Industry experts explain the steps physician practices can take to prepare for the changes that are fast approaching under the new payment law.

An essential part of preparing for the Medicare Access and Chip Reauthorization Act of 2015 (MACRA) is simply ensuring that physicians understand it.

“The best initial step is for practices to begin educating themselves on these changes, in general,” says Greg Dean, vice president, technology partners, McKesson Medical Surgical. “They need to understand the reasoning for the transition from the SGR [Sustainable Growth Rate formula] to MACRA and to definitely understand the two paths they can take.”

The two choices are to report quality measures in accordance with the Merit-based Incentives Payment System (MIPS) or to participate in a designated alternative payment model (APM). Together, the two tracks comprise the new Quality Payment Program, which was created by the MACRA proposed rule and is designed to move Medicare Part B payment away from a volume-based system and toward a quality- and value-based system.

MIPS payment in 2019, the first year of the new payment system, will be based on 2017 quality performance. 

The education process should include several touchpoints, Dean says, such as written messaging and live Q&A sessions to explain the new payment system, followed up by additional sessions explaining the strategy the group has decided to pursue. Groups should designate a staff member, such as a quality officer, to provide this education and be a go-to resource for information on MACRA.

Assessing the Situation

“What we really recommend is for medical group leadership to perform a MACRA readiness assessment to understand the care models that are currently being used within the practice and how those will be measured under MACRA,” says Lynn Schneider Grennan, managing director, Chicago-based Huron Consulting Group. “That will help them determine which of the tracks and measures they’re most prepared for.”

The assessment should look at the typical conditions a physician treats and in which type of care setting, Grennan says. For practices that choose MIPS, an assessment will also help to narrow the number of measures they consider selecting. Practices can then test the measures under different scenarios to gauge the financial impact on the organization, Grennan says.

An assessment may be especially helpful in choosing measures from more than 90 options within the new clinical practice improvement category, which is one of four main categories in MIPS (along with cost, quality, and “advancing care information”). The clinical practice improvement category focuses on areas such as care coordination, beneficiary engagement, and patient safety. While meeting the requirements under this category are rather straightforward, it is a new reporting category and one that may prove particularly difficult for physicians who have not begun investing in care transformation, says Krista Teske, consultant, research and insights, for Washington, D.C.-based Advisory Board.

Physicians who have limited or no experience with quality programs, such as the value-based payment modifier and meaningful use, definitely have their work cut out for them, says Jimmy W. Burnett, managing director and national business unit leader for the physician enterprise solutions practice of Chicago-based Navigant Consulting. Despite the growing momentum toward value-based care, many practices may not be prepared for any type of quality measurement or risk-based payment, meaning they may have to ramp up efforts to reduce cost by increasing standardization and reducing variation in care.

“The pressure on cost is not going to ease up. It’s going to continue,” Burnett says. “With the new payment model, there’s going to be a lot of winners and a lot of losers.”


In the proposed rule implementing MACRA, the MIPS track—which applies to Medicare Part B physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists—carries a potential gain or loss of 4 percent of reimbursement in 2019, the first year of implementation, with the share rising to 9 percent in 2022. In the first five years of the program, a $500 million pool will provide bonuses of up to 10 percent of reimbursement for “exceptional performers.”

Physicians in the APM track will not have to report quality measures under MIPS and will receive 5 percent lump-sum bonus payments annually from 2019 through 2024. According to CMS, most Medicare clinicians will initially be eligible for MIPS rather than APMs. The designated APMs in the proposed rule are the Comprehensive ESRD Care Model for large dialysis organizations, Comprehensive Primary Care Plus, Medicare Shared Savings Program (MSSP) Tracks 2 and 3, the Next Generation ACO Model, and the Oncology Care Model with two-sided risk.

Although the APM track may look more lucrative, Teske says physician practices should carefully consider whether the organization is set up to perform well under an advanced APM that exposes the group to downside payment risk. To be successful under these higher-risk models, organizations must have made the necessary investments in care transformation, such as setting up their practices to become patient-centered medical homes—which require data-sharing capabilities as well as care coordinators—or setting up higher-acuity ambulatory clinics designed to reduce emergency department visits and prevent admissions, Teske says.

Even some organizations in APMs that carry upside risk only, such as Track 1 of the MSSP, may not be ready to move into a model with the level of downside risk required to qualify for the APM track under MACRA, she says.

“But I do think that over time, we will see more groups wanting to move to the APMs track and setting up their organizations to do that,” Teske says.

Rich Bajner, managing director, health transformation, Navigant, says practice groups may be better off staying in MIPS because providers in general struggle with how to quantify risk. “Payers do that extraordinarily well, but the majority of provider organizations lack the infrastructure to quantify such risk,” he says. “So, if they’re going to put 25 or 50 percent of their revenue at risk, what does that mean, in terms of the cost-benefit analysis, versus just staying in MIPS?

“That’s a difficult calculation for our clients. Many of our clients believe MACRA is tilted toward staying in MIPS since the level of risk required to get into an APM is too high.”

Eric Cragun, senior director, health policy, The Advisory Board, says the decision to participate in payment models with downside risk should take into account factors other than MACRA.

“MACRA’s an important consideration, but there’s really a lot of other factors that need to go into that decision,” Cragun says. “It’s important for providers to look at MACRA as it fits within the broader context of what is going on in the healthcare industry—the move toward risk-based payments, the move toward pay for performance, toward care coordination, collaboration, those types of things—and fit MACRA into that and not try to base a strategy purely on the specific requirements of MACRA.”

More Strategizing Ahead

The choice of MIPS or APMs may be among the least of the immediate challenges facing physician groups. In general, the new payment system means that practice leaders and independent physicians will have to think more strategically about running a practice.

“Those strategic conversations might be new and different for a number of medical groups,” Teske says.

Hospital-based practices that have relied on their hospital partners to report their quality measures may now consider the advantages of doing it themselves, she says. One question is whether a hospital partner is best-positioned to choose which measures best represent the performance of the practice group. Under MIPS, the financial implications can be greater over time than under current value-based payment modifier programs, so hospital-based groups may want to choose the measures. “They want to have greater control over their own destiny,” Teske says.

The dynamics will also change for independent physicians in small to mid-size markets, Bajner says. The necessary investments in technology resources may be too expensive for many independent physicians to manage. Couple that with a threat of losing up to 9 percent of annual Medicare reimbursement starting in 2022, and the survival of independent physician practices may hinge on partnerships with larger organizations.

As such, competition between health systems and/or larger physician groups for these independent physicians can be expected, Bajner says. “The battle for independent physician alignment is heating up,” he says.

Ready or Not

For practices that perform well under MACRA, the potential upside is significant, given the incentives and the additional bonus pool for exceptional performers. “Groups that have figured this out have the potential for some significant financial upside,” says Grennan of Huron Consulting Group.

For practices that haven’t prepared for value-based payment, however, the financial penalties can be significant, says Navigant’s Burnett. For these physicians, the greatest challenge may be change itself. Although many practice groups have embraced the move to value, others appear to still believe value-based payment is a ways off, if it comes at all, he says. Those physicians may find themselves left behind.

”I think that boat sailed a long time ago,” Burnett says.

Karen Wagner is a freelance healthcare writer based in Forest Lake, Ill., and a member of HFMA’s First Illinois Chapter.

Interviewed for this article: Greg Dean, vice president, technology partners, McKesson Medical Surgical, Richmond, Va.; Lynn Schneider Grennan, managing director, Huron Consulting Group, Chicago; Krista Teske, senior analyst, research and insights, The Advisory Board Company, Washington, D.C.; Eric Cragun, senior director, health policy, The Advisory Board Company, Washington, D.C.; Jimmy W. Burnett, managing director and national business unit leader, physician enterprise solutions practice, Navigant Consulting, Chicago; Rich Bajner, managing director, health transformation, Navigant Consulting, Chicago.

Publication Date: Thursday, July 07, 2016