Strategic Planning Under MACRA/MIPS

Dawn Holcombe, MBA, FACMPE, ACHE

April 2017, Vol 7, No 4 - From the Editor


Strategic planning for oncology practices has always been an interesting exercise, and has become much more challenging in the past 3 years. Historically, a practice’s leaders would step away from the daily routine; review their history; discuss their opportunities, challenges, and changing markets; and then establish a 3- to 5-year strategic plan.

Factors to consider would include what the competition was doing, whether the patient market mix was changing, and a review of what were “simple” payer contract negotiations for billed charges or set fee schedules. A complicated strategic planning meeting might have included a potential merger or affiliation to consider, or an aggressive competitor, possibly even a geographic market in decline as a result of significant employer changes.

For 2017 and beyond, at least 3 new considerations should be reviewed in practice strategic planning:

  • Value-based programs, such as the Medicare Access and CHIP Reauthorization Act (MACRA)/Merit-Based Incentive Payment System (MIPS), the Oncology Care Model (OCM), and private value-based programs
  • Networks and alliances
  • Technology.

Let’s explore how these 3 top approaches may affect your strategic planning.

1. Value-Based Programs

MACRA/MIPS

The majority of practices in the country are affected by the MACRA/MIPS mandatory value-based program. Practices will receive neutral, positive, or negative adjustments 2 years after every performance year from 2017 on. Those adjustments are determined by the Centers for Medicare & Medicaid Services (CMS) after CMS calculates performance on quality, practice transformation, and advancing practice information measures (and in succeeding years, cost measures) of the practice and for every other practice (oncology or otherwise) reporting on those particular measures.

Practices will have no direct control over their positioning relative to other practices, which will be a significant challenge for strategic planning. The Quality and Resource Use Reports generated by CMS to show practices their positioning against all other practices in the country are issued in the fall after the reporting year.

Any changes a practice may make in operations or care delivery, or in quality and reporting, will not become visible until months after the performance year, and the impact on the practice income in the following year will have been predetermined by the time the report appears.

The MIPS program is budget-neutral, so all positive adjustments will be offset by practices receiving negative adjustments to their billings. The 2019 adjustments will be ±4%; in 2020, they will be ±5%; in 2021, ±7%; and from 2022 and beyond the adjustments will be ±9% annually.

Practices will find repeated negative adjustments each year to be financially unsustainable, and will make operational or business changes accordingly. Then, the groups that were floating in the neutral adjustments will shift into the negative adjustments tier.

The MACRA/MIPS program is game-changing, because practices can no longer look internally for strategic planning and business success. Their financial positioning within MACRA/MIPS is determined by CMS and will be difficult to project for strategic planning.

The Oncology Care Model

OCM practices will also have significant financial outcomes outside of their direct control. CMS sets the target thresholds for OCM performance targets, the baseline data, and the valuation of performance on OCM measures. Practices will be able to track their cost profiles and trends for performance quarters, albeit 6 months after the end of the quarter.

For the first few years, practices will only see positive adjustments, but once the option of a 2-sided risk becomes more pressing, the variability of patient mix and full patient cost accountability could lead to significant negative financial obligations beyond the practice’s planning capabilities.

Private Value-Based Programs

Unlike the MACRA/MIPS program from CMS, practices will mostly be able to voluntarily participate in private value-based programs, and therefore will have a little more control over the financial and strategic implications of such a program on the practice. Over the next 3 years, there are likely to be more private value-based programs developed.

2. Networks and Alliances

Historically, practices could select which networks and alliances they wanted to participate in, and decisions about alliances were often a key part of strategic planning. The rapid rate of health system mergers and acquisitions, on the corporate level as well as for key primary care and specialty care practices, has changed all of that. In the blink of an eye, a primary referral source for an oncology practice could disappear, with no discussion or input from the practice.

New patient sources are an integral part of strategic planning, and a smart practice regularly reviews its referral sources and looks for vulnerabilities. Besides the health system alliances, practice volume planning for future years is also affected by insurer or employer network participation.

Participation decisions are increasingly less the choice of the practice and more the decision of an insurer or a health system about the inclusion or exclusion of the practice. One major exclusion decision can wreak havoc in a strategic plan for a practice.

3. Technology

No longer can practices function solely with a practice management system and an electronic medical record. Practices are being asked to move from patient treatment to patient management and population management. They are being asked to understand their own patient information and data, as well as to collect and analyze healthcare claims data from payers, and to learn and improve the management of the population. In addition, oncology practices have to develop more complex oral medication management, regardless of whether they dispense oral medications, and many practices are adding dispensing capabilities and certifications.

Adapting to New Demands on Oncology Practices

All these new demands require technology skills that far exceed the skills that we currently have available. These are demands that practices have not historically had to include in their traditional strategic planning, but which are significant and costly.

The vision and leadership demands of practices for the future are rapidly changing. Strategic planning for practices will, of necessity, become more short-term and more flexible. Increasingly, the financial health of the practice will be decided by factors and entities outside of the practice.

This is an exciting time to be an oncology practice leader, and oncologists should value their leaders, who have experience, vision, and the flexibility to build short-term tools and plans to adapt to all these new demands.