Practice Notes

Thinking of adding new physicians to your group? Think again.

How MACRA reporting requirements should influence physician acquisition strategy

by Gillian Michaelson

The health care industry is in a period of rapid consolidation.

Between 2012 and 2015 alone, there was a 50% increase in the number of physicians employed by hospitals. And 91% of CEO respondents to a recent Modern Healthcare survey expect MACRA requirements to drive an increase in physician employment by larger practices and health systems across the next few years.

However, just because consolidation is in vogue doesn't mean your medical group should necessarily join the trend. It's important to recognize that there are a whole slew of new MACRA requirements that might impact what makes for good acquisition targets and when you should bring new physicians onboard.

Here are two things you should know about the MACRA reporting requirements before adding new physicians to your group:  

1. Clinicians have a two-year tail on their MIPS payment adjustments

In a world of MIPS scores, history matters—and clinicians can't simply shed their baggage by switching to a new practice.

All clinicians are associated with a combination of a specific Tax Identification Number (TIN) and National Provider Identifier (NPI), which defines their MIPS performance score. MIPS scores in any given year impact payment adjustments two years later.

If you report group data through your TIN, every current clinician in your practice will receive the same payment adjustment in 2019.

If you acquire new physicians, however, they likely will have a different 2019 payment adjustment because they carry their MIPS score for the past two years from their previous practice.

For example, imagine Dr. X received a low MIPS score in 2017 and 2018. You acquire Dr. X at the beginning of 2019—even though he is now part of your group, he, individually, will receive a negative payment adjustment in 2019 and 2020 based on his poor performance in 2017 and 2018. The 2019 MIPS score you report for him won't impact his payment adjustment until 2021.

This two-year tail will impact physician groups differently based on compensation structure. If physicians in your practice are paid under an "eat what you kill" productivity-based payment model, then their poor MIPS score will only influence their individual Medicare income.

However, if your medical group pays physicians a set salary, your net income could be impacted. For example, imagine you promised Dr. X a specific salary when you acquired him. You will still have to pay him that salary even though he will generate less Medicare income for those first two years as a result of those negative payment adjustments from his poor MIPS performance.

But that performance tail won't last forever. Now that you are reporting for Dr. X as part of your group, his performance will be incorporated into your group's performance. In two years, he will receive the same score as the other clinicians in your group.

For more information on reporting for your clinicians under MIPS, see our MACRA FAQ.

2. When adding new physicians to your APM, timing is everything

When adding new physicians to the group, physician organizations must be cognizant of exactly how CMS will determine physician participation in APMs under MACRA. CMS will take a snapshot of APM participant lists three times throughout the year: March 31st, June 30th, and August 31st. Any clinician who appears on at least one snapshot will be included in the APM entity for the performance year.

This is important for two types of groups in particular: those that seek to qualify for the AAPM track and those that participate in MIPS and hope to receive the MIPS-APM scoring standard. If a group adds clinicians to its practice after these designated snapshots, that group will be responsible for reporting for those clinicians under MIPS.

Given the complexity of adding new providers to the participant list of Advanced APMs, we recommend that for the first performance year provider organizations report to MIPS for all clinicians, regardless of whether your organization qualifies for the Advanced APM track. This will help safeguard your organization against any potential errors that may have occurred in meeting these snapshot windows. 

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