The Medicare Access and CHIP Reauthorization Act of 2015, commonly known as MACRA, has wide-ranging implications for health plans. By changing the way healthcare providers are reimbursed for the services they provide to Medicare beneficiaries, MACRA puts significant revenue at stake for hospitals and health plans that employ clinicians who are paid through the Medicare PFS. But the law’s incentives for clinicians to enter risk-bearing, coordinated care models could create opportunities for these organizations to enter into new arrangements with clinicians under Medicare. It’s a shift that could set the stage for changes to other government programs and commercial plans, and there’s not much time to prepare. MACRA implementation starts on January 1, 2017.

“MACRA is a disruptive force in healthcare and within any disruption is opportunity for those who see it,” wrote Heather Lavoie, Chief Strategy Officer of the healthcare analytics firm Geneia, in a recent company blog post. “MACRA will provide strategic opportunities for health plans to strengthen relationships with providers, create new accountable care arrangements, and achieve higher levels of collaboration as everyone comes into alignment and works together toward the common goal of increased value-based care,” she said.

MACRA at a Glance

MACRA, which was signed into law in April 2015, has the potential to significantly restructure U.S. healthcare by tying a growing percentage of physician payment to quality and effectiveness. The legislation replaces the current Medicare reimbursement schedule with a new pay-for-performance program and solidifies the Centers for Medicare and Medicaid Service’s (CMS) commitment to driving value-based care. “Designed with input from thousands of clinicians and patients across the country, the new Quality Payment Program will strengthen our healthcare system for patients, clinicians and the American taxpayer,” Department of Health & Human Services Secretary Sylvia Burwell said in a recent press release.

MACRA and Changing Reimbursement Structures

Under MACRA, participating providers will be paid based on the quality and effectiveness of the care they provide. A growing percentage of physician payment will be based on value – not on volume – like the current fee-for-service system. High-value care will be defined by measures of quality and efficiency and providers will earn more or less depending on their performance against those measures.

MACRA’s Quality Payment Program will be based on two new reimbursement structures –  the Merit-based Incentive Payment System (MIPS)and Alternative Payment Models (APMs). MIPS, which streamlines several existing quality and value programs, scores providers in four weighted performance categories: quality, resource use, clinical practice improvement activities and meaningful use of certified EHR technology. Based on their score, providers will receive positive, negative or neutral adjustments to the base rate of their Medicare Part B payment. MIPS applies to all qualifying providers, except for qualifying participants in Advanced APMs. According to CMS, most providers who participate in APMs will be subject to MIPS and will receive favorable scoring under the MIPS clinical practice improvement activities performance category. The law gives physicians — and the health plans and hospitals who employ them — significant incentives for adopting Advanced Alternative Payment Models: Qualifying participants are not subject to MIPS, receive five percent lump sum bonus payments for years 2019-2024 and receive a higher fee schedule update beginning in 2026.

HHS summarized both reimbursement models in a press release. It’s time to modernize the Medicare physician payment system to be more streamlined and effective at supporting high-quality patient care. To be successful, we must put patients and clinicians at the center of the Quality Payment Program,”said Andy Slavitt, Acting Administrator of CMS.

The MACRA Timeline

Other than a 0.5 percent fee schedule update in 2017 and 2018, very few changes will be implemented when the program first begins in 2017. According to Slavit, a critical feature of the program will be implementing these changes at a pace and with options that clinicians choose. “Today’s policies are designed to get all eligible clinicians to participate in the program, so they are set up for successful care delivery as the program matures,” he said. Here’s what to expect next:

  • Fall 2016: Final Rules Published for Implementation
  • Merit-Based Incentive Payment System (MIPS) Implementation:
  • 2019 – Providers subject to -4% to +4% base rate adjustment for Medicare Part B reimbursements
  • 2020 – Providers subject to -5% to +5% adjustment
  • 2021 – Providers subject to -7% to +7% adjustment
  • 2022 on – Providers subject to -9% to +9% adjustment

How Health Plans Can Prepare

The best time to start preparing for MACRA is today. According to Lavoie, forward-thinking health plans must embrace the challenge in a strategic (but realistic) way to maintain and create a competitive advantage. To stay ahead of the curve, she recommends health plans take the following actions, which are outlined in more detail on Geneia’s blog:

  1. Keep private practices independent: healthcare costs soar as private practices consolidate.
  2. Help clinicians succeed with MACRA and avoid expensive cost-shifting measures.
  3. Align value-based arrangements with MACRA risk requirements
  4. Strengthen relationships: help providers earn bonus payments.
  5. Improve collaboration: the interoperability of data and knowledge.
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