How Doctors Can Manage MACRA

Next year a lot will change for clinicians who treat a lot of Medicare patients, and yet many physicians and nurses don't understand what they need to do.

On Jan. 1, how doctors are paid for treating Medicare patients will be measured by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Physician practices have a lot to do to prepare for MACRA.  It's part of the overall move away from fee-for-service to value-based care. By 2018, HHS seeks to have 90 percent of Medicare payments linked to quality.

Here's how doctors can manage the transition:                             

Consider Your Affiliation

Most U.S. doctors (60.7 percent according to the AMA) work in small practices of 10 or fewer physicians. Many of these are loose affiliations established to help with billing and administration but may not share a clinical mission. MACRA assesses doctors on the quality of care. A smart move is to set common standards across your affiliation - everything from how patients are treated to what EHR is employed. A tighter group will perform better. Doctors must ensure their affiliation shares their patient care mission and has a plan to improve the practice management, including setting procedures for weeding out poor performing clinicians.                                                                                                        

Take a Deep Dive Into Your Data

The aggregation of data will be crucial under MACRA. MACRA's scoring mechanism demands that data be collected in an accurate and timely fashion, through a similar guideline to Meaningful Use. Doctors use a variety of systems and some still use paper, so sorting out data aggregation will be critical to getting accurate reimbursement.

MIPS or APMs?

Doctors have two reimbursement choices: The Merit-based Incentive Payment System (MIPS) is the default system, while some doctors will be paid under the Advanced Alternative Payment Models (Advanced APMs).

Under MIPS, doctors receive a final score on a 100-point scale for 2017 that’s performance weighted 60 percent for quality of care, 25 percent for Advancing Care Information (using EHRs and reporting data), and 15 percent for Clinical Practice Improvement Activities (improving a practice through such things as varied as integrating mental health services to improving emergency response preparedness). Those scores will determine reimbursement in 2019.  In 2020, based on 2018 performance, cost accounts for 10 percent of the final score, and in the following year and beyond, it carries 30 percent of the weight (with an equal reduction from Quality). CMS revised the scoring mechanism for 2017 performance, whereby just reporting one measure for a portion of 2017 will save practices from being negatively reimbursed in 2019.  However, those scores will also be published, making them crucial to reputation. 

Doctors that may be reimbursed under the APM approach include those in the Medicare Shared Savings Program (Track 2 & 3 only), Medicare-based Next Generation Accountable Care Organizations (ACO), those in the Comprehensive Primary Care Plus (CPC+) Model, and a few others.

The Bottom Line

The days of annual fee-for-service (FFS) increases for doctors are over. Physicians will receive FFS raises of 0.5 percent for the next three years, and then there will be no automatic hikes from 2020 through 2024. After 2019, performance under MIPS and APM will determine pay by using performance to determine incentives and penalties.

Under MIPS, the potential impact on Medicare Part B payments starting in 2017 ranges from a 4 percent incentive, plus a possible lump sum bonus, down to a 4 percent penalty, although  it is estimated that most won’t receive a penalty in 2017 due to the changes in scoring for the first year. By 2022 (based on 2020 performance), incentives are as high as 9 percent while the penalty for poor performance can be a 9 percent penalty. In addition, the top quartile of doctors are eligible for an additional bonus, not to exceed 10 percent for exceptional performance.

Doctors in APMs will receive an annual 5 percent bonus from 2019 to 2024. This is to serve as incentive for entering into a two-sided risk model as these practices also have significant upside and downside potential. Depending on which APM doctors are in, a significant portion of payments is also at risk if aggregate expenditures exceed expected levels. Similarly, a practice that can keep quality of care high while lowering costs can keep some of those gains. For example, an ACO might significantly boost its profits by getting patients to exercise, reducing spending to treat obesity, diabetes and other costly diseases.

Doctors that intend to treat a large volume of patients efficiently will likely prefer the MIPS approach, which could also yield significant savings through making practice administration more efficient. On the other hand, doctors setting up specialized centers of excellence that intend to boost profit margins through improving outcomes will benefit from APM reimbursement. (The AMA has created online tools, including a payment model evaluator to help doctors decide the best MACRA payment model for their practice.)

In the coming months, as MACRA becomes part of the fabric of medical life, more independent practices will move toward being bought or becoming employees of larger medical groups. For others, the months ahead are a time to firm up affiliations, set clinical goals and standards, assess IT challenges and decide what reimbursement scheme makes the most sense.

(Tony Colarossi leads Plante Moran's acute healthcare consulting services. Kyle Higdon is an associate in Plante Moran's healthcare reimbursement consulting practice.)