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MACRA Accelerates Value-Based Approach to Healthcare

Analysis  |  By Christopher Cheney  
   June 26, 2017

Medicare's reimbursement system for physicians is emerging as a major driver of change in the healthcare industry.

The long journey to establish value-based healthcare business models has taken a giant leap forward this year.

The rollout of the Medicare Access and CHIP Reauthorization Act (MACRA), which is linking an ever-increasing share of physician payments for outpatient care to service-value rather than service-volume, is a game changer, according to the presenters of a workshop Sunday at the HFMA-ANI conference in Orlando, FL.

"The turning tide is largely driven by MACRA. It has changed healthcare significantly in terms of moving the mindset toward more value-based reimbursement," said Max Reiboldt, CPA, president and CEO of Coker Group, a healthcare consultancy based in Alpharetta, GA.

Survey Snapshot: Exploring Value-Based Readiness

While there is considerable uncertainty over the ultimate fate of the Patient Protection and Affordable Care Act, MACRA is an example of how value-based healthcare appears destined to advance, he said.

"It has been a long, drawn-out process from March 2010, when President Obama signed the Affordable Care Act, to today. But regardless of what happens to the ACA or how the ACA changes, the concepts involved in shifting to value-based reimbursement are not going to change. MACRA illustrates the point. No one is talking about repealing MACRA."

Medicare's physician reimbursement model, which launched with performance reporting this year and is slated for full implementation in 2019, is making the shift from volume to value a real business condition in the healthcare industry, Reiboldt said.

"Everybody is now in a value-based reimbursement setting, and the reason for that is MACRA. We are all subject to MACRA."

MACRA Success Strategy: MIPS versus APMs

There are two physician-reimbursement tracks under MACRA:

  • In the near-term, most clinicians will be paid through the Merit-based Incentive Payment System (MIPS), which features data reporting in four performance categories that drive payment bonus and penalty mechanisms.

  • Clinicians participating in MACRA-approved alternative payment models (APMs) such as Medicare's Next Generation ACO can earn 5% payment bonuses.

For most healthcare organizations, MIPS is a more attractive option because it takes a blended approach to physician reimbursement based on both volume and value, said Justin Chamblee, CPA, senior vice president at Coker Group.

"It is still very much a volume-based reimbursement methodology, but it is volume-based with strings attached. It's not just how much you do, but also how well you do what you do."

From the perspective of physician financial success, the key to MIPS is a highly structured approach to balancing volume of services with quality of services, said workshop presenter William Strimel, DO, president of Mercy Physician Network, Mercy Health System in Philadelphia. MHS is an affiliate of Livonia, MI-based Trinity Health. "You need to have a robust system in place to manage quality."

Participating in an APM is potentially more lucrative for physicians. However, operating under APM contracts, which feature both significant upside and downside risk, poses more daunting challenges than MIPS, Chamblee said.

"Under an APM, Medicare is saying they will give physicians an annual 5% uptick in reimbursement for at least a few years. So, clearly there is an incentive to be in an APM, but an APM takes a lot more work. You have to be in the Medicare Shared Savings Program or some sort of innovation model to qualify for APM reimbursement."

Long-term strategy should be a prime consideration for healthcare organizations that are struggling with the decision to embrace MIPS or APMs, Strimel said. "Mercy is looking to get to full risk. So, if we are going to get to full risk, then we need to perform well in an APM. We need to build the infrastructure."

Christopher Cheney is the CMO editor at HealthLeaders.

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