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Black Book: Small Physician Practices Foresee End of Their Independence Due to MACRA

June 13, 2016
by Rajiv Leventhal
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According to a Black Book survey of 1,300 physician groups of five or fewer clinicians, more than two-thirds (67 percent) of high Medicare-volume doctors foresee the end of their independence due to the physician payment changes that will take place under MACRA (the Medicare Access and CHIP Reauthorization Act.

In April, federal healthcare officials released the long-awaited MACRA proposed rule, which repeals the Medicare Part B Sustainable Growth Rate (SGR) reimbursement formula and replaces it with the new Merit-based Incentive Payment Program, a quality payment program within MACRA which eligible Medicare clinicians will be participating in. Indeed, according to the May 2016 Black Book survey, 67 percent of high Medicare-volume doctors additionally feel they will not have the technology, capital or staffing to sustain under the conditions of MIPS.

Despite small practice education, training and technical assistance programs promised from Centers for Medicare & Medicaid Services (CMS) to help onboard physicians with the MACRA programs, 89 percent of the remaining solo practices expect to minimize Medicare volumes as to not be required to submit reports for the quality and clinical practice improvement activities or report in the cost performance category.

What’s more, 77 percent of small practices identified themselves as financially struggling currently due to physician staffing losses to larger group practices and hospital integrated delivery networks (IDNs) directly. More than seven in 10 (72 percent) also blame their under-performing billing technology and compounding payment issues for their troubles, according to the research.

“Physician payment based on 2017 performance isn't scheduled to kick in until 2019,” Doug Brown, managing partner of Black Book, said in a statement. “That's far too long to maintain operations for the most stressed practices to hold on with outmoded technology and scarce billing support.”

During a Congressional hearing last month, CMS Acting Administrator Andy Slavitt was pressed repeatedly on the rule’s potential impact on smaller physician practices. A key point of the proposed legislation brought up by multiple members of Congress at the hearing in May was a table on page 676 of the 962-page MACRA rule that outlined the details of the MIPS. In that table, CMS estimated that 87 percent of eligible solo practitioners (nearly 103,000 in total) will be hit with a negative payment adjustment in 2019, the first payment year of the program. For slightly bigger practices, the news doesn’t get a whole lot better: 70 percent of practices with two to nine physicians are estimated to get hit with negative payment adjustments, while 59 percent of practices with 10-24 clinicians will be docked, according to the estimated CMS data. In terms of dollars, these negative hits could be in the range of $100 million to $300 million, per the estimation.

However, at that time, Slavitt said that the table is “designed to estimate the impact of these regulations on practices of various sizes. Despite what the table shows, our data shows that physicians in small and solo practices can do just as well as those in practices larger than that.” He further noted that the table looks that way because it is based on Medicare reporting data from 2014, a year in which many small and solo practitioners didn’t even report on their quality.

Slavitt went on to explain how CMS has plans in place to help out smaller practices with MACRA/MIPS, from providing technical assistance, providing access through medical home models, and giving them the opportunity to report in groups and in more automated ways.

Nonetheless, according to the Black Book research, the apparent solution for 80 percent of remaining independent primary care physicians is to join a bigger group or IDN to gain needed reporting, revenue cycle tools and support before 2019.

Black Book also anticipates the electronic health record (EHR) replacement market to decline in the small practice market as 55 percent of independent practitioners indicate they will make no technology shifts or purchases until they have made decisions on being acquired. “On the other hand, the growth opportunities for EHR vendors currently serving the larger practice market, IDNs and multi-specialty clinics are expected to appreciably benefit from these small practice acquisitions,” said Brown.

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