by Peter B. Nichol

How to prepare your healthcare practice for the conversation on payment reform

Aug 10, 2016
Health and Fitness SoftwareHealthcare IndustryInnovation

Healthcare practice payments are evolving. What exactly do the regulations and new initiatives mean for your practice? When’s the application deadline? How should your practice assess readiness? Be prepared for tomorrow’s conversations.

A revolution occurring is occurring. The Centers for Medicare & Medicaid Services (CMS) is rebuilding financial incentives and care models that impact every patient in every provider’s facility. This won’t transform your patient’s experience tomorrow, but change is coming quickly. Your parents, grandparents, sons, and daughters soon will be treated by physicians working for participating providers shifting from volume to value. The satisfaction of the patient will matter.

The Medicare Access & CHIP Reauthorization Act of 2015 (MACRA) to reform Medicare payment opens two paths towards the CMS goal of paying for value and better care with Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APMs). Let’s explore each model affecting physician compensation.

Major payment reform changes

The repeal of Medicare Part B Sustainable Growth Rate (SGR) reimbursement formula and the replacement with Quality Payment Program (QPP), a value-based reimbursement payment system, is the result of ten years of incremental Medicare changes. How does this impact physicians? Let’s begin with a brief summary of MACRA, MIPS, APMs, and CCM.

  1. The Medicare Access & CHIP Reauthorization Act of 2015 (MACRA)MACRA combines the existing Medicare Meaningful Use (MU), Physician Quality Reporting System (PQRS), and Value-Based Modifier (VBM) programs into MIPS. Officially, MACRA starts on January 1, 2017, with payment adjustments applied to Medicare Part B payments two years after the performance year. For MACRA, payment adjustments would start January 1, 2019, for the CY2017 performance year.
  2. Merit-Based Incentive Payment System (MIPS): MIPS defines four categories of eligible clinician performance, contributing to a MIPS composite performance score (CPS) weighted up to 100 points (about CY2017 performance year and associated CY2019 payment year). The four categories include Quality (50%), 2. Advancing Care Information (ACI, renamed from Meaningful Use) (25%), 3. Clinical Practice Improvement Activities (CPIA) (15%), and 4. Resource Use (10%). Payment adjustments for MIPS would start January 1, 2019, for the CY2017 performance year.
  3. Alternative Payment Models (APMs): An APM includes four payment models run by CMS (not by commercial payers): 1. CMS Innovation Center Model (other than a Health Care Innovation Award), 2. Medicare Shared Savings Program Accountable Care Organizations (MSSP ACOs), 3. Demonstration under the Health Care Quality Demonstration Program, and 4. Demonstration required by federal law. Payment adjustments for APMs would start January 1, 2019, for the CY2017 performance year.
  4. Chronic Care Management (CCM) services: Beginning January 1, 2015, Medicare pays separately under the Medicare Physician Fee Schedule (PFS) under American Medical Association Current Procedural Terminology (CPT) code 99490, for non-face-to-face care coordination services furnished to Medicare beneficiaries with multiple chronic conditions. Welcome, Payments for CCM services from Medicare were eligible for reimbursement on January 1, 2015. A chronic condition is broadly defined as multiple (two or more) chronic conditions expected to last at least 12 months, which place the patient at significant risk of death. Examples of chronic conditions include diabetes, health failure, hypertension, cancer, and asthma among others. A condition of participation is that the provider records patient health information with an electronic care plan addressing all health issues. There are four main requirements to use a certified EHR, or other electronic technologies and these include structured data recording, care plan, access to care, and manage care.

Comprehensive primary care plus (CPC+) initiative

The Comprehensive Primary Care Plus (CPC+) is a primary care medical home model promoting a regionally-based multi-payer payment. The CPC+ care delivery transformation has five comprehensive primary care functions:

  1. Access and Continuity
  2. Care Management
  3. Comprehensiveness and Coordination
  4. Patient and Caregiver Engagement
  5. Planned Care and Population Health

CPC+ has two primary approaches or tracks to achieve comprehensive primary care. Track 1 participating practices will continue to receive Medicare FFS payments. Track 2 practices will receive higher Medicare payments by swapping the classic FFS model for a hybrid of Medicare FFS payments and the “Comprehensive Primary Care Payment” (CPCP). The CPCP is a collaboration between public and private payers aimed at improving primary care delivery in seven regions across the United States, recently expanded in August 2016, to 14 regions, including 1. Arkansas, 2. Colorado, 3. Hawaii, 4. Kansas and Missouri, 5. Michigan, 6. Montana, 7. New Jersey, 8. New York, 9. Ohio, 10. Oklahoma, 11. Oregon, 12. Pennsylvania, 13. Rhode Island, and 14. Tennessee. The Comprehensive Primary Care initiative required participating providers to meet requirements aligned to the five comprehensive primary care functions.

Additionally, Track 2 offers greater incentives for participating practices by tier of heath care costs (HCC). For example Tier 1 (33 percent greater, 1st quartile), Tier 2 (27 percent greater, 2nd quartile), Tier 3 (16 percent greater, 3rd quartile), and Tier 4 (9 percent greater, 4th quartile). A brief assessment of the Comprehensive Primary Care Plus (CPC+) request for applications, addressing questions on key model participants, intervention, care delivery design, payment redesign, learning systems strategy, data sharing, quality strategy, practice monitoring, and evaluation. With the provider compensation impacted up to 33 percent, it will be a short window before participating providers make dramatic changes to their physician compensation models.

The Center for Medicare and Medicaid Innovation (CMMI, or “the Innovation Center”) is shifting tiers of primary care compensation, surely to directly impact physician. CPC+ is a five-year model that will begin in January 2017. Eligible practices, in designated regions, may apply to the CPC+ initiative from August 1 to September 15, 2016.

However, before realigning your policies, procedures, and practice guidelines for a chance at 33 percent greater incentives based on these revised payment models, your practice must assess the impact of CPC+ on the cash flow of operations. Answering the following questions can help your practice decide when to apply for CPC+ initiative.

  • Do we have policies, procedures, and guidelines in place to support this shift in reimbursement model?
  • Have we educated our staff and prepared for the cultural transition across our care continuum?
  • How does a transition from fee-for-service impact the patient experience?
  • Does the financial analysis support positive cash flow, paying prospectively on a per beneficiary per month basis?
  • What revenue cycle management processes and outbound patient communication will be impacted?
  • Does your practice have a clear financial forecast before the transition and after the transition: do the numbers work?
  • What staffing models support 24/7 clinician availability?
  • Have we directly tied treatment reimbursement to clinical staff payments? Are clinicians incentivized to make this work?
  • Do our present electronic health record systems support coordinated patient care, new quality measures, as well as remote monitoring and billing?

Value-based care is the future and your practice needs to decide when to jump into this new world. However, the decision to participate in CPC+ is monumental, and shouldn’t be initiated without a thorough financial and operational assessment of the benefit and risks.