Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)
By now you?re probably familiar with the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) ? as much has been published on its mechanics and regulatory impact. In its latest Executive Briefing, HealthScape examines the opportunity for providers to look at MACRA through an alternative, strategic, long-term lens.
Regardless of the participation tracks in the first year that allow for a delay in implementation, MACRA represents a compelling strategic opportunity for provider organizations to think differently about their business model and pursue sustainable growth and margin levels.? However, success in the post-MACRA model will require advanced preparation and a new understanding of the concept of patient economics.? Current patient economics looks at value as a snapshot in time, while long-term strategy must be improvement of patient economics through investments in analytics and other targeted strategies.
Moving forward, organizations should recognize that:
- 1.?????? MACRA is significant and transformative; risk is a matter of when, not if, and providers face a critical decision point.
In an environment lagging behind CMS targets for alternative payment models, expect MACRA to drive increased provider consolidation, enhanced population health infrastructure, interest in financial risk transfer, and expanded focus on long-term patient population measures. Providers must determine which track (MIPS or APM) best suits their organization and develop a roadmap to address the risks posed by each path.
- 2.?????? MACRA serves as a catalyst and establishes principles that will drive providers to establish a Senior Markets Strategy and harmonize this strategy across payers.
Since providers will be less able to rely on subsidization across payers, organizations will need to evaluate their patient portfolio across Medicare FFS, Medicare Advantage and commercial markets and strategically position themselves to minimize variation in risk contracts. There is no ?one size fits all? approach to achieve portfolio balance; organizations may pursue strategies such as shifting revenue from Medicare FFS to Medicare Advantage, executing more advanced APMs with Medicare and/or non-Medicare payers, or consider merger, acquisition or partnership singularly or in combination (among many other strategic options).
- 3.?????? Execution on strategy requires an understanding of the new patient economics both currently and in the longer term.
As data becomes increasingly available, organizations need to conduct analysis that cover the entirety of a patient?s cost and engagement profile ? the patient-level income statement, which captures intra- and extra-organizational cash flows and weighs those payments against expense categories to achieve a total P&L view.? Segmentation analyses can then be completed to determine drivers of financial performance in both the short-term and throughout the patient?s lifetime value.? Organizational business models must evolve in order to deploy tactics that target patient segments qualifying as financially sustainable under this comprehensive view of patient economics.
Providers must begin to shift their focus from education and understanding of MACRA to strategic implications and strategy development.? Read more, including recommendations, and next steps, in our comprehensive Executive Briefing ? MACRAnomics: Patient-Level Economics and Strategic Implications for Providers.? ?