MACRA: Physicians’ Choice Puts Hospitals on the Hook Too

Here’s my simple mantra on MACRA: You are tied to the fate of your physicians — whether you like it or not.

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) lays out two paths for adjusting providers’ Medicare fee-for-service payments: the Merit-Based Incentive Payment System (MIPS) and alternative payment models (APMs). Healthcare media are focused on the potential for MACRA to create winners and losers among physicians. Yet too often lost in the conversation is the fact that hospitals and health systems have a vested interest in helping their clinicians succeed under MACRA, whether through MIPS or an advanced APM.

The truth is that hospitals are directly on the hook when it comes to MACRA. First, consider the reality that hospitals and physicians are inextricably linked. You need look no further than the American Hospital Association’s Annual Survey1 that states: “Hospitals employed more than 249,000 physicians in 2014, and had individual or group contractual arrangements with at least 289,000 more.” This means that hospitals will directly bear the cost of complying with MIPS and any gains/losses resulting from performance adjustments.

Additionally, community physicians will look to hospitals to create advanced APMs that can exempt participating physicians from MIPS as well as qualify them for the 5 percent annual bonus payment for APM participation. Another contrast to MIPS: Bonuses in the advanced APM program, as well as contractually specified bonuses or penalties, have no requirement to be budget neutral2.

Proactive Approach Is Paramount

The only way to get in front of these issues is to get up to speed on MACRA — what it means and how it will likely affect your hospital and your physicians. Recent surveys reveal the vast majority of physicians are not very familiar with MACRA and its potential implications moving forward. Once informed of MACRA’s details, many physicians felt it will drive physicians to join larger organizations. Additionally, a large majority of independent physicians indicate they want to join organizations that help them address MACRA while maintaining their independence. This offers up a strong indication that physicians are looking to align themselves with organizations that will provide needed guidance regarding the challenges and opportunities that MACRA presents.

Indeed, I hope that hospitals and health systems will look at MACRA as creating an opportunity rather than a burden. The reason is that physicians will increasingly feel that they need the support of larger organizations to maintain their income. Hospitals, health systems and large practices need a strategy to offer options to and help their physicians become a part of a larger sophisticated organization that supports their success in MIPS and offers a path toward an advanced APM. Without adequate support, community physicians may align themselves with a competitor who offers something better.

Unless CMS makes an exception, the deadlines have passed to initiate participation in any of the advanced APMs for 2017. Therefore, by default, the vast majority of physicians will be in MIPS for 2017. But tying physicians’ fates to hospitals and health systems goes beyond the 2017 MIPS measures. That’s because — whether physicians want to hear this or not — the Centers for Medicare & Medicaid Services (CMS) is putting all providers on the path to value-based care in concert with hospitals. Physicians cannot look at MIPS as a way to evade this; they have to look at it as providing breathing space while making the transition toward value-based care.

Path to the Future

Laying out a path for a transition to value-based care is essential for both parties. Here’s why: At first look, MIPS consolidates and simplifies three previous payment adjustment programs and, by and large, carries over such measures for the first year. But it’s designed to evolve over time, according to CMS3:

“Measures in the PQRS, VM, and Medicare EHR Incentive Program for Eligible Professionals assess individual or group practice-level performance rather than holding more than one clinician or other provider type accountable for a person’s care. As health care settings evolve toward population-based payments that hold multiple provider types accountable for the health of populations, CMS must adapt and use measures that reflect this shared accountability. Measures of shared accountability should reflect careful attribution of responsibilities among clinicians delivering care for the same patient population.”

This means in the coming years, the fates of hospitals and physicians will be tied even more closely together. This creates opportunities for organizations to support physicians with their MIPS performance in the short run, while making the transition to value-based care and planning to be an advanced APM down the road.

Learn More: How to Improve Financial Performance and Support New Payment Models

The release of the MACRA final rule provides flexible options that allow “pick your pace” participation in 2017. This flexibility will help small and independent practices comply with the regulations by including two MIPS options in addition to full-year participation: submit some data, with no up-or-down adjustment; or submit 90 days of data, with the opportunity for small upside.

Here are three clear benefits of taking the proactive path to getting ahead of MACRA:

  • Build greater physician affinity: Busy physicians have little time to pour over the 2,398 pages of MACRA’s final rules to figure out how they will impact them. They want guidance and information that not only helps them makes sense of the new requirements but also provides clear insight into the best path forward. Hospitals that have a well-thought-out and strategic approach to MACRA will have a distinct edge with the physician community.
  • Enhance future profitability: The decisions made regarding MACRA will have far-reaching implications on the potential profitability of your physicians, and the financial success of your hospital and/or health network.
  • Leverage a competitive advantage: Hospitals that progress in the journey to value-based care in combination with their providers will have a distinct competitive advantage.

1. American Hospital Association. Statement of the American Hospital Association before the Finance Committee of the U.S. Senate. Available here.
2. Brookings Institution. How the Money Flows under MACRA. Available here.
3. Centers for Medicare & Medicaid Services. CMS Quality Measure Development Plan: Supporting the Transition to the Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs). Available here.

Conifer Health offers a comprehensive portfolio of solutions to help clients make informed decisions that reduce cost and deliver quality outcomes as healthcare organizations, employers and unions adapt to new realities in the fee-for-value era.