Within the past two weeks, the Centers for Medicare & Medicaid Services (CMS) released the final rules for the Medicare Access and CHIP Reauthorization Act of 2015 or MACRA (see MACRA Finalized, Changes To Medicare Payment System Start January 2017). Like all new federal initiatives, there are lots of new acronyms — like MIPS and APMs — and new definitions. I think the implications of MACRA are not in the specific details, but in what it represents in the overall context of the U.S. health care system.
First, MACRA matters because of its magnitude. The legislation affects about 600,000 clinical professionals who provide Part B services to Medicare beneficiaries — outpatient care, durable medical equipment, hospital outpatient services, laboratory tests and X-rays, mental health care, and some home health and ambulance services. And Medicare will pay in 2017 an estimated $192.9 billion in gross fee‑for‑service spending for Medicare Part B services.
But beyond the impact, MACRA brings value-based reimbursement (the move from pay for volume to pay for value) to the last remaining sector of health care. In commercial health plans and employer-sponsored health plans, use of managed care and other value-based approaches to health care financing have been common for years. And, state Medicaid plans have morphed over the past five years with more managed care, accountable care organizations (ACOs), DSRIPs, SIM grants, waiver programs, and health homes.
But much of Medicare, which represents about 20% of total U.S. health care spending, has been outside of this move to value-based payment. About 31% of the Medicare population is in managed care. And, about 14% of the Medicare population served by an ACO. Consequently, a notable portion of the spending, clinical professionals, and provider organizations haven’t been as influenced by this movement — yet. Small as the new penalties and bonuses may be, however, this is a first step toward the value-based paradigm for a substantial proportion of the health care service system.
Like any change in policy and practice, there are going to be some specific impacts on the health and human service landscape. The most pronounced is that MACRA will be difficult for many clinical professionals in solo practice. There are new reporting requirements — and many solo practitioners will need to make a business decision about participation in MIPS to prevent penalties. To be eligible for bonuses, participation in the “Advanced Alternative Payment Models” requires even great infrastructure investments.
With the potential for those bonuses, participation in ACOs, medical home initiatives, and the Medicare episodic payment program will increase. For ACO participation and participation in the Medicare episodic payment program, this means more affiliations between outpatient service providers and ACO-sponsoring organizations (see For Medicare ACOs, 66% Of Outpatient Specialty Office Visits Outside The ACO Network). For medical home models, there are specific infrastructure requirements for participation (see Health Home Performance & Payments – The High & The Low Remain Miles Apart).
The impact of MACRA will be more like the steady drip of erosion than a tidal wave. The implementation is staggered. There is a roll-out period, and penalties aren’t assessed until 2019. In addition, smaller practices and those practices with smaller annual Medicare billing are not required to participate initially. But this is one more step in the volume-to-value transformation.
Want to learn more about how technology is helping provider organizations deliver more value? Don’t miss the keynote presentation on Friday, November 11, from Dr. Andrey Ostrovsky, chief medical officer for the U.S. Center for Medicaid and CHIP Services (CMCS), at The 2016 OPEN MINDS Technology & Informatics Institute. If you can’t make it this year, be sure to follow the online conversation on Twitter using the #OMTechnology hashtag.