In 2015, Congress enacted the Medicare Access and CHIP Reauthorization Act (MACRA) in order to create a new system for reimbursing providers that serve Medicare beneficiaries. The Quality Payment Program (QPP) is designed to move the traditional Medicare payment system away from the standard fee-for-service model and towards a value-based payment method.  What are the MACRA challenges for hospitals in 2018, in terms of impact on the revenue cycle?

MACRA challenges

Now that we are more than halfway through 2017, it’s an ideal time to review MACRA challenges and CMS’ proposed solutions for 2018.

MACRA went into effect at the beginning of 2017. Now that we are more than halfway through the first year of MACRA, some unique MACRA challenges for hospitals have manifested (review our previous blog post where we divulge what the critics of the Merit-Based Incentive Program have to say).

he Healthcare Law Blog, Lexology, explains that under MACRA, two different payment models have been established:

  • Advanced Alternative Payment Models (AAPMs)
  • Merit-Based Incentive Payment System (MIPS)




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“From a hospital and health system perspective, not only is it critical to think about how to prepare employed physicians for MACRA, but it is also important to determine what supports are in place for the organization’s affiliated network and independent physicians in the community.” Anand Krishnaswamy, vice president of Kaufman Hall’s strategic and financial planning practice, from “5 steps to get your hospital’s MACRA strategy off and running” (Becker’s Hospital Review)

Will the Proposed Rule Fix MACRA Challenges for Hospitals?

At the end of June, the 2018 Quality Payment Program proposed rule was released by CMS. The changes proposed for the next fiscal year are intended to simplify MACRA reporting requirements and increase participation.

This could be helpful because Hospitals employee many of the physicians the rules affect.  A 2016 article in InterfaceWar, explains MACRA’s impact on hospitals in terms of number of physicians employed like this:  “According to the annual survey conducted by the American Hospital Association (AHA), hospitals in the United States employed over 249,000 physicians in 2014. When you add in the 289,000 physicians who had individual or group contractual arrangements with hospitals, the total number of physicians who had working relationships with hospitals in 2014 was 538,000. That number represents nearly 70% of the estimated 800,000 physicians who will be affected by MACRA.”

What’s the impact?  Administrative costs.  The article further explains that, “Depending on the agreements in place with their physicians, hospitals may have to absorb the administrative expenses (namely the cost and time it takes to create reports) of complying with MIPS. And those administrative expenses aren’t small – Health Affairs reported that U.S. physician practices in four common specialties spend an average of 785 hours per physician and more than $15.4 billion dealing with the reporting of quality measures each year.”

Then there are the details in the measurement system that could be problematic for patient treatments.  Medpage Today analyzed a viewpoint article from JAMA Cardiology that suggests the MACRA benchmarks could be problematic for cardiologists. The following are the key takeaways Medpage found in the JAMA article:

  • “Very high benchmarks for some items in the cardiology set of quality performance measures and lack adjustments or automatic exclusions for disease severity for many of them”
  • “An episode-based heart failure measure that could leave those caring for ventricular assist device and cardiac transplant patients compared on cost to general internists treating less complex heart failure”
  • “Patient attribution issues for cost and quality that may incentivize generalists to refer costly, complex patients to cardiologists, exacerbating risk adjustment problems”

There is no doubt that there are MACRA challenges for hospitals.  But some healthcare analysts see positive changes in the June proposed changes to MACRA and MIPS.  Healthcare Dive recently examined the proposed changes form the June update and highlighted the following:

  • Sustainable growth rate formula is replaced with a 0.5 percent annual increase through 2019. After this period, physicians are encouraged to choose one of the QPPs – MIPS or APM.
  • To address the issue of small practice participation, the proposed rule exempts 134,000 more clinicians from MIPS because the low-volume threshold is changed to $90,000 or less in charges for Medicare Part B or less than 200 Medicare patients annually from the previous $30,000 in Part B charges or 100 Medicare recipients.
  • Proposed changes in the guidelines offer greater flexibility for providers and broaden the exemptions.

Jeff Coughlin, senior director of federal and state affairs at HIMSS, comments on the proposed rule, stating: “Directionally, this is where we thought the rule would head. I think the focus is not going to go away in terms of ensuring that there is some flexibility for clinicians, but that the underlying push [for value-based care] is still there.”

Resources to Help Hospitals Deal with MACRA Challenges

State and regional health information exchanges (HIEs) have been delivering relevant data that informs physicians about their patients – successfully reducing unnecessary treatments and tests. Diagnostic Imaging reports that this role has been a key factor in establishing trust between physicians and HIEs because they help physicians complete MACRA reporting. (We recently wrote about improving your hospital’s revenue cycle management, and thorough MACRA documentation is a big factor in the equation.)

The article continues to explain how HIEs want to build upon that trust to become a “one-stop shop for MACRA reporting.” Jamie Bland, NeHII’s director of business development, talks about this partnership:

“The No. 1 strategic element is lowering the quality-reporting burden for providers. We have an extraordinary amount of data we can align to providers, and through the qualified entity process, we can look at the attribution taking place for providers at CMS, giving them a much more complete picture of what they want to report, how they want to report it, and what would be most beneficial.”

American Academy of Family Physicians recently included an insert in the July 15 edition of American Family Physician (AFP). This four-page color pull out section serves as a handy reminder that helps physicians stay up-to-date on QPP reporting. Included in the insert is instructions to visit the AAFP‘s online tools and FAQs, where they will find:

  • “MACRA on-demand modules that provide members with an introduction to MACRA, MIPS and advanced alternative payment models;”
  • “a list of ‘MACRAnyms’ that sort out a confusing assortment of phrases; and”
  • “thorough explanations of the MIPS payment track, accountable care organizations and more.”

In an article on the transition to MACRA and its affect on the hospital revenue cycle, Becker’s Hospital Review includes this insightful quote:  “In regard to MIPS, Mr. Barnes from iHealth Innovations acknowledged that having comprehensive documentation inside an EHR is a lot of work. Physician practices, medical groups, and health systems have invested billions of dollars in their health IT, specifically in their EHRs. However, these organizations’ EHRs are rarely optimized. “In many cases, more technology is not needed…optimizing what you already have is plenty to be successful [under MACRA],” says Mr. Barnes. With that premise, he says hospitals and health systems should ensure their EHR, and health IT in general, is customized to address the main program or any state- or specialty-based programs they’re participating in.”

In a related article, also in Becker’s, “5 steps to get your hospital’s MACRA strategy off and running” are given by Anand Krishnaswamy, vice president at Kaufman Hall. Krishnaswamy makes the case that MACRA readiness should be a priority not only for physicians but also for hospital boards and executives. He lists these 5 steps (with more details in the article), to help with MACRA challenges for hospitals:

  1. Understand the requirements.
  2. Develop a strategic vision.
  3. Evaluate current readiness.
  4. Assess options — there are two main options in the QPP, the MIPS and advanced APM tracks.
  5. Implement a MACRA strategy.