Private Payers News

Private Payers Falling Behind in MACRA Implementation, APMs

Commercial payers may need to catch up to CMS with regard to MACRA legislation and advanced alternative payment models.

By Vera Gruessner

Earlier this month, the Department of Health & Human Services (HHS) announced the release of the finalized ruling for the MACRA legislation. Along with gutting the flawed Sustainable Growth Rate formula, MACRA legislation brings forward Advanced Alternative Payment Models (APMs) and the Merit-Based Incentive Payment System (MIPS).

Alternative Payment Models

The new payment models under MACRA legislation will replace meaningful use requirements and take a number of quality payment programs including the Physician Quality Reporting System (PQRS) and Value Modifier Program under MIPS. While providers will need to be better educated on MACRA legislation and how it affects their revenue cycle, healthcare payers should also look at the new law and work with their provider networks to advance alternative payment models in the private market.

Experts have found private payers aren't keeping up with public programs pushing forward value-based care. For example, when looking at bundled payment strategies, commercial health payers are behind the Centers for Medicare & Medicaid Services (CMS) in terms of contracting and operating these new reimbursement structures, said Dave Terry, CEO of Archway Health.

“We spent a fair amount of time with payers in the commercial market talking about bundled payment programs and it’s been slower adoption on the commercial side than what we’ve seen in Medicare,” Terry explained. “Some of the things payers tell us is that they don’t have the mechanisms to pay a bundle in their systems. They’re concerned about how equipped the providers are to take risk in those programs. We’ve heard uncertainty on how to define the bundles. Payers are concerned about how it gets complicated on a larger level.”

Regarding MACRA legislation and value-based care reimbursement, private payers are behind CMS when it comes to working with providers to help apply and contract through these alternative payment models, said Dr. Farzad Mostashari, Founder of Aledade Inc. and former National Coordinator for Health IT.

“I see some positive trends just in the past two years, but private payers, by and large, are still behind CMS in terms of making it easy for organizations to apply for and qualify for these models,” Mostashari told HealthPayerIntelligence.com. “Medicare has an application process that is complicated but predictable whereas with many private payers, the process itself is opaque and the outcome uncertain. I would strongly suggest that private payers institute more predictable processes and requirements as well as boilerplate contracts that are based off of CMS templates and a clear process for how organizations can apply for and get those risk, value-based contracts.”

Mostashari also described some of the beneficial requirements of MACRA legislation that will allow smaller medical practices to operate either through MIPS or Advanced APMs in a more flexible manner. For example, CMS streamlined reporting requirements and enabled healthcare providers to report quality measures through various platforms.

“What CMS recognized in the MACRA rulemaking was that unless steps are taken to make it more feasible for smaller practices to stay independent, that does not lead to a good outcome either for public or private payers. It would lead to more market consolidation and less competition in provider markets,” Mostashari asserted. “Recognizing that in MACRA, CMS did some very sensible things including streamlining the reporting requirements, making it possible for providers to report through multiple means - not just claims-based but also registry-based and  EHR-based quality reporting as well as virtual groups and ACOs. This is not always at the practice level but rather at the group level.”

Mostashari went on to explain how commercial payers have not kept up with CMS in terms of this type of multi-platform quality reporting. Additionally, private payers will need to align with the Medicare program when it comes to creating risk-based alternative payment models, he said.

“We, unfortunately, see many times that private payers are actually behind Medicare in being able or willing to do that [type of quality reporting flexibility],” Mostashari continued. “For example, accepting clinical data from EHRs instead of claims-based attachments for quality reporting [is uncommon among private payers].”

“The other major move in MACRA, which is so important for private payers to follow suite on, is around advanced alternative payment models. Creating this lower-risk, two-sided risk model where the risk is defined as a portion of practice revenue rather than as a percent of total cost of care is important. We have seen that in one commercial contract, but there is now an urgent need for private payers to join with Medicare in creating models that would fit that construct so that groups of independent practices that come together can embrace those sorts of advanced risk models both with private commercial patients as well as with their Medicare patients,” Mostashari recommended.

Along with embracing alternative payment models, Mostashari discussed how payers and providers can work together to succeed in meeting MACRA requirements especially within the constructs of an accountable care organization. With providers set to face some challenges from MACRA legislation, private payers can work to invest in risk-based reimbursement structures for a more long-term basis.

“There are going to be challenges in just understanding what the requirements are and how to comply with them,” Mostashari explained. “Medicare hopes that more than 80 percent of even the smallest practices will participate in the MIPS reporting. They’ve certainly made it easy to do so, but I don’t think that is a given by any means. I think what it will take to see that level of engagement is not just better communication and marketing from Medicare but actually the existence of helpers who can bring these smaller practices together in virtual groups and in ACOs to help them deal with the regulatory, the IT, the quality reporting, and the practice improvement requirements of MACRA.”

“The fundamental challenge in ACO payment arrangements for provider groups is called the Ratchet. The Ratchet is when if you reduce costs, the benchmark is reduced so you have to keep setting your personal best record to be able to sustain the ACO economically. That is not a sustainable business model,” Mostashari pointed out.

While commercial payers use this type of benchmark system, CMS has recognized it and has created requirements that allow ACOs to sustain themselves financially over a longer time period.

“One of the ways in which Medicare is ahead of commercial payers is that Medicare has recognized this and has created a pathway to keep the benchmark steady for three years so it does not reset for the first years years of the contract. That is rare among commercial contracts,” Mostashari maintained.

“Secondly, Medicare has said that after the first three years, there will be blending of regional benchmarks and regional efficiency with historic benchmarks, which also creates a pathway to sustainability,” he concluded. “If payers want provider organizations to take on risk and invest in infrastructure, this cannot be something that’s done for one or two or three years and then organizations give up. There has to be a pathway to sustainability and this will require purchasers and large self-insured employers to also recognize this roadmap instead of demanding from payers, if they see a reduction in cost, that they immediately ratchet down provider payments and premiums.”

 

Dig Deeper:

How Medicare, Medicaid, and CHIP Guide the Health Payer Industry

How Stakeholder Input on Quality Payment Program Differs