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How One Health Plan in Minnesota is Looking to Pass the MACRA Test

September 1, 2016
by Rajiv Leventhal
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Much like providers, health plans are apprehensive of the challenges that MACRA brings

For providers across the U.S., the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), the law put in place last year which repealed the Sustainable Growth Rate (SGR) formula for Medicare physician payment, and which will move towards a value-based care reimbursement model that stresses care coordination and financial risk sharing, has caused a whole lot of confusion.

MACRA is set to begin its first performance period as it stands now on Jan. 1, 2017, but when a Deloitte Center for Health Solutions survey in July revealed that half of responding physicians said they have never even heard of MACRA, levels of concern were raised. For payers too, MACRA has the potential to bring on impending chaos, particularly regarding the two new Medicare payment program tracks— the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APMs).  As such, for organizations like Medica, a Minnetonka, Minn.-headquartered health plan, with approximately 1.7 million members active in the upper Midwest, “business as usual” will no longer be the case.

Indeed, Andrew Davis, vice president and general manager of Medicare at Medica, says that his senior leadership team is still trying to figure out what will be the “new normal” as it pertains to its contracting strategy with major providers, specialists, and others. “There are lots of conversations taking place with the provider community around their interpretation [of the law], how they’re digesting this, how they’re building their internal strategies on the APMs and MIPS fronts to get their organizations ready, and also how will that will impact the way they engage all payers,” he says. “We’re still feeling each other out, and it’s all centered around the contracting approach between both sides. So there are still more open questions than answers,” Davis says.

What are the Biggest Questions?

Davis says that providers are trying to determine how much of a tipping point this will be to the existing revenue model for a particular provider, and to what degree do the MACRA-related payment models also affect Medicaid, induvial, and commercial reimbursement? On top of that, there are questions on how to incorporate the type of internal workflows and data management that needs to apply to a Medicare population, and how to apply that to other lines of business because they are now “thrown into the dominator in many cases,” Davis says. “So this is seminal event for large systems who either have a toe in the APM space through the MSSP [Medicare Shared Savings Program] or Pioneer ACO [accountable care organization] model, but for those who have not been highly involved in that activity, it is unchartered territory.”

And, from a technology standpoint, Davis sees a wide spectrum of readiness, particularly on the data analytics front as health systems try to better understand and manage populations to the degree that will be needed. “You have seen major investments on the EHR (electronic health record) front, but that doesn’t take you across the goal line by any stretch,” Davis notes. The “sore spot” from a technology standpoint is the analytics that are aimed at the identification of risk and risk stratification of patients, and the appropriate engagement based upon that risk in the provider community. “That’s one of the biggest challenges that they are facing, so they are looking at health plans for support on how to do it effectively, or have the health plan do it for them,” Davis says.

In sum, all of the unanswered questions leads to significant apprehension in the health plan community, similar to what has been reported on the provider side, Davis says. “There is anxiety because there is so much uncertainty, and we just don’t know if this is the seminal event that will create the tipping point to flip the revenue model of these big integrated systems to move away to volume to paying for value,” he says.

Within MACRA’s complexity, Davis points to one simple equation: “Are we at that point where fundamental structural change needs to occur within a system where you are looking to reduce people in hospital beds, encourage people to discharge early, and [overall], keep people out of the system? That’s the fundamental shift, and it’s an open [question] as to whether or not MACRA will drive that,” he says.

Nonetheless, while Davis attests that most of the change that MACRA will bring with it will be new to providers, much of its core involves things that payers are already doing. “The idea that APMs are new to payers is not true, just like the concept of risk sharing or withholds based on quality performance is now new for most payers,” Davis says. “So our systems are able to accommodate that in a range of automation versus manual output. To me, there is a much bigger lift on the provider side than it would be on the payer side. Now having said that, we are investing from an IT, analytics and software standpoint around the things that are driving our top line revenue,” he says.