The Urgency of MACRA: Why Healthcare IT Must Take Action Now to Avoid Hefty Revenue Decline
The Stimulus bill (American Recovery and Reinvestment Act of 2009), with its $27 billion subsidy and the threat of up to a 5 percent penalty, ushered in the EHR era and transformed healthcare into an IT enabled industry. The result is that the majority of physicians now utilize software while caring for patients and payers can leverage the data to affect cost and outcomes.
The Stimulus Bill seven years ago created a sea change for physicians and CIOs, and significant opportunities for EHR vendors. Now MACRA (Medicare and CHIP Reauthorization Act of 2015, References 1,2,3) is creating a tsunami coming next year that will drastically alter delivery of care for Medicare patients, with a potential to spill over to commercially insured patients as well. MACRA is effectively a national capitated Medicare Part B that will rank physicians by quality, resource use (cost), advancing care information (MU), and clinical practice improvement activities from zero to 100. Performance Year 2017 will affect Part B payments beginning in 2019. The “budget neutral” adjustment will make sure that total spending is fixed at the national level, which could widen the Part B reimbursement swing (maximum positive to negative adjustment) from 18 to 26 percent in 2019 and from 28 to 46 percent in 2022.
Moreover, the scores will be listed publicly. Most Medicare providers will have to race against their peers to improve their scores, there by avoiding reimbursement cuts and patient attrition. Private insurers may also utilize such data in their preferred networks. Simply billing more services will no longer be a sure path to more income. With the increased individual financial risk, physicians have an even stronger incentive to join a group and adopt an Advanced Alternative Payment Model (for example, MSSP track 2 or 3) to pool risk.
Most Medicare providers will have to race against their peers to improve their scores, thereby avoiding reimbursement cuts and patient attrition
The financial impact of this substantial payment reform across the $600 billion annual Medicare spend will eclipse the $27 billion EHR subsidy, which was spread over many years. The MACRA effect on HIT vendors and CIOs will be significant as well because the time to execute is much shorter, given that providers' performance in 2017 will have a profound impact on reimbursement in 2019.
The Next 6 Months: Preparing for MACRA
With the January 1, 2017 date looming, every IT project should be measured based on its potential to maximize the MIPS composite performance score.
• Focusing on EHR utilization goals is secondary. Quality and resource use equate to 60 percent of the composite score, while Advancing Care Information is 25 percent. That means the priority for healthcare IT investments must be around driving true collaboration and coordination of care across multiple healthcare settings. Healthcare providers must organize, staff, and collaborate around best practices for improving quality score, patient outcomes, and clinical practice, and adopt IT solutions that support these efforts.
• Engaging patients must be a bigger focus. Patient actions and outcomes are a significant part of the new measures.
• Understand the details of clinical quality measures and which ones are most impactful for your practice. Make sure you have a plan and tools in place to monitor, manage, and achieve them.
• Solutions addressing rapidly forming and shifting populations are critical, and they must live outside of EHRs designed in the fee-for-service era.“My EHR will take care of all our clinical IT needs” will be harder to defend as large numbers of clinics with disparate EHRs pool together to share the risk.
• Initiatives like Medicare Chronic Care Management (CCM), designed to help providers prepare for this value transition, can have a strong impact. Incremental revenues from CCM can offset the technology investments necessary to be successful under MACRA, while the program in itself can have a positive impact on cost and quality of care for patients.
The EHR era delivered a set of winners and losers in Healthcare IT. There will be a different set of winners and losers under the new world of MACRA. With commercial insurance joining the fray of transformation to value, there should be strong urgency to act now to avoid a low rating and its associated significant loss of income. Healthcare IT executives need to immediately build new capabilities to succeed in the new MACRA era, as it takes more lead time to affect quality and resource use, and January 1 is just around the corner. A head start will provide an advantage competing with your peers. Bessemer Venture (Reference 4) catalogued 175 companies driving the $1 trillion healthcare transformation to value, which together received $4.5 billion of venture funding, signaling a strong market interest in these new technology segments.
It is hopeful MACRA will deliver in years to come what SGR (Medicare Sustainable Growth Rate of 1997) failed to deliver in the past two decades - a path to Medicare solvency.
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