MACRA, MIPS and APMs: An Unappetizing Alphabet Soup

CMS is tightening the proverbial screws on provider holdouts that do not share the agency's goal of tying all reimbursement to quality and patient outcomes. For providers who thought they could find an alternate route to Medicare reimbursement without subscribing in full to CMS's vision, there will soon be no detours left.

The Medicare Access and CHIP Reauthorization Act (MACRA), which was passed into law last year and for which a proposed rule was issued by CMS earlier this year and finalized earlier this month, will create a difficult choice between two equally unappealing sub-sections.

The proposed rule's Merit-based Incentive Payment System (MIPS) component forces fee-for service holdouts toward quality and outcomes measurement, with harsh penalties for those who can't or won't keep up the pace. MACRA's other arm, the Alternative Payment Models (APMs) offers providers a full exemption from the anxiety-provoking requirements of MIPS. Doesn't that fleeting second of hope feel good? Don't get used to it. APM completes the dilemma by requiring providers to assume risk. "Penalties" and "risk" are two words that caregivers do not want to hear.

MIPS measures quality, resource use, clinical practice improvement activities, and meaningful use of certified EHR technology. Depending on how they score, providers will be either rewarded or penalized beginning in 2019. While MIPS does offer a reprieve from the reviled (and repealed) Sustainable Growth Rate in 2017 and 2018, its long-range impact on the practice of medicine may actually be far greater.

APMs offer an array of CMS-approved, risk-bearing arrangements, though they have not yet been fully fleshed out. The upside is high, with an annual incentive payment equal to 5 percent of the providers' prior year Part B payments beginning in 2019 and running through 2024, over and above any bonuses derived from APM performance

One can also infer, however, that the downside will be steep as well when the regulations are finalized later this year. Early language from CMS indicates that the risk must be "more than nominal" and they intend to define the nominal threshold by producing percentages for "total risk," "marginal risk rate" and "minimum loss rate." Clearly, this is a work in progress with far-ranging potential impact.

Beginning to get the message from Washington? CMS wants to increase the pace of systemic change by foreclosing the options that currently exist to remain a purely, fee-for-service provider. They clearly see their traditional reimbursement method as part of the federal budget problem and intend to eradicate it.

Any provider that can afford to take risk and has the infrastructure to manage it will gravitate toward APMs. Larger practices will have a credible patient sample size to forecast financial results and a larger base to spread the expense of population health initiatives. Solo and small group practitioners attempting to grind it out via MIPS will have a tough road ahead. Though not formally assuming risk in the traditional sense, they will face it nonetheless with potential penalties in 2019 and beyond.

Some of us remember the punch line of those 1970s oil filter ads, with the mechanic holding the wrench and saying, "You can pay me now or you can pay me later." The clear message is that, either way, there would be an expense and that a small up-front payment may eliminate a larger one down the line.

Providers that have not prepared for this sea change in reimbursement will likely have to decide to make an investment now in an attempt to meet quality targets, or defer action and brace for the penalties coming in a couple of years. For these practitioners, it is not yet clear if one option is even less desirable than the other.

Some have stated that MACRA will be a death knell for solo practitioners. While reports of their death have been greatly exaggerated in the past, the embellishment is getting less far-fetched by the minute, as the proposed regulations seem to suggest that there clearly is strength in numbers.

Barry Koslow, JD is president and CEO and Dennis M. Sexton is Senior Vice President of MKA Executive Planners, a Massachusetts-based executive benefit and retirement planning firm. They can be reached, respectively, at bkoslow@mkaplanners.com and dsexton@mkaplanners.com.