Healthcare

In the previous installment of this two-part series, we considered how the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) is the game-changer in the transformation of physician payment from fee-for-service to value-based payment. We further contemplated the fact that about 19 in 20 MACRA-affected providers will fall under the Merit-Based Incentive Payment System (MIPS), which consolidates the current Physician Quality Reporting Program (PQRS), Value-Based Payment Modifier (VM), and Meaningful Use (MU) programs into a single Quality Payment Program (QPP). We also pondered critical actions to take today to prepare for MACRA, one of which is identifying preferred MIPS metrics.

Recently, I received a call from a close friend who wanted advice because his small company had been the victim of a ransomware attack. A hacker had locked the company out of all significant business applications, compromised all the backups, and wanted $250 in the form of Bitcoins to unlock the system. The IT manager tried to restore the systems without paying and without success.

Government and commercial insurers are transforming payment models from fee-for-service (FFS) to arrangements that include incentives for quality, outcomes, improved patient satisfaction, and reduced cost. In the FFS environment, hospitals, physicians, and other providers have been subjected to insignificant financial risk relative to the risk borne by payers; however, with time, transformed payment arrangements have encouraged, if not required, more providers to assume downside risk. Why? One reason is to hold providers accountable for the cost and quality of care. The table below by The Commonwealth Fund summarizes this need by showing where the United States ranks relative to other industrialized nations in health outcomes and risk factors:

One of our favorite sessions at the AHLA Annual Meeting is the Year-in-Review by Jack Schroeder and Elizabeth Carder-Thompson. It is a great way to get caught up on a year’s worth of activity in health law in 120 minutes. Out of the volumes of information Jack and Elizabeth read to summarize for conference attendees, we found 10 pieces of information that were particularly interesting for our practice in these days of constant and rapid change. We felt these would be worth sharing:

The HORNE Healthcare team has been blogging recently about the necessary business model changes we think are inevitable to healthcare transformation. We’ve focused on the macro level, urging healthcare organizations to take action. While I believe our advice is sound for large systems, I am additionally concerned about the pressures physicians are feeling in their practices, particularly in small practices. In this blog, I’d like to introduce three issues I think will be important to physicians going forward. I will write in greater depth on each topic in the coming weeks. 

As I help healthcare organizations create effective cost accounting systems, the number one complaint I hear is: “I don’t think this report is accurate” or its second cousin “This just doesn’t look right.” My own father gives me grief because he doesn’t trust accounting systems.

Currently, one of the more perplexing issues around fair market value physician compensation relates to designing comp models that effectively reward physicians for quality and cost savings in a market that is still driven by fee for service (FFS) reimbursement. Compliance-minded hospitals are understandably concerned about adopting (seemingly aggressive) models that stack quality payments on top of existing FFS models, particularly if total compensation exceeds what is commonly considered outside the upper range of FMV. Unfortunately, what those models should look like, especially what resulting (compliant) physician compensation should come from those models, represents somewhat unchartered waters.

For the C-Suite to become value added, the C-Suite level executives must become value added leaders within the organization. Senior leadership must learn how to recruit, train, nurture, maintain and retain these value added individuals.  For an organization to do more than just survive – to succeed, it must anticipate its customers’ needs and adjust its direction and momentum so that it is providing what the customer needs in a timelier fashion than its competition. Becoming an anticipatory organization guided by visionary leader is essential for growth. 

The 1989 movie Field of Dreams is one of my favorite baseball movies. In it, an Iowa farmer hears a mysterious voice tell him, “If you build it, he will come.” The voice is talking about building a baseball field in the middle of an Iowa cornfield to attract the ghosts of the Chicago White Sox players banned from baseball for throwing the 1919 World Series. The ghosts appear, including the farmer’s father, and so do thousands of spectators.

At a recent national conference, I heard top executives from some of the largest healthcare systems in the country discuss their business models and their healthcare delivery transformation during the past several years. We can count on the Geisingers and the Mayos, as well as other large systems, to lead the way, but I was struck by the extent of their progress towards offering value and outcomes to patients rather than the traditional models present today in many systems. They are doing, quite successfully, what many smaller systems are only beginning to debate. They are proving that new models can deliver better patient care and still be profitable.

Futurists identify hard trends and build prognostications around what will take place. They also use the identification of hard trends to seize opportunities in order to transform businesses. 

CMS released a proposed rule on April 27^th which specifically addresses the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive as components under the Quality Payment Program. The Medicare Access and CHIP Reauthorization Act of 2015 repealed the Medicare sustainable growth rate over a year ago, but to date, the recently released proposed rule provides the most concrete guidance on the likely trajectory of physician payment under Medicare Part B for the next decade. While receiving such information is important and exciting for market participants, frankly CMS did not leave much time for physicians and health systems to consider this information, update strategic plans and execute accordingly. That’s because the first performance period begins in less than seven months on January 1, 2017.

The healthcare industry has been buzzing about payment reform and pay for performance for some time now, especially since the release of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and the introduction of the Merit-Based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs). The recent release of the MACRA Proposed Rule has further fueled the discussion and has those of us living in the healthcare industry focusing our sights on the items CMS says have value (or impact reimbursement).