Debunking MACRA Myths: Hospitals’ Vital Role in Physician Success

March 6, 2018 10:11 am

The clock is winding down on the inaugural reporting period of the Medicare and CHIP Reauthorization Act’s (MACRA’s) Quality Payment Program (QPP).

Physicians participating in the program’s Merit-based Incentive Payment System (MIPS) have until March 31 to submit the minimum data required—one quality measure, one improvement activity, or the advancing care information set of measures for any point in 2017—to avoid a negative Medicare payment adjustment in 2019. Eligible professionals vying to earn a positive payment adjustment must submit data spanning a period of 90 days or more.

Provider hesitancy to embrace MACRA has been well documented. Mounting regulatory burdens, limited budget and resources, and the uncertainty of payment under value-based models have prompted many physicians to seek the shelter of hospital employment. The American Medical Association (AMA) reports that in 2016, roughly one-third of physicians were directly employed by hospitals or belonged to hospital-owned physician practices. a

A 2016 study by Merritt Hawkins reports that, on average, hospitals can expect to obtain $1.4 million in annual revenue from each affiliated full-time primary care physician, and the average annual revenue hospitals obtain from affiliated surgery specialists surpasses $2 million. b  The notion that physician practices are the only ones that experience an impact from QPPs is a myth. Given the revenue cycle ramifications of MIPS and the inevitable expansion of value-based models, hospitals, health systems, and physician practices all have a vested interest in understanding and supporting what will be required of clinicians.

Hospitals as MACRA Enablers

Although some clinicians will not earn MIPS incentives in the program’s first payment year, the potential for Medicare gains (or, inversely, losses) will climb in future reporting periods. Despite adoption apprehension, many physicians remain optimistic about their earning potential under MIPS. A crowd-sourced survey of 8,845 physician practices conducted by Black Book Research in early 2017 reveals that 77 percent of hospital-affiliated physicians view MIPS as an opportunity to increase revenue and improve patient care. c Interestingly, 66 percent of those physicians report being unprepared for managing and executing MACRA initiatives without hospital, integrated delivery system, or group practice support.

Respondents to another survey of physicians by KPMG and the AMA over the first half of 2017 point to the time required to report on MIPS measures as the most significant challenge to clinicians. d  Although 45 percent of physicians reported receiving some training on the QPP from practice, hospital, or health system affiliates, knowledge of MACRA and the QPP was lowest in hospital practice settings. More than 80 percent of surveyed physicians expressed a need for more educational opportunities to better understand the reporting requirements, scoring methodology, and potential financial impact of the new payment program.

Patient perception of the physicians representing a hospital is another important factor of MIPS. The same annual MIPS Composite Performance Scores used to determine physician incentives and penalties will be made public by the Centers for Medicare & Medicaid Services (CMS) and could reflect positively or poorly on hospital affiliates, depending on provider performance.

High performance scores can create a strategic advantage over local competitors, particularly as empowered patients increasingly look to online reviews when selecting providers. High marks can likewise lure new physicians and potential business partners to the healthcare organization. MIPS success today could also influence opportunities for participation in alternative payment models (APMs) down the road. 

How Hospitals Can Lead the MACRA Charge

There are many facets to building a hospital-physician partnership on MIPS goals. Physician education, technology alignment, clinical quality measure assessment, and incentive and compensation planning are all components of a successful MIPS strategy. Using shared expertise and resources, hospitals can garner greater rapport and buy-in among burdened affiliate physician members.

Cultivate MIPS ownership. Hospitals should appoint and educate in-house physician executive leaders as key figures in assisting the organization’s owned, managed, and affiliated practices with the intricacies of MACRA. Hospitals should adhere to the following steps to govern quality payment program initiatives:

  • Form a cross-functional steering committee with clinical, administrative, and technical stakeholders, charged with developing and managing the high-level MACRA strategy, overseeing progress, managing the timeline, providing direction, and reporting back on behalf of their respective departments.
  • Appoint a designated QPP expert in each department and/or practice setting to act as a resource for staff questions and point person on known issues. Allies also may be found in quality review and utilization review departments.
  • Host recurring educational sessions that delve into the specific requirements of the hospital’s performance measures to ensure staff members understand reporting objectives.
  • Apprise team members of regulatory updates and deadlines as they become available.
  • Determine responsibility for reporting of MIPS and other data, bearing in mind that most hospitals have a mix of hospital-employed physicians, physicians employed by hospital-affiliated practices, and independent physicians. 

Some healthcare institutions advocate exploring business process outsourcing or management service organizations, where providers can consolidate these reporting functions for physicians in their market. It is worth noting that medical groups in networks with patient-centered medical home status receive full credit for the MIPS Improvement Activity scoring category.

Align technical assets. Many hospitals and health systems will inherit the costs associated with supporting the technology, data collection, and quality reporting needs of their employed physician base under MACRA. To maximize investments in these areas, hospitals should do the following:

  • Offer analysis of historical performance data to help MIPS participants home in on quality measures that align to physician or practice strengths.
  • Customize electronic health record (EHR) technology to support tracking of specific clinical quality measures under MIPS, and optimize EHR workflows to enable tracking of clinical quality measures in a way that results in minimal disruption to patient engagement.
  • Implement analytics dashboards that offer real-time insight into key clinical quality performance indicators, and track aggregate-level data to monitor group reporting performance as well as individual physician trends to identify performance improvement opportunities and promote friendly competition among clinicians.

Smaller, resource-strapped physician practices typically are the slowest to adopt analytics. Hospitals can assist owned, managed, and affiliated practices with competitive intelligence, referral pattern tracking, and chronic care management program support, which benefit both the hospital and its affiliated practices. Most hospitals already have the types of resources and programs in place that can help partner organizations acclimate. Hospitals adept at working with clinical partners outside the inpatient setting will be better poised for population health management initiatives moving forward under value-based care.

Boost physician buy-in. Like their practice-setting counterparts, hospitals should consider modifying physician compensation plans to include incentives and penalties for performance on MIPS-related measures. Black Book’s study notes that 64 percent of hospital-networked physician organizations are incorporating performance bonuses to create an incentive for MIPS participation. Among hospitals surveyed, 88 percent report they are seeking ways to ensure individual performance scores are reflected in the compensation of the physicians they employ. To strengthen clinician engagement in quality programs, hospitals and health systems should take the following steps:

  • Quantify the near- and long-term financial consequences of MIPS performance on the organization for affiliated clinicians.
  • Establish physician performance benchmarks early on and monitor physician performance changes monthly, at a minimum.
  • Set clear and transparent performance improvement goals and communicate those goals to physicians regularly, underscoring the personal financial impact on the physicians to help elicit their buy-in.
  • Build a change management plan to keep affected staff in step with new technological resources and processes being implemented.

Even the best-laid plans can be upended if the individuals charged with embracing essential new technologies, processes, or programs are resistant to the change. People management is a crucial but often-neglected aspect of process overhauls. Providing effective communication and ample training opportunities to clinician team members can be instrumental in helping them to adapt. Physician contentment has an impact on IT adoption as well as patient perception. As provider payment is increasingly tied to patient satisfaction, cultivating a culture that embraces consumerism in healthcare will become all the more essential.

The Undeniability of Value-based Care

MACRA marks a clear tipping point in care delivery. The drive to improve outcomes while controlling costs will require a team effort, especially given the likelihood that commercial payers will continue to follow CMS’s suit with capitation and pay-for-performance payment models. As clinicians bear more risk in healthcare models, the onus will be on hospitals to support the efforts of physician employees. The groundwork that hospitals lay to support MIPS today will serve as the foundation for care management programs and population health initiatives in the years to come.


a. Kane, C.K., “Policy Research Perspectives,” American Medical Association, 2017.

b. 2016 Physician Inpatient/Outpatient Revenue Survey , Merritt Hawkins, 2016.

c. “Black Book Identifies 10 Top MACRA Trends Challenging Providers With Value-Based Care and Quality Metrics,” Newswire, May 8, 2017.

d. Are Physicians Ready for MACRA/QPP? KPMG, American Medical Association, 2017.


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