Payers, Get Ready. Healthcare Changes You Can't Ignore

June 23, 2016
Mark A. Caron, CHCIO, FACHE / Chief Executive Officer, Geneia


MACRA has been a sleeper issue. Few industry stakeholders understood its implications or timeline. However, since the recent release of the proposed final rule, MACRA has taken center stage. The complexity of this daunting reimbursement system has all physicians -- especially those in small and medium-sized practices -- deeply concerned about their future with Medicare patients. Physicians around the country are weighing their options and seeking assistance in preparing their practices for quality reporting, risk sharing and value-based care delivery.

The Centers for Medicare and Medicaid Services (CMS) are leading the charge. Where they go, the rest of the industry will follow. Looking ahead and understanding the consequences of MACRA and the opportunities for payers, providers and healthcare consumers to benefit from this transformation is key to realizing the vision of value-based care. In fact, this push by CMS forces payers and providers to align values and outcomes that, up until now, have been so difficult to achieve in the commercially insured population alone.

Keep Private Practices Independent

The majority of experts predict the impact of MACRA to small and medium-sized independent practices to be severe. Lacking resources to comply with reporting requirements and withstand the real implications of downside risk, many independent practices could close or be forced to affiliate with large hospitals and healthcare delivery systems.

Healthcare costs increase as private practices consolidate.

When private practices merge with hospitals and larger systems, costs increase for consumers, employers and payers, while physician satisfaction and productivity declines. Proponents of consolidation argue that it will reduce redundancy and improve care coordination, but evidence to the contrary is mounting.

The impact comes at many levels. Larger physician groups typically negotiate higher reimbursement rates; many physician offices are reclassified as hospital outpatient departments, resulting in facility fees and substantially higher outpatient reimbursement rates; and as physicians move, many of their commercial patients move with them, generating cost increases across entire patient panels.

Independent practices are on the decline. In 2014, 35 percent of physicians owned their practices, down from 49 percent in 2012 and 62 percent in 2008. This trend is expected to accelerate with the implementation of MACRA as many independent practices lack technology resources and the ability to absorb potential losses generated by downside risk.

Most payers recognize and are justifiably apprehensive about the long-term expense of hospital/provider consolidation. Innovative payers realize there is opportunity to assist private practices and help them remain independent and cost efficient. Payers need explicit strategies to effectively support independent physicians during this time of increasing financial risk. The long-term value of keeping private practices independent far outweighs the expense of underwriting and provisioning pivotal technology, education and support desperately needed now.

The Broader Provider Network

In seven short years, we have gone from a system based primarily on fee-for-service payments to one where, by 2018, 50 percent of physician payments and 90 percent of hospital payments will be value-based. In a monumental move, MACRA has ensured that nearly every physician practicing today with Medicare patients will care about outcome reporting, quality measures and managing risk to a greater degree than ever before. Physician engagement in controlling costs is about to become a requirement.

Mindset is the first step in genuine change. However, MACRA is coming fast, and though physicians want to achieve performance levels that will result in bonuses and higher reimbursement, many are uncertain how to do so. The majority of physicians are in need of resources, clarity and leadership as they grapple with varying degrees of readiness. This risk-bearing experience, however, has traditionally existed within the payer, not the provider, world. Through sharing knowledge and resources, payers can shape the future and get closer to realizing their value-based care vision. 

MACRA encourages the development of and participation in advanced alternative payment models (APMs) – models that bear downside risk, use advanced technologies and rely on quality outcome reporting. However, most physicians practicing today are not part of an advanced APM, nor are they likely to be anytime soon. Early estimates claim that only 5 percent of practices are ready to participate in an alternative payment model.

The lack of participation in models like APMs means that most providers are unfamiliar with looking at their patient populations through the lens of risk and risk management; they do not have advanced analytics and technological capabilities, and quality reporting is often only finished after exhaustive audits.

Payers can help their providers better understand the risk, better align efforts and interests, and work collaboratively to control costs while providing quality healthcare.

Three Steps to Take Now

  1. Analytics. Advanced technology is key. Many electronic health records (EHR) that promise insight and expanded capabilities fail to deliver. Payers can provide to their physician network advanced technology solutions that deliver near real-time insights, quality reporting (especially reporting mapped to MACRA requirements), financial information and care coordination. A single, shared platform enables the freer flow of information among payers and providers, and better coordination.
  2. Education. Providers need educational resources to help them understand MACRA and how to develop strategies for managing risk and health outcomes among their patient populations. Payers are in the best position to provide education such as training on new quality measures, methods to engage in shared decision making, analyzing data, improving care coordination, and utilizing case and disease management programs.
  3. Leadership.  Leading payer organizations are having conversations with providers now to understand what resources are most valuable. Payer actions over the next several months will determine the degree of influence and leadership in this area. By providing resources and education, payers can deepen collaborative working relationships with providers and establish a meaningful and positive position within the broader context of health system transformation.

Physicians are the front lines of our healthcare system and whatever impacts them will impact everyone. Payers have the knowledge, claims data and the resources to assist private practices, help them remain independent and mitigate unnecessary cost increases. On a broader scale, through technology and education, payers can assume a positive leadership role in the healthcare community and further the overarching goal of delivering high-quality, high-value care.


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