Public Policy

MACRA Provides New Direction for U.S. Healthcare


Last year, Congress passed legislation to permanently eliminate the Sustainable Growth Rate (SGR) formula, created in 1997 and designed to hold Medicare Part B or outpatient spending under control. Allowing the SGR to go into effect would have severely cut physician reimbursements in recent years, but Congress passed legislation each year to temporarily avert these cuts (also known annually as the “doc fix”). In search of a permanent solution, the passage of bipartisan legislation permanently repealing the SGR in 2015 was hailed as a way to ensure more certainty around the future of Medicare payments for physicians.

This legislation (H.R. 2, 114th Congress), sponsored by Rep. Michael C. Burgess (R-Texas) and entitled “Medicare Access and CHIP Reauthorization Act of 2015,” or MACRA, does much more than simply remove the SGR’s threat of broader Medicare payment cuts. The law changes the ways physicians are reimbursed by Medicare and continues to shift our healthcare system away from volume-based reimbursements and toward a value-based payment system.

What Is MIPS?

MACRA creates two value-based payment tracks for physicians. The first, the Merit-Based Incentive Payment System (MIPS), is closer to the old fee-for-service model of reimbursement. However, MIPS takes into account both volume and quality (i.e., payment is adjusted based on physician-quality scores). These physician-specific scores broaden the scope of quality measurement by including new measures related to resource utilization, electronic health record (EHR) use, and clinical improvement practices, along with the traditional clinical quality markers.

Under MIPS, the current Physician Quality Reporting System (PQRS), EHR Incentive Program, and Physician Value-Based Modifier all will be integrated into this single-payment adjustment.

The range of potential payment adjustments based on a physician’s MIPS score grows each year through 2022 (in 2022, adjustments can range from +9% to -9%). The program is budget neutral, which means that increases in payments to high-scoring providers will be offset by decreases in payments to low-scoring providers. For 2019 to 2024, there also will be an additional payment adjustment given to the highest MIPS performers for exceptional performance.

A benefit of MIPS is that it will streamline the various quality-reporting programs currently in place into one single program and does not ask physicians to assume any additional financial risk related to outcomes when taking care of patients. However, the particulars of how the MIPS score will be calculated are yet to be determined, and much of the utility and palatability of this score will depend on the chosen metrics. The goal of these metrics should be that they are meaningful, valid, and attributable to specific providers.

What Are APMs?

The other payment option MACRA provides for physicians allows them to opt out of MIPS and participate in the Alternative Payment Models (APMs) track. To incentivize physicians to take part in this riskier track, providers taking part in APMs will receive some extra money for their participation: a 5% annual lump sum bonus on reimbursement payments. To clarify, qualifying APMs are those where providers take on “more than nominal” financial risk, report on their quality measures, and use certified EHR technology.

To qualify as a participant in an APM (for example, the Medicare Shared Savings Program), providers must hit a threshold for percentage of total revenue received or percentage of patients from qualifying APMs. This threshold will increase over time. For example, from 2019 to 2020, providers must obtain at least 25% of their Medicare revenue or patients via APMs, whereas in 2023, 75% of their Medicare revenue or \ patients will need to come from APMs.

Providers will benefit from the increased reimbursement offered if they participate in APMs. There also is funding allocated in MACRA to help develop quality measures, with a call for physician leads to develop quality standards. This payment model, however, does come with increased financial risk for the provider contingent on patient outcomes. In addition, it may be difficult for all providers to hit the thresholds for participation.

Stick with MIPS? Or Take the Plunge with APM?

How MACRA affects you will depend a lot on the practice environment. As described above, MACRA is designed to move physicians into risk-based payment structures if possible. If possible, or otherwise, to simplify the current fee-for-service mechanism of payment by consolidating various Medicare pay-for-performance programs.

Let’s look at a few scenarios:

Hospitalist A works for a physician group that assumes risk for patients in a MACRA-approved APM and sees only those inpatients as opposed to unassigned patients. Therefore, almost all of hospitalist A’s patients are covered by risk-based contracts, and hospitalist A might be well positioned for the new APM structure.

Hospitalist B works for a group, or a university, and sees whatever patients are admitted to the hospital. Hospitalist B’s eligibility to participate in the APM will depend on the percentage of patients in alternative payment models in their market. If hospitalist B’s market has many Medicare accountable care organizations, and Medicaid and the commercial insurers compensate through a risk-sharing model, hospitalist B might reach the threshold. This is more accidental than planned, however, and hospitalist B might not be able to consistently hit this threshold year after year.

In addition, just working within the model will probably not be enough to qualify. Hospitalist B will need to also take on “more than nominal risk” as a participant in the model. In an employed academic setting, where the hospital is taking on risk as part of an APM, it is unlikely hospitalist B will qualify just by virtue of hospital employment. Hospitalist B must also meet/exceed the patient or payment thresholds under the model.

Bottom line: Given the current situation, we expect many hospitalists will likely be required to participate in MIPS and not qualify for APMs. Understanding the details and expectations now will help them be successful in the future.

Is MACRA Good for Hospitalists?

Most of organized medicine is happy to be free from the annual threat of reimbursement cuts. In addition, the new law might streamline quality reporting. But the specific upside depends on your perspective.

With APMs, a hospitalist might enjoy more upside potential, particularly for high-quality work and EHR use. However, whether it is realistic for most hospitalists to even participate in the model depends on many factors, as described previously, and SHM is advocating for the law to be implemented in ways that will more readily accommodate hospitalist practice and employment structures.

For example, the SHM Public Policy Committee has provided the Centers for Medicare & Medicaid Services (CMS) with realistic options for implementing the APM framework that would allow hospitalist B in the above example to qualify as an APM participant.

With MIPS, the benefit to hospitalists depends a fair amount on the way the law is implemented: how quality reporting happens, what metrics will count as quality improvement efforts, and how utilization of EHRs is measured.

What Issues Should Hospitalists Be Aware Of?

As MACRA is further developed, the main issue for hospitalists will be to ensure fairness in assessing quality and incentive payments. As previously encountered with quality reporting, hospitalists are not differentiated clearly from outpatient providers. As a result, they could suffer from the comparison of their quality outcomes for their sicker hospitalized patients to the patients cared for in a typical primary-care internal medicine practice. This inaccurate comparison poses problems in both models.

A potential solution would be a hospitalist-specific billing code, which would make it easier to identify hospitalists. SHM applied for and advocated for the approval of such a billing code and the request was recently approved by CMS.

In addition, as hospitalists mostly work in groups with shift-based schedules, thus sharing care of patients, individual identifiers may not be as significant as possibly looking at hospital, system, or team-based metrics. Using facility performance measures for both clinical quality and performance improvement—where hospitalists can opt to align with their hospital, which is already reporting quality outcomes—might be one way out of this conundrum. It would take into account the type of facility-level quality improvement work many hospitalists participate in. This also would decrease reporting burden for hospitalist groups.

SHM has advocated for this solution and was able to ensure this concept was included in the law; however, it is unclear when or how CMS will implement it.

To summarize, looking good in quality reporting will continue to be a challenge for hospitalists. It will be critical to keep pressure on CMS to implement solutions that account for the unique situation of our specialty.

Another issue to be aware of is the ability of hospitalists to participate in APMs. As with other facility-based providers, hospitalists have little control over whether their facility participates in an APM. Ways to ensure hospitalists can reach thresholds for participation could include allowing the various APMs that hospitalist patients are aligned with count toward an individual hospitalists’ APM participation total—a solution that SHM is advocating for Medicare to include in the APM framework.

What’s Next?

Much remains to be solidified regarding implementation of MACRA, despite the fact it goes live in a few short years (see Figure 1). CMS has asked for comments and stakeholder input regarding MIPS and APMs, and it will be releasing the first round of rules around MACRA this year.

SHM is actively working with CMS to ensure this legislation will reflect the work we are doing as hospitalists to provide high-quality clinical care for our patients and enhance the performance of our hospitals and health system. TH



Dr. Doctoroff is a hospitalist at Beth Israel Deaconess Medical Center and an instructor of medicine at Harvard Medical School in Boston. Dr. Dutta is a hospitalist at Rush University Medical Center and an assistant professor of medicine at Rush Medical College in Chicago. Both are members of the SHM Public Policy Committee.

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