians perform well on these measures in order to receive positive payment updates?
  • If organizations choose to invest in Advanced Alternative Payment Models (APMs): Given our current payer mix, is it possible for professionals to meet the revenue or patient-count thresholds required to qualify for APM incentive payments and higher payment updates? Are we experienced with and successful at managing risk under these Advanced Alternative Payment Models? What types of Advanced Alternative Payment Model arrangements will be most beneficial for us?

MACRA overhauls Medicare’s payments to clinicians by creating strong incentives for them to participate in APMs that require financial risk-sharing for a broad set of health services and that are designed to improve quality. Clinicians who are not counted as participating in these models will need to report and have their performance measured in four categories–quality, resource use, health information technology (HIT) use, and clinical practice improvement. One change from the proposed rule is that resource use, which measures the costs associated with clinicians’ practice and referral patterns, will be weighted at zero percent for the 2017 performance period. However, over time, that measure will grow to 30 percent of the performance formula. Together, these policies will encourage a much stronger focus on quality and total cost of care.

The Act puts significant revenue at stake for hospitals, health plans, and other organizations that employ clinicians who are paid through the Medicare PFS. In addition, the law’s incentives for clinicians to enter risk-bearing, coordinated care models could create opportunities for health systems and health plans to enter into new arrangements with clinicians under Medicare; this may set the stage for similar initiatives in other government programs, as well as with employers, and commercial health plans.

MACRA is most likely to directly impact clinicians, health systems, and health plans. However, the law may affect other stakeholders along the health care continuum. The Act’s intent is to reduce health care spending and overall utilization by rewarding providers for improved quality and outcomes.

Implications for health systems

  • Hospitals that own physician practices will need to consider how to succeed under MIPS and whether to pursue an Advanced Alternative Payment Model arrangement. This may not be an either/or decision: Even if systems invest in Advanced APM initiatives, not all of an organizations’ clinicians may be able to take part in an Advanced APM initiative. practices may be more interested in becoming part of health systems if they are not well-positioned to adapt to the new payment arrangements.
  • Both APMs and MIPs will require health systems to invest in technology and business practices. CMS requirements will change over time, so systems and processes will need to change with them. Under MIPS, clinicians, and health systems billing on their behalf will need to analyze quality and resource use performance against the national benchmarks and, if needed, change practice patterns to avoid payment reductions and public reporting about substandard performance. While resource use will be weighted at zero percent for the 2017 performance year, as required by the statute, the weight will increase to 30 percent by performance year 2019, which is significant. Health care providers also will need to review and appeal inaccurate CMS information and prepare for CMS audit processes to validate clinician-submitted performance data. If organizations have not already accredited their clinicians as patient-centered medical homes (PCMH), they should consider doing so or investing in other practice improvement activities to receive credit under the MIPS clinical practice improvement measures.
  • Under Advanced Alternative Payment Models, health systems will need to confirm that their initiatives qualify for and conform to the CMS definition and that the initiatives succeed in managing financial risk. Health systems may need to build or acquire special capabilities to succeed under Advanced APMS. Among these could be managing risk (including reserving capital and purchasing stop-loss coverage), building networks (including post-acute care providers), integrating health information technology across clinicians and the health system to support collaboration, and investing in analytics to identify high-cost enrollees and work efficiently with clinicians to reduce costs and improve quality.

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Hospital wall

Implications for health plans

  • Health plans should consider identifying strategic business opportunities to support clinicians and hospitals as they change the way they practice medicine and adapt to new payment and risk arrangements.
  • Health plans may see pressure from clinicians and hospitals to align quality and reduce utilization, and to identify high-performing clinicians using Medicare’s new measures. In addition, health plans using narrow-network strategies may see pressure from businesses or consumers to include clinicians that are identified as high-performing based on publicly reported scores.
  • Greater consolidation among clinician practices and clinician practices with health systems to meet MACRA requirements may put pressure on health plan payment rates.
  • Some health systems may decide to offer Medicare Advantage (MA) provider-sponsored plans to gain more control over health care spending and payment, and to avoid some MACRA mandates. This could potentially introduce new competition or a collaborative opportunity for health plans.
  • CMS will be considering how to align MACRA with MA in future regulatory activity; this may directly affect MA plans’ relationships with clinicians and their investments in Alternative Payment Models.

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Implications for life sciences companies

As our health care system moves along the road to MACRA implementation, life sciences companies should consider focusing on accelerating their evolution toward value-based models to keep up with customer demands. This includes partnering with other stakeholders to achieve the goals of value-based reform as well as:

  • Investing in real world evidence programs
  • Building new commercial models and go-to-market capabilities 
  • Evolving patient/consumer engagement solutions and patient support platforms to improve outcomes 
  • Developing contracting structures to tie in financial incentives
  • Investing in analytical capabilities to track and measure performance against contracts

Learn more:

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