JUNE 13, 2019

Welcome to the MACRA MIPS/APM Update eNewsletter
Editor: Philip L. Ronning
This issue sponsored by the National MACRA Summit, National ACO Summit,
and the National Bundled Payment Summit.

Academy Gives Senate Strong Prescription to Improve MACRA
For family physicians eager to see Medicare reward value rather than volume, 2015's Medicare Access and CHIP Reauthorization Act checked a number of key boxes. But MACRA's departure from the fee-for-service payment model also came with a host of new boxes for physicians to check -- an administrative hamstringing, the Academy recently told lawmakers, that must be addressed as the program advances. Delivering oral and written testimony (8 page PDF) before the Senate Finance Committee on May 8, AAFP President John Cullen, M.D., of Valdez, Alaska, cautioned that MACRA's Merit-based Incentive Payment System "has created a burdensome and extremely complex program that has increased practice costs and is contributing to physician burnout." "Understanding the requirements and scoring for each MIPS performance category and reporting required data to CMS is a complex task and detracts from physicians' ability to focus on patients," he added. "Many of my colleagues are frustrated and angry. We urge Congress to work with CMS to reduce the complexity and administrative burden of MIPS." The Academy's testimony -- which commended MACRA's potential to support a primary care-based health system -- outlined areas of concern and suggested potential improvements. (American Academy of Family Practice, May 15, 2019)

What Value-Based Payment Means for Academic Medical Centers
The value of health care -- defined as the health outcomes achieved relative to the costs invested -- is an increasing concern in the United States. Health care spending is expected to accelerate over the next 5 years, reaching 20% of the U.S. gross domestic product by 2025. Quality of care and health outcomes remain suboptimal. While environmental, social, and behavioral factors are the primary determinants of poor population health status and health outcomes in the U.S., significant opportunities remain to improve the value of health care and the health care delivery system. Moreover, the health care system has an obligation to play a meaningful role in helping to overcome the effects of these external factors. Major academic centers also function as large community-based health care systems that offer ambulatory primary and specialty care as well as basic hospital services to populations in their surrounding areas. Indeed, evidence suggests that teaching hospitals provide higher-quality care than non-teaching hospitals do -- not only when caring for the sickest patients, but also when caring for patients with routine conditions. For example, from 2012 to 2014, Medicare beneficiaries had significantly lower 30-day mortality rates at major teaching hospitals than at non-teaching hospitals (8.3% vs. 9.5%, p < 0.001) after accounting for patient and hospital characteristics. Reductions in mortality were observed among patients with common medical diagnoses that are leading causes of hospitalization as well as among those undergoing major surgical procedures (Fig. 1).11 In fact, patients with low-severity medical illnesses or moderate-severity conditions requiring surgical treatment benefited from being admitted to major academic centers as much as or more than those with high-severity illnesses did.12 In addition to serving patients better, major teaching hospitals' dual functions as community hospitals and regional referral centers enable trainees to become proficient in both basic and advanced types of care in an organizationally and economically efficient manner rather than in a diffuse, uncoordinated manner.

Given their diverse roles, major academic medical centers have unique financial structures, with high fixed costs as well as high costs per case. Tertiary and quaternary care require large investments to deliver routine care in ample case volumes and to ensure adequate standby capacity -- i.e., keeping personnel, equipment, and facility infrastructure at the ready for patients with rare and catastrophic illnesses. While this profile makes academic centers more expensive than other settings, concentrating specialized clinical capabilities, education, and research at academic centers improves efficiency and limits total costs to the overall system because it avoids unnecessary duplication of scarce and expensive resources. (NEJM Catalyst, May 30, 2019)

The Seven Characteristics of Successful Alternative Payment Models

Below is the complete Executive Summary of this important white paper. The complete paper can be found at through this link.

Alternative payment models (APMs) are central to the efforts to reduce the growth in healthcare costs and improve outcomes for patients. Yet some stakeholders remain skeptical of their potential. This is understandable, because APMs have shown mixed results. We have identified seven characteristics of well-designed models that yield meaningful savings for payers, improve margins for high-value providers, and improve patient outcomes.

  1. Density and scale
    For an APM to succeed, the proportion of the provider's book of business included in the model must be sufficiently large (high density) to motivate providers to change, justify investments, and adopt dedicated clinical-operational workflows. When the proportion is small (low density), the incentive to change is weak. Worse, the provider's economics may be adversely affected if changes spill over to fee-for-service (FFS) patients.
    The absolute scale of the entity contracting the APM (APM contractor*) also matters. Providers with high volumes of patients in APMs can better afford the necessary investments and target operational changes for the APM patients. Scale also reduces the impact of chance on the contractor's measured performance. Medicare Shared Savings Program (MSSP) accountable care organization (ACO) results suggest that even with 20,000 members, ACOs can routinely save or lose based on random variation alone.
    APM design can influence density and scale in multiple ways, including minimum thresholds for participation; concentration of patient volume in APM providers; smart caps on outliers (that do not meaningfully reduce savings opportunities); and alignment with other payers on incentives, measures, and operational requirements. Allowing virtual contracting entities also increases scale, but these may be difficult to successfully migrate to risk.
  2. Strategic leverage
    The leverage available to APM contractors varies considerably. Physician-led APMs can realize savings by reducing admissions, rationalizing diagnostic pathways, and referring patients to lower-cost hospitals--all without incurring revenue loss. With relatively small operating budgets (compared with the total costs of care), savings can have substantial impact on revenue and margins. For hospitals, these “savings” would be realized largely at the expense of their own revenues, which may explain the more modest savings seen in hospital-led APMs (even those that are well designed):
    • Hospital-led ACOs: 1-2%
    • Physician-led ACOs: 3-5%
    • Hospital-led bundled payment: 3-5%
    • Physician-led bundled payment: 5-8%

    Yet many opportunities for hospitals exist. Some hospitals can reduce post-acute costs without impacting their revenue, for example, or they can focus on “best-in-class” areas of expertise to increase efficiency and market share. They can also increase margins by replacing the avoided (re)admissions with other patients, based on improved physician alignment, thus receiving both shared savings and additional revenue. This approach combines a more traditional revenue-growth strategy with savings realized per patient or episode.

  3. Skin in the game
    Successful APMs tend to include financial risk. Financial accountability for losses ensures providers' organizational commitment. Models that share both savings and losses with providers allow payers to offer higher shared savings percentages--up to 100%--which helps providers justify needed investments.
    Successful APMs also include accountability for outcomes and costs for both low-risk and high-risk patients. Less experienced APM contractors may push to exclude high-risk patients or care outside their direct sphere of influence, which reduces the percentage of savings payers can share. Also, the proposed exclusions (e.g., high-risk patients) are often where the largest possible savings are. Here, a seemingly safe approach can leave both payer and provider with empty hands.
  4. Focus on the forest rather than the trees
    Rewarding value is possible only when costs can be juxtaposed with quality of care that meaningfully reflects the patient's journey. Most quality measures used for APMs, however, focus on processes that reflect only fragments of the journey. Two innovative metrics move us closer to measuring outcomes. Surveys of patient-reported outcomes (PROs) assess patients' symptoms and functional improvements in ways claims data cannot capture. For many conditions, PROs are the measure that matters most. In addition, the rate of potentially avoidable exacerbations and complications (PECs) is a powerful claims-based metric that captures another core outcome of care: the extent to which the care provided helps to reduce a condition's potential complications or exacerbations.
  5. Calibration of risks and rewards
    Successful APMs are built upon design choices that balance the payer's interest in reducing medical costs and the provider's interest in minimizing risk and maximizing retained savings. Successful APMs drive predictable savings for payers but remain sufficiently attractive to providers to optimize participation in voluntary models and avoid demotivation and resistance in mandatory ones. Although these goals might not seem compatible, making the right combination of design choices allows APMs to meet both needs. Risk adjustment, benchmarking, and attribution methods can make or break success.
  6. The right mix of incentives, motivation, and feasibility
    Successful APMs combine financial incentives with two other key behavioral modification drivers: professional motivation and feasible targets. Restoring the link between provider economics and the professional motivation to deliver patient-centered, high-quality care creates a powerful drive. In addition, successful APMs show a feasible path for providers to deliver higher-value care. The clearer it is to providers how to achieve high-value performance, the more they are likely to succeed. This makes general ACOs a natural anchor point for primary care physicians (PCPs), and episodes of care or specialized ACOs attractive to specialty care providers.
  7. Accounting for consumer behavior
    Misalignment of the contractor's incentives with consumer incentives can threaten an APM's success. APM contractors can identify and target specific value “leaks” and introduce initiatives to improve consumer behaviors, treatment adherence, and referrals to high-value providers. Payers can also encourage behaviors through well-designed benefits and value-based insurance products.

(McKinsey & Company, January 2019)

Senators Seek Feedback on Medicare's Pay Models Under MACRA
Members of a powerful Senate committee said during a Wednesday hearing that they are keeping tabs on the administrative burdens of Medicare programs meant to tie physicians' pay to judgments about the quality of care they provide. The Senate Finance Committee does not appear to have any immediate plans for making major changes to the programs created by the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015. But during the hearing, members of the Finance Committee showed clear sympathy with physicians' complaints about the Merit-based Incentive Payment System (MIPS). "When it comes to assessing quality, the goal of implementing this new system is not to have doctors checking boxes all day long," Sen. Ron Wyden of Oregon, the ranking Democrat on the committee, told the witnesses at the hearing. (Medscape, June 3, 2019)

AMA, AAFP Suggest Reducing Health IT Utilization Measures in MIPS
In testimony before the Senate Committee on Finance, AMA, AAFP, and AMGA voiced their support for the shift to value-based care and the Merit Based Incentive Payment System (MIPS), but urged policymakers to simplify the program by eliminating some health IT utilization measures and instead focusing on outcomes-based measures. While stakeholders feel MIPS can be improved, most commended several aspects of the program and expressed overall support for Congress' decision to abandon the fee-for-service payment model. In written testimony, AMA President Barbara McAneny, MD, applauded CMS for making efforts to ensure small practices can participate in MIPS. “AMA appreciates the accommodations for small practices that are included MIPS. Specifically, the low-volume threshold exemption excludes numerous small practices or physicians who see very few Medicare patients,” said McAneny. “In 2018, physicians with annual Medicare allowed charges of $90,000 or less or 200 or fewer Medicare patients were exempt from the QPP altogether…AMA has also supported reduced reporting requirements for small practices, hardship exemptions from the Promoting Interoperability MIPS performance category for qualifying small practices, bonus points for small practices, and technical assistance grants to help small and rural practices succeed in the program.” (EHR Intelligence, May 8, 2019)

AmeriLife White Paper Highlights MACRA-Driven Opportunities for Medicare Supplement Carriers, Agents and Clients
AmeriLife Group, LLC ("AmeriLife"), a national leader in developing, marketing and distributing annuity, life and health insurance solutions, today released a study highlighting the opportunities being created across the Medicare Supplement industry by the Medicare Access and CHIP Reauthorization Act (known as MACRA 2020).

The study's co-authors - Patrick J. Fleming, FSA, MAAA, AmeriLife's Executive Vice President, Product Innovation and Corporate Actuary, and Charles F. Thalheimer, FSA, AmeriLife's Executive Vice President and Corporate Actuary - state: "Change opportunity. And so it will be when MACRA takes effect in January." "Together with the larger demographic changes that continue to roll through the Medicare market," they said, "MACRA will create new opportunities for well-positioned insurance carriers and agents - and for the millions of individuals who: (1) are already covered by Medicare, or (2) will become Medicare eligible during the next few years." The white paper, titled "Get Ready for MACRA":

  • Analyzes the evolving Med Supp marketplace
  • Explains MACRA and corrects misperceptions about its short- and long-term impact
  • Predicts the future for "first-dollar" Med Supp plans and the options that will become available to current holders of those plans
  • Forecasts MACRA's impact on broader Medicare consumer buying patterns
  • Describes the key role agents must play in guiding their clients through market changes

The full study is now available at AmeriLife.com. Click here to view.

(PR Newswire, May 16, 2019)

MACRA MIPS/APM Update e-Newsletter is one of a family of free e-Newsletters providing a complimentary video presentation and regularly updated news and key resources on major health care issues such as ACOs, patient safety, pay for performance, bundled payment, readmissions, and Medicaid. To view and subscribe to other e-Newsletters go to healthcareeNewsletters.com.

A Step-by-Step Guide for Health Plan APMs to Qualify As AAPMs

Francois de Brantes
Former Executive Director, Health Care Incentives Improvement Institute

Valinda Rutledge
Vice President- Public Payor Health Strategy, Care Coordination Institute