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MACRA is a 'Trojan Horse' for Value-based Models

Analysis  |  By Gregory A. Freeman  
   September 07, 2016

MACRA effectively killed the much-despised SGR, but it will usher in changes that will destroy the fee-for-service model.

UPDATE: On September 8, the Centers for Medicare and Medicaid Services released four options offering physicians flexibility complying with the MACRA's requirements.

The law aimed at revising how Medicare pays physicians will reinforce the move toward value-based models, pushing the healthcare industry a big step closer to what health plans have promised for years but not quite delivered, one healthcare executive says.

Healthcare plans should be preparing for what could be a radical shift, says Ray Desrochers, executive vice president of HealthEdge, a company providing software management for payers.

Attention to the Medicare Access and CHIP Reauthorization Act (MACRA) has focused largely on the implications for small-practice providers and a potential delay in implementation, but Desrochers says MACRA really is a "Trojan Horse" for value-based models, quietly introducing changes that will destroy the fee-for-service model.

When MACRA was signed into law in April of 2015, it was welcomed as the solution to the much-despised Sustainable Growth Rate (SGR) formula that threatened every year to cut physician compensation to unreasonable levels.

But there is no doubt MACRA also will move the industry away from traditional fee-for-service payments by limiting aggregate Medicare physician payments to a 0.5% increase per year through 2019.

Additionally, 4% of a physician's annual Medicare payments will determined by either the Merit-Based Incentive Payment System (MIPS) or participation in Alternative Payment Models (APMs).

MACRA: The Risk-Savvy Approach

CMS will begin using the new system on January 1, 2017, with data from physician performance that year used to determine bonus and penalty payments effective in 2019. 

Health plans have not adopted risk-bearing contracts to a significant degree, but CMS intends for them to make up 25 to 75 percent of all plans by 2023, Desrochers notes.

"The transition to value-based care will involve significant challenges in people, processes and technology," he says. "It's a major complexity issue for paying claims, one that can ultimately result in claims-paying issues, causing cash-flow issues for small practices, surprise medical bills for patients, and other headaches."

Medicare Billing Appeal Backlog Persists Despite $1.5B Settlement

Healthcare insurers are starting to assess where they will fit into this new world, Desrochers says.

"A number of them are scrambling, asking how they can possibly meet the needs of a variable world where it is not one-size-fits-all, and I have to deal with each provider in a different way," he says.

"You will have situations where providers are paid differently according to their compliance and when they call to ask why they got a different rate, it's not going to be easy to explain what led to that determination."

MACRA, the End of Meaningful Use, and Beyond

Many insurers first addressed MACRA, value-based models, and risk-bearing as modifications to business as usual rather than wholesale changes, Desrochers says. Their plan was to just get through the transition.

"What they're realizing now is that this is a level of change that this is much more than that. This is a level of change that is fundamental," Desrochers says. "We don't have all the answers yet for how it will affect providers and payers, but we do know that MACRA is about a lot more than Medicare."

MACRA will give providers reason to pressure insurers to adopt similar models, Desrochers says.

"Providers will be incentivized [as] to how they care for the Medicare population, but at the same time they will be given credit for providing the same level of care to their commercial population," he says.

"That is so important because the Medicare population tends to be some of their lowest margin business. If they can go out and create an advantage for themselves by complying with some of these new rules on their commercial populations, you can bet they're going to do that."

Gregory A. Freeman is a contributing writer for HealthLeaders.

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