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The Medicare Access and CHIP Reauthorization Act, or MACRA, has obvious implications for physicians and physician practices nationwide. But what does it mean for facility providers?

In this #5in5 episode Optum consultants Jay Hazelrigs, vice president and lead actuary; Erik Johnson, vice president, value-based care; and Julie Witt, director of actuarial consulting tackle the topic from the hospital perspective.

According to these experts, hospitals and physician practices should collaborate to transform care delivery towards value.

1. We know that MACRA is a big deal for doctors. How is MACRA a concern for hospitals?

Jay Hazelrigs: There's a risk for health systems, in that MACRA will pose another reason for providers to consolidate, and hospitals and health systems typically play the role of consolidators.

In a competitive market, where physicians—especially among primary care physicians—begin to merge with one health system, the system or systems on the outside looking in could become more exposed to referral loss.

This can happen whether hospitals buy practices or align with them as partners to comply with MACRA.

Erik Johnson: Physicians likely will be looking to hospital partners for help on meeting the stipulations of MACRA’s various payment models.

Julie Witt: In addition to thinking about referral patterns, MACRA gives hospitals another reason to think about lower admission rates.

MACRA metrics focus on reducing unnecessary hospitalizations; in the first iteration of the rule, this is largely a result of the emphasis on advanced alternative payment models.

As physicians gain efficiencies to meet the MACRA requirements, this will trickle down to reducing admissions, which will increase pressure on hospitals to transform to a value-focused care delivery model.

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2. How can hospitals benefit from physician collaboration?

Julie: Our financial modeling for physician incentive payments shows that Medicare Part B payments will not keep up with inflation under the new law.

That’s true no matter which payment model physicians choose under the law—either the Merit-based Incentive Payment System (MIPS) or an advanced Alternative Payment Model (APM).

Jay: This may create some margin erosion for certain physician practices, but many physicians will look outward for assistance. Health systems and hospitals can become part of the solution for physicians as they move forward.

Erik: Health systems may consider MACRA as an impetus for physicians to agree to acquisition. But health systems with foresight and creativity will develop organizations that physicians can join that will help them get the most out of MACRA.

Leaders need to ask themselves: how do I create an operational support system for the physicians in the market who are feeders to my facility? That may include the development of advanced APMs, or some help with the reporting requirements under MIPS.

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3. How can hospitals help physicians who are part of the Merit-based Incentive Payment System?

Erik: The CMS MIPS program will likely include most physicians, according to CMS’s estimates, and most physicians just aren’t ready to actively participate in an advanced APM.

One of the things that MIPS does is consolidate reporting requirements for the physician quality reporting system (PQRS), the value-based modifier system and the meaningful use program.

Hospitals may be able to create a business processing outsource (BPO) or managed service organization model, where they consolidate and aggregate these reporting functions for physicians in their market.

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4. If physicians feel ready to participate in an advanced APM, what role can hospitals and health systems play for them?

Erik: Not many physician groups have the capability to build out an ACO or the infrastructure for a Medicare-sponsored patient-centered medical home program like Comprehensive Primary Care Plus.

If facilities choose to help physicians with an alternative payment model, physicians will expect these organizations to bear the bulk of the responsibility to set them up.

Jay: Advanced APMs reporting requirements are different than those of MIPS, but they are not easier to do. Quality reporting will still be required.

Advanced APMs will still need to use certified EHR technology. And they will either need to bear some financial risk of loss or be accepted as a CMS medical home model. It will depend market-by-market, practice-by-practice what the right choice is.

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5. What capabilities do hospitals need to be good resources for providers under MACRA?

Erik: Hospitals need to understand that the physicians in their market have a significant disruptive force happening to them, and they will react.

How hospitals position for that reaction in such a way to benefit them is key. What models do you bring to the table? Can you deliver on an Advanced APM model? Can you set up an MSO model to aggregate and execute on the reporting requirements in MIPS?

Do you have the comprehensive data, the advanced analytics systems and other resources you need to provide robust analysis and assess all potential outcomes?

While there is most definitely opportunity for hospitals, there is also work that needs to be done to make the most of that opportunity.

Jay: Because this situation has the potential to be mutually beneficial, it practically begs for a strategy where health systems help physicians.

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