We are now nearly five months into the first performance period for MACRA, yet many provider organizations are still confused about the law’s reporting requirements, payment systems, and financial requirements.
While understanding the “who, what, how” of MACRA is critical to future reimbursement, provider organizations should also take a longer-term, strategic view of their MACRA preparations, says Bruce Hamory, MD, Oliver Wyman’s chief medical officer.
That’s because MACRA, which changes how Medicare rewards clinicians for value, will require a massive change in clinicians’ practice habits, as well as organizations’ compensation models and infrastructure. The decisions providers make now regarding people, processes, and organization will support their MACRA transition, but also are foundational to their long-term success.
Here, he shares five workforce and infrastructure considerations.
1. A new approach to physician compensation is required
In the new MACRA and value-focused climate, more physicians are expected to seek employment or closer alignment with a hospital or larger physician group. To absorb these new clinicians in the most beneficial way, provider organizations should structure compensation plans to support both MACRA metrics and the organization’s value-based payment goals.
For example, one of the improvement metrics under MIPS is that clinicians demonstrate improved access and availability. Meanwhile, hospitals in value-based payment contracts are working to avoid readmission penalties. One of the best ways to avoid readmission is to ensure a patient sees a primary care physician within a week of discharge. Thus, extended office hours and increased physician availability could meet the MIPS metric and the larger system objective.
When structuring physician compensation plans, provider organizations should look for connections between MACRA metrics and the hospital’s value-based goals, and then incentivize accordingly.
2. Clinician skillsets are in evolution
MACRA, by encouraging physicians to engage in risk-based contracting for their patient panels, will further accelerate the adoption of population management. As population health gains hold, hospitals will experience reductions in certain types of admissions and ED visits. And that will require hospitals to alter the nature of their inpatient units.
Hospitals will need to consider closing beds, or reconfiguring hospital beds to provide a varying level of service all at the same location. For example, some hospitals may deliver standard-floor care, observation, and ICU-level care all in the same room. This will require different skillsets for hospital-based providers, and hospitals will need to plan and budget for workforce retraining.
What’s more, many hospitals fall short in their IT, data analysis, and outpatient/home care capabilities. Hospitals need to proactively address these workforce issues by analyzing their capabilities in the areas of home care, care management, social care, IT, and data analysis.
3. The workforce is aging
A large number of physicians are at or above retirement age, and the MACRA-related reporting requirements and burdens will encourage many of these clinicians to retire. (A physician census in 2010 showed that 22.4 percent of physicians were over 60 years of age at that time.)
With some parts of the country already experiencing significant provider shortages, the shift to population health management will likely lead to major stresses in recruiting and retaining people with the skills needed to deliver care in the new paradigm.
4. “Focused factories” are on the rise
With MACRA pushing providers to deliver good outcomes at low costs, some lower-volume facilities—which may have excellent outcomes but not the volume to support the capital requirements of a specialized team and equipment—will suffer. Thus, we expect an increase in the numbers and types of “focused factories” for elective procedures. Higher-level services will become more regionalized, as less efficient and lower-quality providers exit these services. The increasing expense of recruiting and maintaining the skilled teams and larger capital requirements for these procedures will accelerate this latter trend.
Hospitals will need to take a hard look at their service lines and consider the reality of exiting certain lines of business over the next few years.
5. Provider-led health plans are no silver bullet
Under MACRA’s Advanced APM track, 75 percent of a provider’s patients will ultimately need to be in risk-bearing contracts. To maximize the potential of this risk environment, a number of providers are considering launching their own health plans. A provider-led health plan provides the infrastructure for risk-bearing deals; however, most provider-sponsored health plans will be too small to withstand certain market factors—namely the rapid rise in drug costs for rare chronic and inherited disease. Only very large plans will have the membership to support these expenses while maintaining somewhat affordable premiums,
Before launching a provider-led health plan in response MACRA opportunities, provider organizations should carefully evaluate the risks of becoming an insurer in light of current regulations for establishing premiums and the onslaught of new and very expensive drugs for orphan diseases that may require chronic administration.
Moving ahead, efficiently and judiciously
With the MACRA clock already running, most provider organizations are focused on getting organized and operational. While time is certainly of the essence, providers should strive to incorporate long-range thinking and planning into their MACRA preparation so that their efforts are foundational to their future success.