With the changing healthcare landscape and the unknowns of the current administration, it is crucial for hospitals and health systems to understand what they need to know about value-based payment in 2017.  Further, with the very clear regulations of MACRA looming over Medicare healthcare providers, there will be continued need for strengthening of relationships, data capabilities, and alternative payment models across the continuum of care. Hospitals and health systems are at the center of value-based payment and the high cost of care, and 2017 holds many forthcoming mandates and trends that will be imperative for continued success, maximum reimbursements, and improved care quality.

 

Will the New Administration Change Healthcare in 2017

value-based-payment.jpgThe truth is that no one knows exactly what healthcare legislation will pass in 2017. However, it is likely that that the implementation of some significant legislative actions will be seen. What is the likelihood and how will this affect hospitals and health systems?

First, with Medicaid, it is likely that there will be a recommendation and push toward a block grant system. Per Kaiser Health News, under President Trump, Medicaid block grants will portion money to states based on their current spending. The amount is expected to grow with inflation but not with medical inflation, which raises prices more quickly. While block grants give more control to states for decisions that can be tailored to a region, growing consensus says that the amount of money will dwindle over time. Many Medicaid providers are already operating under slim margins. A decrease in funding will likely force states to eliminate some of their Medicaid services. Therefore, it is likely that hospitals and health systems are going to be called on more. This will include sharing the burden of risk and joining cooperative networks in their communities to provide coordinated care of the patient population. Further, patients who lose insurance or access to services may present more frequently to emergency departments without first having adequate preventative and primary care, adding more strain on the acute care industry.

 

Macra Macra Macra

Medicaid isn’t the only area that has changes coming this year. With reporting requirements for The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) going into effect in 2017, this mandate is at the front of mind for most providers, hospitals, and health systems. Further, unlike the Affordable Care Act (ACA), which may be repealed, MACRA is minimally tied to the ACA and passed easily though bipartisan efforts. MACRA applies to healthcare providers, including physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists, under Medicare Part B. MACRA allows providers to choose one of two paths for compliance with the law.

With the Merit-Based Incentive Payment System, healthcare providers must participate in activities, reporting, and data around quality, cost, clinical improvement, and advancing care information. Achieving high quality in their reported measures, participating in enough areas of advancing care information and clinical improvement, and maintaining appropriate costs (starting in 2018), will allow up to a four percent increase in reimbursement, paid out in 2019. On the other hand, not participating or performing poorly can lead to up to a negative four percent reimbursement. Requirements and reimbursements will increase through 2022, when cost and quality will contribute to 60% of payment decisions, with a reimbursement change from negative nine to positive nine percent.

Many of the requirements may be difficult for small group or solo practitioners, like block grants for Medicaid providers. Therefore, hospitals and health systems can expect several providers to request aid in expensive reporting and technology investments. However, it is also likely that many providers will choose to take MACRA’s second option to meet the requirements, which is an important trend for health systems to keep in mind.

 

Are Advanced Payment Models the Way of the Future?

Per the Centers for Medicare and Medicaid Services, 90% of Medicare spending is planned to be linked to value by 2018, with 50% of all spending directly through alternative payment models. Alternative payment models, such as Accountable Care Organizations, Episode-Based Payments, or Patient-Centered Medical Homes, tie payment to quality but also share funds and risk between several providers or healthcare facilities. Larger physician groups or hospitals that are already functioning in an alternative payment model should expect for both Medicaid and Medicare providers to be eager to join to comply with MACRA or to offset any decrease in federal funds for their services. It is advantageous for hospitals and health systems to begin looking at their patient population as one that is cared for by a community of providers. Increasing data collection and sharing, reporting, and coordination between this web of care will also be essential for hospitals. When they are trying to decrease readmissions or optimize length of stay, the assurance that the community providers and post-acute care facilities on the receiving end are optimized for providing high quality care is essential.

It is likely that we will see many changes in healthcare during 2017. However, even with extension of the ACA, Medicaid block grants, MACRA, or some other unknown, one thing is certain, each of these ensures payment will be increasingly tied to quality outcomes at a decreased cost. High performance will take an integrated and cooperative community of providers and facilities, which can be accomplished through shared risk, coordinated and cooperative care, and/or alternative payment models.