MACRA: Disrupting the health care system at every level

Rebuilding the foundation of health care under MACRA

The Deloitte Center for Health Solutions and the Network for Excellence in Health Innovation (NEHI) convened 31 senior leaders from across the health care industry—health care providers, health plans, biopharmaceutical companies, and medical technology organizations—to discuss the implementation of MACRA.

Health care organizations have built systems based on a fee-for-service (FFS) foundation. But those systems won’t function under MACRA. Changing something as pervasive as FSS is going to take time and will pose challenges to many health care stakeholders. But, findings from our cross-industry discussions suggest that many health care organizations are ready to come together and begin building a new foundation based on clinical delivery and payment models not constrained by FFS rules.

Explore four key takeaways from the convening and smart next steps for health care providers, health plans, life sciences companies, and government as industry leaders collaborate to lay the foundation for MACRA.

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Industry implications

As industry stakeholders begin to implement MACRA, many health care providers, health plans, life sciences companies, and regulatory and legislative bodies will need to work together to overcome barriers. As the health care industry begins to take apart its old payment system and rebuild the foundation based on value, stakeholders may consider the following:

Health care providers

• Invest in technology that allows organizations to connect and integrate data. Data capabilities will be critical not only for reporting under MACRA, but also for reviewing and shifting the way health care is provided to improve performance. Providers also should consider investing in data and decision-support tools that can be used to transform data into point-of-care information for physicians.
• Review and/or develop new relationships, as data held by traditional and non-traditional partners could become critical components of tracking patient outcomes. Relationships with specialists and post-acute care providers are likely to be key in identifying cost-saving opportunities within the system.
• Engage with the US Centers for Medicare and Medicaid Services (CMS) and other federal partners such as the Physician-Focused Payment Model Technical Advisory Committee (PTAC).
• Get experience in risk-based contracts, regardless of whether they qualify as advanced alternative payment models (APMs) under MACRA.
• Change clinical models to direct the right work to the right worker and/or setting, and to move from a focus on achievement to one of improvement.

Health plans

• Bring deep analytics and actuarial experience to relationships with providers as they look for ways to integrate more data into their decision-making, and to bolster population health initiatives.
• Review care and disease management programs as providers develop more capabilities to manage population health, and improve coordination with providers to ensure these services complement and support physicians and care teams.
• Assess providers in each market to better understand to what degree they are ready to take on risk, as MACRA will influence the structure of commercial and Medicaid payment arrangements. Plans also might consider partnering with organizations that are willing to take on and lead change for those who are not already cost-effective.

Life sciences companies

• Work with providers to use real-world evidence (RWE) in daily practice, as doing so could help them understand which products work best, identify how to create greater efficiency in care delivery, and update clinical pathways to make more cost-effective treatment decisions.
• Monitor progress to understand how quickly the transformation to value will impact different markets, how to segment customers, and where to align sales and support operations.
• Engage with providers to develop clinical measures that gauge outcomes beyond the short term as patients look for ways to ensure that their long-term needs are met.

Government

• Send data and feedback more frequently and in actionable formats to help providers track performance and adjust care models as needed.
• Continually review information technology upgrades that the Office of Inspector General (OIG) recommended CMS make to provide the data and feedback providers need to succeed under MACRA.
• Develop regulatory solutions to prevent data blocking among electronic health record (EHR) vendors and others in the system, and to continuing making progress toward interoperability.
• Share information and develop more educational and outreach materials to inform providers about initiatives such as PTAC and the Accountable Health Communities model, and share detailed lessons from successful and unsuccessful projects.
• Continue to identify new delivery and payment models to further encourage stakeholder participation as the government works toward implementation and adheres to the principles laid out in the law.

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A pulse on the industry

In the fall of 2016, 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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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 (non-pediatric 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.

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.