A systematic shift to value-based care is fundamentally changing the way Medicare approaches provider reimbursement. The Medicare Access and CHIP Reauthorization Act (“MACRA”), scheduled to launch January 2017, aims to reimburse physicians based on the value of care provided rather than the traditional fee-for-service model. This shift creates a market opportunity for population health management (“PHM”) companies.
MACRA was introduced in 2015 as a replacement for the Sustainable Growth Rate (“SGR”). SGR was the previous method used by CMS to control spending on provider services. MACRA is a two-track program intended to streamline value drivers to determine reimbursement levels.
- Track one of MACRA is centered on the Merit-Based Incentive Payment System (“MIPS”). MIPS utilizes four key performance indicators: i) quality, ii) resource use, iii) clinical practice improvement activities, and iv) meaningful use of certified EHR technology. Together, they produce a composite performance score that determines the level of adjustment to a provider’s base rate of Medicare reimbursement.
- Track two of MACRA incorporates Alternative Payment Models (“APMs”). APMs are new approaches to reimbursement that incentivize quality and value. APMs themselves are subject to MIPS scoring (~90%) and qualifying APM participants (~10%).
CMS believes that MACRA will help achieve two goals established by the Department of Health and Human Services by the end of 2018:
- 50% of Medicare payments tied to quality or value via APMs
- 90% of Medicare fee-for-service payments tied to quality or value
CMS announced four new implementation options for physician groups on September 8th. These options determine the reimbursement adjustment for which physicians are eligible in 2019.
In the media, coverage has been intensely focused on MACRA, but an advanced primary care medical home model known as Comprehensive Primary Care Plus (“CPC+”) is also set to launch in January 2017. CPC+ extends the Comprehensive Primary Care Initiative launched in October 2012 with advances in payment to primary care practices. These advances facilitate more comprehensive care, both standard and complex, that better satisfies the needs of its patients. CPC+ also puts providers on one of two tracks, outlined below, both of which fall under track two of MACRA.
One of the leading companies enabling physician practices to participate in CPC+, Caravan Health, has put together a blog to educate providers on CPC+ and other value bases programs. The blog includes a video to help providers select which CPC+ track is best suited for them.
CMS estimates that CPC+, offered only in 14 geographic regions, can accommodate up to 5,000 practices including 20,000 clinicians and up to 25 million patients.
To qualify, medical practices must support multiple payers, use certified EHR technologies, and demonstrate several other capabilities. CPC+ compensates providers through monthly risk-adjusted care management fees, performance-based incentives, and payment under the Medicare physician fee schedule. The application window for physicians closed on Friday, September 16th and the program begins January 2017.
MACRA and CPC+ will have a significant impact on providers leading to robust demand for PHM solutions. With increased scrutiny and material reimbursement dollars at stake, physicians will need a much clearer lens into the populations they manage. Today, a growing number of PHM-focused technology and services vendors are ready to provide physicians with interoperable solutions that satisfy the demand of these new programs.
This is the first time many practices, especially smaller and rural practices, are facing this level of reform. While these programs appear intimidating and opaque, there are numerous PHM solutions that bridge the quality gap to value-based care. Forward Health Group, a PHM provider, along with Leavitt Partners released a whitepaper that highlights the effect of CPC+ and its impact on physician managed care.
It is not surprising that the growing opportunity for provider-led PHM is driving M&A activity. In July 2016, Philips announced the acquisition of Wellcentive, a cloud-based population health management and data analytics solutions for physicians and their organizations, and Evolent Health announced the acquisition of Valence Health, a provider of value-based care solutions for hospitals, health systems and physicians to help them achieve clinical and financial rewards for more effectively managing patient populations.
In summary, the Affordable Care Act has become a driver for PHM solutions. Programs like MACRA and CPC+ ensure a strategic role for PHM in medical practices and, as a result, promising growth opportunities for PHM companies for years to come.