Compensation Changes are Driving Disruption

If anything has disrupted the business of healthcare delivery in recent years, the transformation of reimbursement from volume to value ranks highly. Whether and to what degree we accept this reality varies among providers and facility executives, but disruptive change is either coming or has arrived. Some markets may be less sophisticated than others, with some seemingly a few years to a decade behind, but if CMS has any input—which it does—market timing in value-based reimbursement will soon shrink dramatically.

MACRA (The Medicare Access and CHIP Re-Authorization Act of 2015) is one of the disrupters. Why is it so important? First, it locks down Medicare Physician Fee Schedule (MPFS) payments at or nearly zero over the foreseeable time horizon. This blog has previously included the CMS timeline for MPFS payment updates, none of which exceed 1 percent. Second, MACRA creates a two-track payment system: MIPS (Merit-Based Incentive Payment System) and APM (Alternative Payment Models). MIPS consolidates the current PQRS, Meaningful Use, and Value-Based Purchasing programs into one model, with payments on a carrot-and-stick approach, depending on how providers score in four performance categories. APM is an upside model that provides a 5 percent incentive to qualifying participants in eligible advanced payment models. It’s coming.

What do we do now?

Although MIPS payment adjustments and APM incentive payments don’t begin until 2019, now is the time to begin preparing for these programs. We’re not necessarily talking windfalls here, but any upside could be helpful. The MPFS will freeze at zero between 2020 and 2025, so MIPS or APM incentives will probably be the only Medicare increases available for physicians during those years.

We expect 2017 to be a performance benchmark period to be used for 2019 when MACRA kicks in, and 2017 is just a few months away. This makes 2016 a key year to take full advantage of the existing Medicare P4P systems. This is also a year to begin making decisions about whether to participate or continue participation in advanced payment models, such as ACOs.

It is critically important to ensure that physicians are headed in the same direction toward MACRA. This is the time to begin moving away from pure productivity-based incentive compensation models (regardless of hospital employment or physician-owned group) to models that provide some element of financial incentive for value-based care.

Accurate data, a compliance mindset, physician leadership, and transparency are required for success in these turbulent times. With proper timing and good advisors, you can emerge an innovator, rather than a victim of disruption.

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