From Volume to Value: MACRA Shifts Medicare Reimbursement Focus

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There is both uncertainty and optimism as leaders and physicians at academic medical centers (AMCs) begin transitioning to the Medicare Access and Children’s Health Insurance Program (MACRA). Signed into law by President Barack Obama in 2015, MACRA replaces the highly contested sustainable growth rate (SGR) and shifts the Medicare physician reimbursement system toward one in which physician payments are mainly based on value rather than on the volume of services they provide.

“MACRA is a revolution in Medicare payment policy for physicians and in embracing value-based purchasing,” said Jonathan Oberlander, PhD, a professor and chair of social medicine and health policy and management at the University of North Carolina at Chapel Hill School of Medicine.

Adding to the confusion surrounding MACRA implementation is the possibility that Congress and the Trump administration will repeal the Affordable Care Act (ACA) in 2017. That “takes the uncertainty [about MACRA] and magnifies it tremendously,” Oberlander said. 

“The politics of physician payment don’t end when a bill like MACRA is passed. Now the battle [is] about shaping implementation, and there’s a lot at stake.”

Jonathan Oberlander, PhD
University of North Carolina at Chapel Hill School of Medicine

Regardless of what happens with ACA, MACRA had strong bipartisan support when it passed, and the legislation’s shift toward value continues to have backing in Congress, noted Karen Fisher, JD, AAMC chief public policy officer. “With its focus on value and alternative payment models, I think MACRA moves in the direction that the administration would like to go.”

While Oberlander also sees “a lot of momentum” behind MACRA’s focus on value-based purchasing, he thinks that there could still be changes. “It’s important to remember that MACRA is not written into stone,” he said. “The politics of physician payment don’t end when a bill like MACRA is passed. Now the battle [is] about shaping implementation, and there’s a lot at stake.”

After receiving stakeholder feedback on proposed MACRA regulations, the Centers for Medicare and Medicaid Services (CMS) made changes to the MACRA final rule last fall, allowing physicians flexibility to choose when they begin participating in the program. Rather than requiring providers to transition on Jan. 1, the final CMS rule allows them to avoid a negative payment adjustment and qualify for a payment increase in 2019 by either submitting a limited amount of data or providing data later in 2017.

Unique considerations at AMCs

Monday, March 06, 2017

A Choice Between Two Payment Methods

One of the first steps in transitioning to MACRA is deciding between two payment models—advanced alternative payment models (APMs) and merit-based incentive payment systems (MIPS)—both of which link quality with reimbursements. Under MACRA, APMs must meet criteria that the Centers for Medicare and Medicaid Services has designated as “advanced.”

Beginning in 2019, advanced APM providers will qualify for a bonus payment of 5 percent of their annual fee-for-service revenue. MIPS combines three existing programs—the physician quality reporting system, meaningful use of electronic health records, and the value-based payment modifier—and calculates a composite score based on performance in each area. MIPS providers will receive either a bonus or penalty based on how their MIPS composite score ranks against other providers starting in 2019.

MACRA poses unique challenges for AMCs. For example, many AMCs have large multispecialty practices under a single tax ID number. Some specialty practices might already be participating in an advanced alternative payment model (APM), and a merit-based incentive payment system (MIPS) might be the better choice for other specialties. Melinda S. Hancock, chief financial officer at VCU Health System in Virginia, noted that because the system is such a large provider, it will report as a single group at first and work with providers to identify metrics that will help the institution succeed in efficiency and quality and safety. “Metrics that are key to a family practice may be very different than those chosen for surgery practices. We need to be sure to align the metrics and then be sure we are looking at the drivers that feed those metrics, so if you do well in those drivers, they will improve those metrics.”

Hancock recommended that institutions look carefully at their current performance. “My first message is to understand how you’re doing today. We want to know where to put our attention because we can’t work on everything ... so what are we doing well?”

At AMCs in particular, patient populations could also affect MACRA implementation. AMCs serve high-risk, vulnerable patients, who may be more likely to be readmitted to the hospital or have higher infection rates, for example, than the population at large. These factors and other quality measures that disproportionately affect this population could lead to lower quality numbers, and, eventually, lower MACRA reimbursements than for institutions that don’t serve high-risk patients.

“With any kind of system that bases payments on outcomes or quality, you have to think about [whether] we are doing enough to protect the institutions that are in the safety net,” Oberlander said. “If you do not have proper controls, you can wind up penalizing safety net hospitals simply because they’re seeing many low-income patients who have high medical needs.”

Hancock noted that relationships between AMCs and community organizations that can address some of the barriers vulnerable populations face will “become a necessity for all health systems” as value continues to play a bigger role in delivery. “At the end of the day, health systems have to take a more holistic view. I think we’ll continue to see more of that integration with the community,” she said. 

“AMCs have a lot at stake,” Oberlander said. “They are a crucial part of the safety net in the United States ... so any changes in these [payment] programs have profound effects.”