April 24, 2018 | Rosemarie Day and Niko Lehman-White

Four MACRA-Related Payment Changes that Medicare Providers Need to Know in 2018

It has been three years since the Medicare and CHIP Reauthorization Act (MACRA) passed the House and Senate with over 90% support, representing the most substantial change to government-funded healthcare since the Affordable Care Act. It alters the payment system for Medicare through the Merit-Based Incentive Payment System (MIPS) and Advanced Payment Model (APM) tracks, both of which represent significant shifts to value-based payment models.

MIPS-eligible Medicare providers had until March 31, 2018 to submit their 2017 performance year data to CMS, who will increase or decrease their billings based on how they performed in relation to quality, improvement activities, and electronic medical record (EMR) use. Those who experienced difficulty with their submission should recognize the imperative to better prepare for the future because the requirements, standards, and penalties of the law will rise with each passing year. Beginning in performance year 2018, cost will be added to the list of scoring criteria and the “pick your pace” program that allows minimal data submission will have higher standards. In performance year 2019, pick your pace will sunset and half of participating providers will see their Medicare revenues adjusted downward. By performance year 2020, 9% of revenues will be at stake.

MIPS participation will be compulsory for the 37% of physicians with Medicare patients who meet the minimum threshold. Most have experienced limited impact as of yet, but in the coming years the effects of this legislation will accelerate, transforming the Medicare payment and delivery systems. Here are the biggest changes that will be felt in the MIPS track beginning in the 2018 performance year and continuing through the program’s maturation in 2020.

  1. More money at stake. MIPS payment adjustments will phase in gradually: the maximum 4% adjustments in performance year 2017 will grow to their final level of 9% in 2020. This higher degree of risk, combined with the sunsetting of pick your pace, means that there will be more money from negative adjustments going into the pot, and more money for positive adjustments coming out of it. Expect much more revenue to shift from providers with low scores to those with high scores because of this.

MACRA 4-24

  1. More negative adjustments. By performance year 2019, the performance threshold for MIPS will be high enough that half of its providers to fall below it. Awareness of data submission requirements, topped out measures and alternate reporting options like virtual groups will be important for providers who want to be prepared for this new environment.
  1. Fewer participants, with larger average size. Providers with fewer than $90,000 in Part B charges or fewer than 200 Medicare patients will be exempt from these requirements. This new threshold was established in MACRA’s 2018 Final Rule. As a result, 134,000 mostly small-practice clinicians will be excluded, and the pool of providers competing for positive adjustments will consist of larger entities with lots of capital and the ability to leverage their economies of scale to improve their scores through cost-effective, centralized resources like reporting systems, EMRs, chronic disease programs, care management, and quality improvement programs.
  1. More difficult submission requirements. The “pick your pace” program allowed physicians to avoid negative adjustments and submit minimal data. As this program terminates, practices that have been putting off the development of quality reporting capabilities will need to build them quickly.

Like or dislike MIPS, the MACRA legislation is going to affect the healthcare industry in profound ways. Rising payment adjustments will mean that innovative patient-centered programs that have until now been more in the wheelhouse of global or capitated payment-focused entities like ACOs will have an increasingly appealing return on investment for a broader range of providers. On the other hand, of the providers required to be in MIPS, the advantage enjoyed by larger entities with greater economies of scale could incentivize provider consolidation, which often results in higher prices. The full ramifications of MACRA are uncertain, but what we can say for certain is that the train has left the station, and providers caring for large Medicare populations will need to get on board quickly or risk revenue losses up to 9%.