For providers across the U.S., the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), the law put in place last year which repealed the Sustainable Growth Rate (SGR) formula for Medicare physician payment, and which will move towards a value-based care reimbursement model that stresses care coordination and financial risk sharing, has caused a whole lot of confusion.
MACRA is set to begin its first performance period as it stands now on Jan. 1, 2017, but when a Deloitte Center for Health Solutions survey in July revealed that half of responding physicians said they have never even heard of MACRA, levels of concern were raised. For payers too, MACRA has the potential to bring on impending chaos, particularly regarding the two new Medicare payment program tracks— the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APMs). As such, for organizations like Medica, a Minnetonka, Minn.-headquartered health plan, with approximately 1.7 million members active in the upper Midwest, “business as usual” will no longer be the case.
Indeed, Andrew Davis, vice president and general manager of Medicare at Medica, says that his senior leadership team is still trying to figure out what will be the “new normal” as it pertains to its contracting strategy with major providers, specialists, and others. “There are lots of conversations taking place with the provider community around their interpretation [of the law], how they’re digesting this, how they’re building their internal strategies on the APMs and MIPS fronts to get their organizations ready, and also how will that will impact the way they engage all payers,” he says. “We’re still feeling each other out, and it’s all centered around the contracting approach between both sides. So there are still more open questions than answers,” Davis says.
What are the Biggest Questions?
Davis says that providers are trying to determine how much of a tipping point this will be to the existing revenue model for a particular provider, and to what degree do the MACRA-related payment models also affect Medicaid, induvial, and commercial reimbursement? On top of that, there are questions on how to incorporate the type of internal workflows and data management that needs to apply to a Medicare population, and how to apply that to other lines of business because they are now “thrown into the dominator in many cases,” Davis says. “So this is seminal event for large systems who either have a toe in the APM space through the MSSP [Medicare Shared Savings Program] or Pioneer ACO [accountable care organization] model, but for those who have not been highly involved in that activity, it is unchartered territory.”
And, from a technology standpoint, Davis sees a wide spectrum of readiness, particularly on the data analytics front as health systems try to better understand and manage populations to the degree that will be needed. “You have seen major investments on the EHR (electronic health record) front, but that doesn’t take you across the goal line by any stretch,” Davis notes. The “sore spot” from a technology standpoint is the analytics that are aimed at the identification of risk and risk stratification of patients, and the appropriate engagement based upon that risk in the provider community. “That’s one of the biggest challenges that they are facing, so they are looking at health plans for support on how to do it effectively, or have the health plan do it for them,” Davis says.
In sum, all of the unanswered questions leads to significant apprehension in the health plan community, similar to what has been reported on the provider side, Davis says. “There is anxiety because there is so much uncertainty, and we just don’t know if this is the seminal event that will create the tipping point to flip the revenue model of these big integrated systems to move away to volume to paying for value,” he says.
Within MACRA’s complexity, Davis points to one simple equation: “Are we at that point where fundamental structural change needs to occur within a system where you are looking to reduce people in hospital beds, encourage people to discharge early, and [overall], keep people out of the system? That’s the fundamental shift, and it’s an open [question] as to whether or not MACRA will drive that,” he says.
Nonetheless, while Davis attests that most of the change that MACRA will bring with it will be new to providers, much of its core involves things that payers are already doing. “The idea that APMs are new to payers is not true, just like the concept of risk sharing or withholds based on quality performance is now new for most payers,” Davis says. “So our systems are able to accommodate that in a range of automation versus manual output. To me, there is a much bigger lift on the provider side than it would be on the payer side. Now having said that, we are investing from an IT, analytics and software standpoint around the things that are driving our top line revenue,” he says.
To this end, Medica has hooked up with Burlington, Mass.-based vendor HealthEdge as the payer looks to better position itself for healthcare’s changing landscape. Ray Desrochers, executive vice president and chief marketing officer at HealthEdge, notes how, in many instances, the 25-year-old technology infrastructures that have done so well for payers over the years are not necessarily geared with these new models in mind, particularly in terms of flexibility for what is an “exponentially, more complex business.”
Desrochers says than in this new world, it’s more than just a simple agreement between the member and provider for payment. “Now, we might be paying based on additional variables, and might have situations where we could be paying differently based on things such as levels of compliance. That leads to interesting discussions across the market right now. We are at the point where people are starting to figure out how to go from the world they have lived in for so long to one with significantly more variability,” he says.
Alignment for Quality Needed
Davis also points to another problem: a potential conflict in quality metrics that payers are held accountable for. The Centers for Medicare & Medicaid Services (CMS) uses a five-star quality rating system to measure Medicare beneficiaries’ experience with their health plans and the healthcare system. But Davis notes that MACRA has a separate set of quality initiatives and expectations for fee-for-service patients, so his concern is the potential conflict in quality measures.
“We have engaged CMS and Minnesota stakeholders on this issue, and are working towards [a solution],” Davis says. “We should be driving towards the same outcomes and the same incentives, related to what is [considered] ‘quality care’ for a Medicare beneficiary. You can’t have a provider be split between the quality associated with a fee-for-service member and the quality for a Medicare Advantage member. We are in the grey zone right now where we may have competing incentives from a reimbursement standpoint, and therefore between payers and providers,” he says.
Davis wonders what this conflict might drive in terms of physician behavior, performance, and investment, if there is indeed two sets of quality measures that are in some cases aligned, and in some cases in conflict. “We are addressing the alignment in these two programs,” he says. “Ultimately, particularly on the APM side, if I am a large integrated health system, I will look at a Medicare beneficiary as just that. It doesn’t matter if you’re from health plan A, B or C, I will try to get my contracts lined up in a way that I can optimize the care given to that particular member no matter where it is. We could have more symmetry and computability between contracting between health plans between systems; the bar is raised high, as you have to treat every Medicare beneficiary essentially the same. MACRA will force that.”
In the end, Davis says that payers and providers must work together now more than ever, and for that to happen the historical “I win, you lose” paradigm has to be replaced with a realization that in the Medicare space, “aligning outcomes and strategies is in both of our best interests now.”
Davis continues, “I am very fond of looking at this from a partnership standpoint versus an adversarial standpoint. That is easy to say, but it’s not easy to change decades of behavior.” He adds that the only way to survive as a health plan in the post-Affordable Care Act world, is to be “exceptionally good at managing risk.” Davis says, “At the end of the day, the vast majority of risk is in control of the provider. More than ever, our two worlds have collided and are aligned. MACRA has given us the opportunity to redefine how to create and share value together.”