Implications of MACRA for Healthcare Providers and Payers

(or Why You Should Avoid Talking About MACRA to Your Surgeon)

By Boris Rachev, Global Health Economist, CSC

A month ago I visited a North Virginia surgery practice to have a sebaceous cyst removed. My surgeon’s interest peaked when I told him that I’m a health economist who works for an IT company, so naturally we started talking about U.S. healthcare. When I asked him his thoughts about MACRA (Medicare Access and CHIP Reauthorization Act of 2015) however, the reaction was unmistakable apprehension: “You don’t wanna talk about MACRA to the person who’s cutting you,” he said half-jokingly trying to conceal his displeasure. As to why he feels that way – well, MACRA will most likely make him a part of a hospital or a bigger network and he will “depend on the whims of hospital administrators.” Preparing for MACRA would also require extra time and resources on his part, no doubt. There was one thing he agreed with me on is that smaller physician practices may be interested in becoming part of health systems after all – if they are not well-positioned to adapt to the new MACRA payment arrangements. All this led me to think again about the practical implications of this legislation on providers and payers:

For Providers

Both Alternative Payment Models (APMs) and Merit-based Incentive Payment Systems (MIPS) will require providers to invest in technology and business practices. CMS requirements will change over time, so systems and processes will need to change with them. Under MIPS, clinicians, and health systems billing on their behalf, will need to analyze quality and resource use performance against the national benchmarks and, if needed, change practice patterns to avoid payment reductions and public reporting about substandard performance. Provider organizations also will need to review and appeal inaccurate CMS information and prepare for CMS audit processes to validate clinician-submitted performance data. This will definitely bring a lot of the physician practices out of their comfort zone and impose a new order of things.

Under Advanced APMs, health systems will need to confirm that their initiatives qualify for, and conform to, the CMS definition and that the initiatives succeed in managing financial risk. Health systems may need to build or acquire special capabilities, i.e., even more investment in time and effort to succeed under Advanced APMs. Among these would be:

  • Managing risk (including reserving capital and purchasing stop-loss coverage)
  • Building networks (including post-acute care providers)
  • Integrating health information technology across clinicians and the health system to support collaboration
  • Investing in analytics to identify high-cost enrollees and work efficiently with clinicians to reduce costs and improve quality

This explains why “hospital administrators” (usually MBAs) may be the physician’s new best friend, albeit reluctantly so. The last two bullets are also not highlighted by chance – the second physician’s best friend will be healthcare IT.

For Payers

The implications of MACRA extend to payers too. From what I understand, payers have already started identifying strategic business opportunities to support clinicians and hospitals as they change the way they practice medicine and adapt to new payment and risk arrangements.

Payers may see pressure from clinicians and hospitals to align quality and reduce utilization, and to identify high-performing clinicians using Medicare’s new measures. In addition, payers using narrow-network (exclusive group of high-value providers) strategies may see pressure from businesses or consumers to include clinicians that are identified as high-performing based on publicly reported scores.

Greater consolidation among clinician practices and clinician practices with health systems under MACRA may put pressure on payer payment rates due to increase in leverage. Clinicians then could flex their muscle to pressure payers to enter commercial contracts with ACOs (accountable care organizations) and PCMHs (primary care medical home organizations) that align with MACRA programs. By doing so clinicians may reduce their burden and qualify them for credit under the “Other Payer” policies.

Some health systems may decide to offer Medicare Advantage (MA) provider-sponsored plans to gain more control over healthcare spending and payment, and to avoid some MACRA mandates. This could potentially introduce new competition or a collaborative opportunity for payers. Either way, CMS will be considering how to align MACRA with MA in future regulatory activity, which may directly affect MA plans’ relationships with clinicians and their investments in the new payment models.

I realize that all of the above will make my surgeon’s life more complicated and will create new dynamics and relationships in his professional life, so I understand his apprehension and sympathize. It is true however, that the whole U.S. healthcare system has been taken out of its comfort zone, and for a good reason, so he may not have much of an alternative, except perhaps selling his practice and moving to the Caribbean.


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