MACRA Primer—Top Takeaways from the New Medicare Physician Payment Pathways and Potential Market Impacts

Physicians are neck-deep in challenges, beginning from managing increased consumerism on one end to interpreting complex regulatory requirements on the other. The most recent, bipartisan-backed, Medicare Access and Children’s Health Insurance Program (CHIP) Reauthorization Act of 2015 (MACRA), marks the onset of delivery and payment reforms under Medicare. Quality Payment Program (QPP), the key initiative under MACRA, aims to provide a value-based reimbursement system, taking into account cost, quality, technology advancement, and clinical improvement aspects. However, as clinicians, vendors, and other entities gear up for the first performance year in 2017, there is a long way to go in terms of achieving the visualized goal of value-based Medicare. This brings about a pressing need for all related parties to understand the tenets of the new reform and its potential impacts.

The QPP is an initiative proposed by Center of Medicare and Medicaid Services (CMS) in mid-October, 2016 to implement MACRA, which has strong bipartisan support. The program impacts Medicare Part B payments for more than 600,000 clinicians. While it is clear that MACRA marks the movement toward value-based care, physicians and digital health stakeholders still await specific leeways or changes to MACRA, with the new government taking charge. Physicians who are still finding it difficult to meet current reporting requirements or have not invested in population health management may experience more hardships while adjusting to new requirements. Regardless of the future of MACRA, physicians must continue to strive for value-based care and improved patient outcomes and digital health solutions will be a critical and inevitable component of that process.

MACRA replaces the Sustainable Growth Rate (SGR) formula, which was used to periodically update the physician fee schedule (PFS) under Medicare, with the QPP. Under SGR, physicians constantly faced payment cuts and temporary fixes to avert the cuts. This unsustainable approach is now planned to be replaced, with the QPP providing stable payment updates. Physicians are offered a choice out of 3 payment pathways, namely the Merit-based Incentive Payment System (MIPS), Advanced Alternative Payment Model (AAPM), and MIPS-APM under MACRA. To provide clinicians a smooth switch-over, reporting standards are aligned between the 3 pathways, wherever possible. Furthermore, MACRA aims to ease the burden for physicians by consolidating existing reporting programs including Meaningful Use (MU), Physician Quality Reporting System (PQRS), and Value-based Payment Modifier (VBM). Incentives and higher PFS are planned out for entities accepting more than the nominal risk, along with technical assistance to facilitate participation.

This market insight provides a brief summary of the payment pathway options laid out for physicians under MACRA, along with vital parameters planned under each pathway including timelines, eligibility, and incentives or penalties based on different performance levels. It includes a review of key strategic imperatives and takeaways for physicians and an outlook for MACRA in light of recent regulatory changes. It also provides a snapshot of smart digital health growth opportunities for physicians and health information technology vendors, in the current period of uncertainty.