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MACRA: Changing the foundation of health care, one brick at a time

“Rome wasn’t built in a day, but they were laying bricks every hour.” – John Heywood

I am sure at some point in your career you have heard an exasperated executive rationalize the lack of progress on an important initiative – mostly due to a lack of alignment or inability for the organization to change – and say some version of this quote. And, this is true: Rome, which started as a village in 745 BC, became the center of the world, and by the second century had a population of 1.6 million citizens. It was this way until imperial power was seized by Constantinople in 330 AD, at which point the city began a long decline. Of course, Rome’s history is a story filled with much more real life drama than 100 seasons of Game of Thrones, and it stands today as one of the most beautiful cities in the world.

The health care industry is on a journey of its own, as the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) is causing transformative change to its foundation. At the same time, it appears to be creating some frustration around understanding what these changes mean for clinicians and the broader industry.

To get a feel for its impact across the broader industry landscape, the Deloitte Center for Health Solutions recently took a pulse on where health care industry stakeholders are in their progress toward preparing for MACRA. To gauge awareness, preparedness, and perceptions about MACRA, we performed a brief online survey of 61 executives who lead or are key decision-makers with value-based care initiatives at hospital/health systems (health systems heretofore), health plans, and life sciences companies. We found the following:

Many health system respondents understand that MACRA will fundamentally disrupt relationships and aspects of their business:

  • Nearly half (45 percent) say that MACRA will be very disruptive to relationships between health systems and physicians.
  • More than one-third believe that MACRA will be very disruptive to their organization’s financial model (41 percent) and technology systems (35 percent).
  • 72 percent of the respondents expect MACRA to drive down their total margins.
  • 38 percent expect total margin losses of greater than 3 percent.

Health plan executives are developing their plans to align with MACRA’s requirements, and some are speeding up value-based care efforts. Yet, many questions remain.

  • Nearly one in three say that they will speed up their plans for value-based payment arrangements due to MACRA.
  • Nearly half (44 percent) of those who have begun planning for MACRA have begun reviewing their contracts with providers to understand how their arrangements align to MACRA’s risk requirements for providers.
  • But, fewer (39 percent) have identified strategic areas that their organization can support provider organizations as MACRA is implemented.

Today’s health system infrastructure is built on fee-for-service (FFS) principles and organized around specialty care. This has created silos, with very little data shared with the patients and other health care providers, limited options for patients to consult with their physician outside of the traditional face-to-face visit, and few if any incentives to control cost. And, it has resulted in no real accountability for outcomes.

While MACRA does still rely on FFS to provide payment, it also begins to reconcile accountability to cost and quality and creates the necessary processes to improve sharing information and clinical data. And, while several CMS programs use prepaid methodologies (e.g., capitation, bundles, etc.) to pay health care professionals, in my opinion, there is more to come to make these arrangements a greater share of total payments. Those payments can be more appropriate in paying for services not typically covered but needed to achieve the kind of results required.

Medicare payments to physicians under Part B are only $69.2 billion representing 16 percent of total spending for Medicare. But, the idea that physicians will be scored and that their scores will be available for consumers, employers, and health plans to review should be more than enough to set in motion the rebuilding of a health care system long in need of a renaissance.

That renaissance may already be on its way. In this new phase of health care, the system would be driven more by accountability than financial incentives. It would also:

  • Reward effective and efficient providers and emphasize continuous improvement in outcomes and measures.
  • Have tools to manage care, engage patients, and track performance that do not exist today; these would become new cornerstones.
  • Unlock data and information currently housed in electronic health records, which often are not accessible to providers or patients; this data would be shared, aggregated, and reported to help improve processes and decision making.
  • Include a mandate to standardize the definition of data elements so that interoperability can be made possible; tracking patients and providers across health systems, geographies, and health plans would be as ordinary as it is today to use our Social Security number for identification.
  • Emphasize virtual care to open access for patients with chronic diseases, who currently comprise 86 percent of the health care costs and where an estimated 28.6 percent of these costs are avoidable.1

Recently, the US Centers for Medicare and Medicaid Services (CMS) announced that it will allow clinicians flexibility around MACRA requirements in calendar year 2017. As long as clinicians submit data at some point next year, they will avoid a negative adjustment in 2019 (see the September 13, 2016 Health Care Current). I believe that CMS and many in the health care industry know that this is a fundamental change, and it may take a decade for the benefits to be fully realized. So, a few months delay in organizing a process to submit quality data probably isn’t going to change the course toward which we are headed.

Moreover, our modern health care system is at least a hundred years in the making. MACRA cannot possibly solve all of our challenges in building a more globally competitive and productive health care system. But, I don’t think we need to wait a thousand years.

1 Francois de Brantes, Amita Rastogi, and Michael Painter, Health Services Research, “Reducing Potentially Avoidable Complications in Patients with Chronic Diseases: The Prometheus Payment Approach,” 2010

Read the entire Health Care Current here and subscribe to receive weekly updates.

Author bio

Bill Copeland, Vice Chairman of Deloitte LLP, is a 27-year Deloitte veteran and leads the US Life Sciences & Health Care Practice. Previously, Bill was practice leader for the health reform initiative, focused on serving clients’ needs around the incredible changes resulting from the Affordable Care Act. He was also National Managing Director of our Life Sciences & Health Care Industry Consulting Practice and managed the Health Plans Consulting Practice.