Medicare is entering a new chapter for risk contracting, and taking the entire health care industry along with it.
The Medicare Access and CHIP Reauthorization Act (MACRA) is driving the most transformative change in several decades to how CMS pays clinicians for care. Under MACRA, physicians will be assigned a payment track—either the Merit-Based Incentive Payment system (MIPS) or the Alternative Payment Models (APMs)—according to their experience in risk-based contracting models. For more details on these two tracks, reference our MACRA FAQ.
Make no mistake—MACRA is not a brief storm to be weathered and forgotten. Though there are rumors that CMS may delay the start of the first performance period, plans need to understand MACRA and prepare for this complex piece of legislation now.
Based on our conversations with plans and providers, plans must take four actions to successfully step into this new world of provider payment.
1. Use MACRA as a catalyst for sharing risk with providers
To use MACRA to their advantage, plans should consider modifying existing arrangements or embarking on new risk-sharing contracts, using the list of MIPS quality measures as a starting point for developing pay-for-performance contracts with providers.
CMS will be releasing a new set of MIPS resource use measures, designed for specific care episodes and specialties, which plans can use as a launching pad for developing their cost measures under pay-for-performance contracts.
MACRA will also increase provider interest in private payer APMs, which won’t be eligible as Advanced APMs until 2019 for payment in 2021. This means that in just two years, providers will look to supplement their Medicare APM portfolio with private payer APMs to reach participant and revenue at-risk thresholds. Thus, plans should consider the attribution, network composition, and benefit design their provider partners will need to qualify as Advanced APMs.
Specifically, private payer APMs must meet the same criteria as CMS-run APMs, meaning these entities must require use of a certified EMR, tie clinician payment to certain quality measures comparable to MIPS, and bear a certain amount of greater than nominal financial risk, or qualify as a Medical Home Model. CMS defines nominal financial risk as:
- Loss sharing at least 30%
- Maximum possible loss at least 4 %
Starting in 2021, CMS will allow clinicians to use their “other payer” book of business, including Medicare Advantage contracts, to help meet the revenue or patient count thresholds to qualify for the Advanced APM model. Current CMS guidelines indicate that full capitation risk arrangements would meet these Other Payer Advanced APM financial risk criterion. For more information on the criteria for these models, please reference questions 25-29 on our MACRA FAQ.
2. Respond to new provider competition and consolidation
MACRA will likely catalyze provider consolidation in some markets, and spark new provider-sponsored plans in others.
The added administrative burden of performance reporting under MACRA will strain provider budgets, leading to more difficult contract negotiations and spurring more provider consolidation. Smaller and more rural providers are likely to face greater financial strain under MACRA, complicating negotiations as plans attempt to secure network adequacy.
In particular, plans should look more closely at markets where they don’t have considerable market power and markets where providers are already facing financial trouble to find new ways to support providers that the plan deems indispensable.
In other markets with more leading providers or progressive health systems, MACRA will mean more competition. Some providers will decide to launch their own plan products in pursuit of greater control over spending and utilization—especially in Medicare Advantage, where they can get rewarded for care management efficiency. MA plans in these markets should look to crystallize their value proposition and defend their market share.
3. Align current provider support with new MACRA mandates
MACRA presents a new opportunity for plans to align with providers on quality and cost through their provider support mechanisms. Because MACRA introduces new reporting requirements, performance expectations, and administrative complexity for providers, plans should explore opportunities to offer tailored consulting and data support to improve provider performance.
Plans can enhance providers’ ability to attribute care to multiple providers with enhanced IT infrastructure, provide more timely and accurate information about certain patient outcomes, and highlight practice-level strengths.
For example, because MIPS groups and clinicians will be choosing what measures they want to report, plans could play an active role in the discussion to determine those metrics in conjunction with providers.
To help providers improve resource use measurement under MIPS, and further optimize risk adjustment accuracy, plans can work with providers to improve medical coding and adapt care models accordingly, to capture an accurate picture of performance improvement.
4. Make your winning bets with the right partners
MACRA increases the stakes for provider performance, so plans need to be more strategic than before about selecting provider partners.
As quality reporting becomes public, purchasers will pressure plans for access to high-performing networks. With more plans using narrow networks as a key part of their provider strategies, plans need to be careful not to undermine their future narrow network products through investments they make today. Plans should initiate risk-sharing relationships with the key high-performing providers that are likely to comprise their narrow network products in the future.