(Excerpts from a presentation by Seth Edwards, Premier, Inc. at the iProtean Symposium, March 2017)
Helpful Acronyms and Definitions:
MACRA: Medicare Access and Chip Reauthorization Act of 2015
QPP: Quality Payment Program—basically, a regulation that enacts the MACRA legislation
MIPS: Merit-based Incentive Payment system—one of two tracks created under MACRA for clinicians to participate in Medicare
AAPM: Advanced Alternative Payment Model: the other track created under MACRA for clinicians to participate in Medicare
Clinicians: physicians, nurse practitioners, nurse anesthetists, registered nurses and other physician extenders included as part of QPP
MACRA legislation, passed in 2015, put in place reforms on how physicians will be paid. It moves physician payment from a volume-based reimbursement system to a value-based reimbursement system.
We’re seeing a number of strategies in the market to be successful under MACRA, or at least to put in place the foundation to be successful under MACRA. A lot of it is related to driving clinically integrated networks and using them to share resources across different provider groups so that you’re not just going it alone.
Being successful in this model requires quite a bit of investment, not only of money, but also of resources and time on behalf of each clinician practice. So finding ways to be able to work together through clinically integrated networks, or through assistance from a health system or other provider types is critical, and something we’re seeing a lot of organizations pursuing. It not only helps with the Merit-based Incentive System (MIPS), but it also lays a foundation that you can build upon to move into an Advanced Alternative Payment Model (AAPM) in the future. So if you want to use a clinically integrated network as a vehicle to move towards an ACO, or a bundled payment model, you’ll have a lot of the infrastructure in place to be able to do so.
MIPS vs AAPM
There are inherent advantages and disadvantages between being in a MIPS and an AAPM. It really depends on where your organization is currently, and where you are planning to head in the future in terms of a population health strategy.
MIPS puts in place clinicians’ reimbursement, from +/- 4 percent in 2019 to +/- 9 percent in 2022 and beyond, and it depends on how well the clinician performs. So if you feel like you’re a high quality, high performing provider, being in MIPS can provide you with a lot of opportunities to get an upward adjustment that can be much greater than what you would get under an AAPM.
Conversely, if you pursue an AAPM, you get a guaranteed 5 percent bonus, assuming you meet the requirements to be considered an AAPM. So, there is certainty in that model, but you can’t go above the 5 percent. On top of that, you’re at risk outside of MACRA for any losses that you would generate above an expected expenditure. So, you have a potential to have to write CMS a check, even though you have a guaranteed 5 percent bonus through MACRA. And oftentimes that 5 percent bonus is not going to cover the amount of exposure that you have to take on under an AAPM to be successful.
So, it’s really a difficult consideration. Do you want to be in MIPS and have a risk for 4 – 9 percent upward or downward adjustment? Or do you want to be in AAPM, get the guaranteed 5 percent bonus, but then have a potential to have to write CMS a check if you spend more than you expected?
Impact on the Hospital/Health System
As a board member, you should know that MACRA has an impact on the long term viability of your health system, not only looking at how you support your employee clinicians, should you have some, but also how you are engaging with independent clinicians within your marketplace. MACRA sets up a dynamic where there are incentives to align with your clinicians, to be able to help them, but then it also puts in place a need to align with clinicians ahead of other organizations. These “disruptor organizations,” as we call them, could potentially set up an accountable care organization with the clinicians, leave your health system out of it and then your organization will be viewed as a “cost center.”
MACRA will have a major impact on how you are going to work with clinicians in the future, as well as how you are going to continue to evolve with the new payment models. As we’ve seen, there is no new money coming into health care, and so working with clinicians and together moving towards population health models that will help you be successful under value-based reimbursement will be a key critical differentiator for your health system.
iProtean subscribers, the advanced Mission & Strategy course, When the Dust Settles, featuring Marian Jennings and Dan Grauman, is in your library. Marian and Dan discuss the complexities of moving to a value-based healthcare organization, key features necessary to ensure the board and leadership stay ahead of the curve, the importance of thoughtful and thorough assessment of options available to the organization, the risks inherent in new investments and changes in board recruitment and development.
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