In this business profile, Deloitte & Touche LLP executives Anne Phelps, principal and U.S. healthcare regulatory leader, and Daniel Esquibel, senior manager, explain ways health systems, health plans, and physician practices can prepare for MACRA.

Anne phelpsAs Deloitte has evaluated how the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) will affect healthcare organizations, what has been the biggest surprise?

MACRA has been a bit of a sleeper issue. Initially, many in health care viewed it as a relatively small change in how physicians and other clinicians are paid under Medicare. However, after studying the law and talking to health plans and health systems, it became clear that this law is poised to create fundamental change in healthcare financing and delivery across the continuum. The ramifications of the law Daniel Esquibelhave been a surprise to many in that it isn't just physicians who will be affected, but health plans and healthcare providers as a whole.

Deloitte views MACRA as a game changer: Congress designed the law to be disruptive. It requires strategic choices—it's not merely a "read the rules and comply" situation. There are large-scale decisions that organizations will need to make along the ten-year implementation journey.

CMS expects most clinicians (at least initially) to be subject to the Merit-Based Incentive System (MIPS). How are organizations preparing for the possibility of having some clinicians on the Alternative Payment Model (APM) track at the same time that others are in MIPS?

At the individual level, clinicians will either be in the MIPS system or they will have earned enough revenue through risk-bearing, coordinated-care arrangements to achieve APM status. At the hospital or health plan level, however, organizations will be dealing with clinicians in both camps. Because of this, hospitals and health systems should take a good look at their entire clinician community—employed, non-employed, affiliated, non-affiliated, primary care, and specialty physicians—and make sure they understand the requirements for both the MIPS and APM tracks, including the relevant quality metrics, necessary supporting structures, and how the various reimbursement patterns will affect clinicians and the hospital.

Do healthcare provider organizations plan to work toward transitioning clinicians to the APM track? If so, over what time frame?

The hospital and health system clients that we've spoken to over the past several months absolutely want to work with their clinicians to respond to MACRA, ultimately helping them move to APM status. How long this takes will depend on the investments the health system has already made in preparation for risk-based contracting and how the participating physician organizations are organized and structured. Basically, it comes down to when the hospital and clinicians are able to start accepting a greater share of the risk through new payment models.

That said, organizations are going to start bumping up against deadlines pretty soon. Although MACRA has a long implementation timeline (10 years), the first measurement period for the law is set for January 1, 2017 according to the proposed rules. This doesn't give organizations a lot of time to understand the requirements, figure out which path they're going to follow, determine what quality measures they will report, and decide how to report them. As such, organizations need to have a long-term strategic roadmap for implementing the legislation, as well as short-term tactical strategies, to get ready for the first measurement period.

Have commercial payers started to have conversations with providers about new payment arrangements that might look more like Medicare Advanced APMs under MACRA?

Health plans and payers are definitely starting to pay more attention to MACRA. Although the law starts with Medicare, it is going to drive adoption of similar risk-based, coordinated-care models across the payer mix. Congress designed MACRA to eventually apply to all payers, and health plans are starting to pay close attention, so they can navigate the legislation and grow market share.

In this context, payers are seeking ways they can help provider organizations transition to better quality care and risk-based contracting. As a result, they are pursuing a number of alliances, joint ventures, and other relationships with physicians and health systems. Within these efforts, payers are also reexamining their own roles.

Are there different factors at play depending on whether healthcare organizations directly employ clinicians?

In some ways, hospitals and health systems that employ clinicians have the advantage because everyone is part of the same organization. There are already agreements in place regarding how clinicians are paid and rewarded. In these organizations, hospital leaders and physician practices are working closely on things like quality measures, data collection, and reporting systems.

A potential downside of employed clinicians is that their performance under MACRA will have a direct impact on the hospital, especially if clinicians do poorly. Under the MIPS system, organizations can receive positive, neutral, or potentially negative payment adjustments. If clinicians fall under an APM model, organizations are going to have to take on some downside risk along with the upside of achieving higher bonuses. Poor clinician performance can also tarnish a hospital's reputation if the scores are made public. Eventually, this could affect the organization's ability to attract and retain patients.

MACRA ties clinicians' payment updates more closely than ever to proper clinical coding. This has been an area of weakness for many health systems that employ clinicians. Do you expect this to be a challenge for organizations?

Organizations are going to have to place more emphasis on clinical documentation and coding largely because of the way the payment model looks at resource use. Providers need to be able to reliably capture the various inputs associated with a care episode—not just what care, treatment, and services a clinician provides in the hospital but also what is done in the office, as well as for certain conditions. Hospitals have been stressing the need for uniformity between the outpatient and inpatient settings for a long time, but until now, clinicians didn't see a change in their own reimbursement, so it wasn't as much of a priority for them. This legislation will provide greater leverage to the health system in terms of pushing the idea of consistent and comprehensive clinical documentation forward.

It's not only the details of the coding that will have to improve but the fact that health systems must apply this coding across the board to numerous clinicians. In the end, to do well under MACRA, providers and hospitals are going to have to devote time and resources to improving the depth and scale of their documentation and coding efforts, so they can have pristine coding that is consistent throughout the entire entity.

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Publication Date: Monday, August 01, 2016