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Deloitte's Life Sciences & Health Care Blog

Going to school on MACRA: Building a foundation for success

This past Friday, the US Centers for Medicare and Medicaid Services (CMS) released its eagerly anticipated final rule outlining the new payment programs under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). At nearly 2,400 pages, even for the most “schooled” in the health policy world, who are used to reading lots of health care regulations, this is a big one.

As our US Health Care Regulatory Leader at Deloitte, the first questions I received on Friday were: “So, Anne, what is your initial reaction to such a monster regulation?” and “What do you think of the changes and transition time given?”

My response is quite simple: A rule of this size and the focus of the first performance year as one of transition is entirely appropriate. The enormity of the new rules reflect the transformative intent of the law. The transition time given is an acknowledgement that the industry shift from volume to value will not happen overnight.

As we’ve said many times, MACRA is disruptive by design. Congress intended the law to put the industry on a path toward delivering much more cost-effective and outcomes-based health care. Congress and the Administration have made it clear that it will be an evolutionary process and will take place over many years. But, do not mistake this transition year as similar to past laws or policy changes that have been more about delays and “kicking the can” down the road. The MACRA journey is underway; we are full speed ahead.

MACRA is not designed to be merely a compliance law. It requires strategic choices by health care leaders, clinical and financial transformation within organizations, and critical investments to be planned for and made. In speaking with hundreds of hospital system executives and clinicians over the past few months, many are beginning to understand the transformative and organizational changes needed. But, for a CEO to transition his or her organization to new risk-bearing models or a CFO to change a revenue mix from volume to value, it may take strategic planning across the enterprise, data, technology, infrastructure, and more. Moreover, for a clinician to understand – let alone change – new care models, it may require a shift in focus to outcomes over processes, engagement with physician leadership to motivate change, and new performance management programs.

MACRA is a transformative law poised to drive payment and delivery reforms for clinicians and health systems across Medicare, other government programs, and commercial payers. In addition to significant new performance measures, reporting requirements, and compliance exercises, MACRA will necessitate major strategic decisions for physicians and other clinicians in how they organize themselves and how quickly they move into coordinated care arrangements. Similar decisions await health systems and health plans that employ those health care professionals or rely on them for patient referrals and to build their networks. And, while the law directly impacts Medicare payments through the Physician Fee Schedule, it also lays the groundwork and provides strong incentives for other payers to move in the same direction, thus potentially disrupting the health care system at all levels.

Even though transition time is given and clinicians can “pick their path” to ease in (see highlights in the October 17, 2016 Reg Pulse Blog), there are several critical issues to consider:

The start date remains: The final rule retains January 1, 2017 as the start date of the first performance period. Organizations have little time to prepare to begin collecting data on clinicians’ performance if they plan to fully participate in the Merit-Based Incentive Payment System (MIPS) and hope to maximize their positive payment adjustments.

Sitting out may not be wise: Clinicians considering sitting the first year out might be wise to reconsider. Clinicians who do not report in 2017 will receive the maximum negative payment adjustment of 4 percent in 2019.

Cost performance will still be important: While many were relieved to see one of the most difficult MIPS performance categories – “resource use” or cost – is now weighted at zero for 2017, the focus on decreasing cost and utilization remains the end goal. The measure of costs will not be taken into account for the first year of MIPS and will not affect payment adjustments for 2019. However, CMS is still going to review claims in 2017 and intends to calculate cost measures and provide feedback to clinicians. Additionally, as required by the statute, the weight of the resource use performance category in calculating performance under MIPS will still increase to 30 percent by performance year 2019, which is significant.

Perhaps it is best to think about MACRA as similar to earning a degree. As any physician or clinician can tell you, it takes years to become an expert in the medical field. But, each year is important on the journey to your degree. If you skate by in your first year of classes, then year two becomes that much harder because you have not adequately prepared in your foundational courses. Each year builds upon the last. For the first year of MACRA, the good news is that the teacher has said that while you must participate in class, you can build a foundation at your pace and even receive some extra credit along the way.

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Author bio

Anne Phelps is the US Health Care Regulatory Leader and a Principal with Deloitte & Touche LLP. She has over twenty-five years of health care policy experience having worked in federal agencies, the US Senate, the White House, and in consulting firms. She serves as a strategic business advisor to numerous health care stakeholders – including providers, health plans, employers, and life sciences companies – helping them navigate the complex health care regulatory environment and how it will impact their organizations.