Hospital boardrooms are beginning to sound more like those on Wall Street, with talk of upside and downside risk, capitation and a hefty addition of new acronyms.
Hospitals, health systems and physician groups are now in the process of deciding which of the two possible reimbursement paths they will take under the Medicare Access and CHIP Reauthorization Act, which replaced the rarely implemented sustainable growth-rate formula for determining physician pay.
“This is not practice as usual,” said Aric Sharp, vice president of accountable care at UnityPoint Health, based in West Des Moines, Iowa. “This is not what we've done for the past 10 to 20 years in group practice. This is a whole new world.”
There was much rejoicing in April 2015 when Congress replaced Medicare's extremely unpopular SGR formula with an overwhelmingly bipartisan vote. The focus, however, was far more on the joy of getting rid of the annual doc fix to payment rates and all of its frustrations than it was on the system now set to replace it—MACRA.
Under MACRA, providers will use either the Merit-based Incentive Payment System, known as MIPS, or an alternative payment model. Under MIPS, physician payments will be based on a compilation of quality measures and the use of EHRs. HHS will announce the eligible measures, and providers will have some options on which to report. More on how this will work is expected in the final rule, which is likely to be published in November.
About 90% of physicians are expected to take this path.
MIPS consolidates three highly unpopular incentive pay programs: the Physician Quality Reporting System, or PQRS; the Physician Value-based Payment Modifier; and the electronic health record meaningful-use program. Providers will now be graded on quality, resource use, clinical practice improvement and meaningful use of certified EHR technology. Medicare revenue would be affected by as much as 4% in 2019, the first year the payment changes take effect, and increase to up to 9% in later years.
Most providers will choose MIPS because they are not ready to take on the other option, a qualifying alternative payment model that requires a hefty amount of risk. Many don't have the capital to set one up or to risk losing money with subpar performance. Although MIPS requires putting some profits on the line, it is much less of a gamble than heading into an APM without experience and confidence that quality measures are high.
But a few large groups are planning to accept payment adjustments based on their performance under already existing alternative payment models. To qualify for that track, providers must bear “more than nominal financial risk.” They will receive a lump sum incentive payment and higher annual provider payment as benefits. They will also be exempt from the MIPS reporting measures.
UnityPoint decided relatively early on that it would participate in an APM because of the success of the Pioneer accountable care organization in one of its regions. The system's other eight regions were in track one of the Medicare Shared Savings Program, and that track is not eligible as an APM under MACRA.