Administrator Focus: Payment Models

March 23, 2017

Part One of Two. Understanding value-based payment models to maximize financial success.

Understanding the new value-based payment models within imaging is crucial to achieving both operational and fiscal success on both the physician and hospital side in the upcoming years, according to experts at the Health Administrator’s Symposium during RSNA 2016.

The Medicare Access and CHIP Reauthorization Act (MACRA) of 2015, a dense document unfamiliar to many physicians, said Ezequiel Silva, MD, vice chairman of the American College of Radiology (ACR) Commission on Economics, has a performance period beginning in January 2017 with a 2019 effective date.  Directly tied to the public sector of payors, including Medicare and Medicaid, he said the ultimate goal for the Centers for Medicare & Medicaid Services (CMS) is for hospitals to have a combined payment system with physicians.

“Administrators need to be conversant in the proper and updated terminology,” said Silva, noting MACRA is now called a Quality Performance Program (QPP) and considered budget neutral.

Containing two different payment tracks – the advanced payment model (APM) and the merit-based incentive program (MIPS) – QPP ultimately influences the private payor sector, as well.

While quality reporting makes up a large portion of both MIPS and APM reimbursement, there will be a shift away from physician quality reporting systems that are claims based towards registry based systems.

“I encourage all to use the ACR National Radiology Data Registry (NRDR) and Triad,” he said.

Changes from Improvement

Improvement activities will make up the other major sector related to new payment models. Adding  there are 90 measures that would satisfy MIPS, Silva suggested the use of R-Scan or a Quality Clinical Data Registry.

“The arc of where CMS is taking healthcare in the U.S. is towards alternative payment models (APM),” said healthcare consultant Richard Weil, PhD.

Whether traditional APMs, such as Medicare shared savings programs or bundled payments, a MIPS APM model, or an advanced APM, the shift continues to move from fee-for-service RVUs towards value- based systems.

“In 2016, 30 percent of Medicare payments were tied to an APM,” he said, with an anticipated increase to 50 percent participation by 2018.

APMs focus on episodes of care, specific clinical conditions, or specific populations, and the advanced track focuses more exclusively on patient outcomes.

“CMS expects less than 10 percent of physicians to participate in advanced APMs in 2017. Yet, there are strong incentives for well positioned groups,” said Weil, who shared incentives will increase over time affecting Medicare, Medicaid, and commercial payors.

“2017 is the training wheel year where no-one is going to get hurt,” he said, acknowledging groups may not be ready to take on more of the risk required with advanced APM models. Yet, groups that can maximize their benefits including the use of care management now will create a stronger foundation for the future and adapt to bigger risk-taking that offers higher incentives.

Drivers for advanced APM systems focus on groups of patients versus the individual, including episodes-of-care managed, conditions managed, and ultimately populations managed. It changes the basis of competition, he said, by creating drivers of revenue based on physicians understanding what percentage of the market they are responsible for and how many patients within those markets chose them.

“Physicians become population health managers,” Weil said. “With MIPS, it is you against the government. In an advanced APM, you provide a service and may have a lesser or bigger role based on differentiation.”

It is important to understand outcome metrics, profitability per groups of patients or episodes-of-care, and to fully understand where patients go for care and the types of care they are getting.

“You can expect utilization to go down initially with duplicate studies largely eliminated,” he said, sharing there may be increased overhead related to this model, including facility leasing and administrative help. Areas of opportunity may come from advanced imaging and commercial contracts.

 “Pay attention to what is going on in your market,” he said, concluding it is imperative to understand what is important and preferred by the care quarterbacks within your market. To achieve success within new value based structures, he said, you must “understand the metrics and how you compare to other folks then come up with a plan for improvement.”