Health Plans: Top 5 Steps to Prepare for MACRA

October 18, 2016
Heather Lavoie, Chief Strategy Officer, Geneia


We now live in a value-based world. Just five short years ago no Medicare payments were based on value. A lot has changed. Five years ago Lady Gaga informed us she was Born This Way, Netflix angered its customer base by dropping DVD mail service in favor of exclusive online streaming, President Obama released his birth certificate, and in December, the Centers for Medicare and Medicaid Services (CMS) approved the first Pioneer ACOs to test shared savings programs.

Since then, 838 ACOs have emerged and currently provide care for an estimated 11.2 million people. As they enter their fifth performance year, for the first time they have authorization to participate in 100 percent risk-sharing arrangements. Taking their cue from CMS, commercial health plans have also entered into a variety of accountable care arrangements, bringing the estimated number of people covered under risk arrangements to 28.3 million. 5 steps to MACRA insert 1

In a landmark announcement, the Department of Health and Human Services set a goal for tying 50 percent of Medicare payments to alternative payment models (such as ACOs and bundled payments) by the end of 2018, and 90 percent of all hospital fee-for-service payments to quality or value by 2018. Health plans themselves predict value-based arrangements will comprise 52 percent of their business within the next five years, up from the current 32 percent. Transformation on this scale requires strategic planning, collaboration and reliable predictive analytics.

The pace of change is picking up, thanks in part to the sweeping changes released in last week’s MACRA (Medicare Access and CHIP Reauthorization Act of 2015) final rule. Even with the “pick your own pace” flexibility and relaxing of thresholds within MACRA’s Quality Payment Program, there is a lot to do in a relatively short amount of time.

Health plans are rightfully concerned about the impact MACRA will have on them and the healthcare market. We anticipate small, independent practices to be hit hard and swallowed up by larger health systems with greater negotiating power, and see the potential for cost-shifting as downward adjustments and penalties are offset with higher commercial rates. It is good to see that CMS is dedicating significant resources toward smaller practices in rural and underserved areas, but it likely will not be enough to mitigate the pressure to consolidate.

MACRA is a disruptive force in healthcare and within any disruption is opportunity for those who see it. MACRA provides strategic opportunities for health plans to strengthen relationships with providers, create new accountable care arrangements, and achieve higher levels of collaboration as everyone comes into alignment and works together toward the common goal of increased value-based care. Forward-thinking health plans must embrace the challenge in a strategic but realistic way to maintain and create a competitive advantage.

1. Keep private practices independent: healthcare costs soar as private practices consolidate.

Health plans 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.

When private practices merge with hospitals and larger systems, costs increase for consumers, employers and health plans, while physician satisfaction and productivity declines.

Negative blows come through several channels:

  • Large 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
  • As physicians move, many of their commercial patients move with them, generating cost increases across entire patient panels

2. Help clinicians succeed with MACRA and avoid expensive cost-shifting measures

5 steps to MACRA insert 2Analyze current capabilities and identify areas within MACRA requirements that your current systems support. Once identified, inform and educate your provider network to help them succeed.

For example, of the 600,000 projected eligible clinicians, only 70,000 – 120,000 are expected to qualify for the advanced alternative payment model opportunities. The remaining 480,000 - 530,000 will be subject to MIPS (Merit-based Incentive Payment System).

While many of the reporting requirements established through MIPS are familiar, the Clinical Practice Improvement Activities category is completely new and focuses on techniques and elements of population health. This category is worth 15 percent of a clinician’s score and can be supported and satisfied through improving population health techniques at the clinician level and beneficiary engagement at the patient level. Analytical and educational resources, such as Geneia’s Theon® advanced analytics and insights platform and The Geneia InstituteSM provide targeted and valuable support for this category.

Helping your providers succeed within the MACRA framework will help avoid the need and likelihood of expensive cost-shifting measures that increase commercial rates to offset downward adjustments and penalties. 

3. Align value-based arrangements with MACRA risk requirements

Learning to navigate new payment and reporting structures within MACRA is likely to reduce provider resources, including those dedicated to commercial contracts. Health plans should analyze current accountable care contracts to find areas of existing alignment and identify quick and easy ways to increase alignment. Commercial plans tend to follow CMS’s lead, but often at their own pace. Diverting resources to this endeavor in the short-term will enable providers to double-up on their reporting efforts, easing their administrative burden and ensuring your commercial contracts retain the necessary resources.

4. Strengthen relationships: help providers earn bonus payments

As quickly as in two years, MACRA bonus payments become more difficult to earn for qualified practitioners on the APM track. They will need your help.  Consider the requirements needed to earn the coveted bonus payment:

  • Until 2019, 25 percent of payments and 20 percent of patients through an APM, and only Medicare patients count
  • In 2019, percentages leap to 50 and 35 percent respectively and patients in non-Medicare alternative payment models count
  • In 2021, percentages leap again to 75 and 50 percent respectively and patients in non-Medicare alternative payment models continue to count

To achieve the highly coveted bonus, physicians have strong motivation to seek out and participate in risk-bearing arrangements in which their risk increases over time. The time to establish these risk arrangements is now so they are ready and useful when the bonus requirements increase (just two years after MACRA becomes effective).

5. Improve collaboration: the interoperability of data and knowledge

It’s time for health plans to openly share their wealth of data, analytics and knowledge. Health plans have deep expertise in aggregating and analyzing complex data and the resources to make it available to their provider network. The exchange of data alone is not nearly enough. Knowing how to turn new MACRA data into actions that positively impact the cost and quality of care is key.

Providers, especially those in smaller practices, have significantly less experience with analyzing data and far fewer resources to dedicate to the effort. However, when providers have transparent access to the same underlying data and analytics, they begin to see their work through a new lens. This shift in perspective enables a higher degree of collaboration and a greater impact on the delivery of value-based care.

In any contract, the ability for all parties to measure performance against commitments is fundamental to determining the success of the contract and where to focus improvement efforts. As contracts and reporting metrics evolve to align with MACRA requirements, health plans and their provider network need a platform that is unified, customizable, adaptable and transparent.

Without a transparent analytics platform, health plans are stuck churning out paper reports with ill-equipped legacy systems and providers are stuck with often-outdated information. Without the ability to customize and adapt analytics and practices to support new metrics, health plans and providers are stuck, bouncing back and forth between multiple systems.

Value-based care and interoperability are inextricably intertwined – you cannot have one without the other. It’s time to facilitate change and offer an interoperable data and analytics platform to your provider community and share your deep knowledge base.


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