Let CMS Pay for Your MACRA and ACO Readiness Costs

Welcome to MACRA—the Medicare Access and CHIP Reauthorization Act. MACRA represents the end of a long history of perpetually delayed Medicare physician fee schedule cuts that were to be automatically triggered under the punitive SGR formula absent Congress’ annual postponement ritual. After providing for a series of annual physician payment increases, MACRA’s reimbursement methodology transitions to a value-based model that includes two pathways—the Alternative Payment Model (“APM”) and the Merit-Based Incentive Payment System (“MIPS”).

APMs include organizations that are focused on providing high quality and cost-effective care, while also taking on significant financial risk (e.g., an ACO). MACRA highly incentivizes provider participation in APMs. For example, APM participants will receive 5 percent bonus payments from 2019 to 2024—if they receive a certain percentage of their Medicare revenue through APMs. In addition, providers qualifying as APM participants are excluded from participating in the MIPS model and are only subject to their own quality standards.

Under the MIPS model, provider performance will be evaluated according to established performance standards and used to calculate an adjustment factor that will then determine a provider’s payment for the year. The performance standards will include the following weighted categories: (1) quality, (2) resource use, (3) clinical practice improvement activities, and (4) meaningful use. Depending on their performance in these categories, providers will receive either a positive adjustment, no adjustment, or a negative adjustment. In 2022, these adjustments will range from a 9% negative adjustment to a similar positive adjustment. MIPS will apply to all Medicare services and items provided on or after January 1, 2019.

What Does This Mean to You? – You are going to be reimbursed as if you have embraced value-based population health management, whether you really do or not. The MIPS formula could deny you north of 9% of your payments. Conversely, if you decide to get into an ACO or something similar, you not only don’t get dinged, you receive a 5% bump in fee-for-service compensation and the chance for additional savings payments. Of course, you have to decide to actually engage and lead this care improvement. 

The Price of Passivity – MACRA’s shifting of the annual flow of $3-trillion from rewarding volume to rewarding value will, in this author’s estimation, have MACRA easily eclipse the Affordable Care Act in significance. Being a product of bipartisan approval, it is not going away.  Indecision will not stop your placement in the value-based payment system. Why not control your destiny to achieve your professional and financial goals as leaders of health care. Through indecision, you will be both unprepared and defaulted into the quality and efficiency compensation measurements of MIPS. 

New Upfront Payments Are Game-Changers – A successful accountable care organization (“ACO”) will be assigned one or more patient populations and be given a minimum of 50% of the savings for the overall costs for those populations if the quality of their health is maintained or improved. This is obviously aligned with the MACRA move to pay-for-value, but the wait for the possibility of shared savings is usually about 18 months.  To excise avoidable waste, the ACO looks at gaps in care for those populations—frequent emergency department use for non-emergencies, avoidably high levels of diabetes and obesity, too high readmission rates, unnecessarily high post-acute care costs, etc. They then use evidence-based best team care practices—from patient self-care, to prevention, to multispecialty coordination, to care management. Why? Because these have been proven to give the highest impact on quality and reducing costs. To hopefully get significant shared savings, the costs are usually measured for a calendar year, then it takes about six months for the claims to be reported and paid. Thus, the shared savings check to the ACO will arrive about 18 months after all this is started.

CMS has figured out that physician care coordination and management drive quality and savings. CMS knows that incentivizing this type of care, the very type calculated to create ACO success, will net significant savings to the Medicare program. For example, the pilot project for preventing diabetes will be expanded because Medicare hopes to save several thousand dollars a year per beneficiary in health care costs. In a blog entry the day the expanded population health management codes were announced, the CMS Acting Administrator wrote that, “Over time, if the clinicians qualified to provide these services were to fully provide these services to all eligible beneficiaries, the increase would be as much as $4 billion or more in additional support for care coordination and patient-centered care.” Thus, these activities, with their upfront payments, drive both MACRA MIPS and ACO success. It also gets you ready to thrive in a MACRA APM.

CMS revenue streams to support ACO success-driving activities include:

Experts are recommending that primary care physicians participate in non-risk-taking ACOs to optimize MIPS value scoring, while also reducing administrative burdens of compliance.  Use the ACO’s analytics to support collaborative care and provide the reports required under MIPS.

Let’s Be Smart About It – According to Gordon Wilhoit, M.D., a practicing physician and Chief Medical Officer of an all-primary-care-physician ACO in South Carolina, “This is a no-brainer. Start first with your MSSP ACO high-value game plan, then align the complimentary care coordination codes, CCM, MIPS, and other revenue stream and reporting activities with it. Now physicians can finance their ACO and MIPS care coordination efforts with a stream of ongoing payments from these care management codes. One of my colleagues saw a 27% increase in revenues in six months just from providing and billing for this type of care and not counting shared savings or MIPS incentive payments. Our office’s reimbursement from these care management codes now exceeds our fee-for-service income, which has not decreased.” 

Even with these payments, CMS will reduce overall net expenditures. Your impact on health care will be more powerful as a manager of the team addressing patients’ overall health than reacting to patient sickness one at a time. The patients you impact the most may be ones you don’t actually see. Your empowerment to practice medicine the right way will continue to grow. Now, finally, you may start getting compensation that takes away the last big hurdle to creating the infrastructure you need to succeed under MACRA and ACOs.

For weekly insights into healthcare, please sign up here: