Several weeks ago, CMS released the final ruling on the Medicare Access and CHIP Reauthorization Act of 2015, otherwise known as MACRA. This new program is designed to transition the healthcare system into a quality payment system from the current fee for service payment system. In today’s payment environment, providers get reimbursed for the quantity of work they perform. This creates a situation that is not sustainable from a healthcare cost perspective. Therefore, CMS is changing how providers will be paid. This new payment system will focus on the quality of care provided to the patient.
I am not going to dive into the politics behind this decision or if it is good methodology or not. I will leave that to those better suited to have an opinion about the decision. Also, considering today’s political climate, having any coversation just leads to division and uneasiness. I am going to write about what I know and that is how this new program could impact your business.
We know that if you are not able to participate in an Advanced Care Model or APM then you must participate under the MIPS portion of this program. MIPS has been established to be budget neutral. Currently the max penalty and max base incentive is 4%. However, that number could fluctuate depending on who participates. In today’s example, I am going to assume that all is neutral across the board and that 4% in the number for both the penalty and the incentive.
The below table represents the potential revenue impact for a provider or pratice with a total earnings of $1.5 million in Medicare Part B payments. As you can see in the sample, there is quite a wide range from the base penalty to the max incentive that could be achieved.
Let’s break down the dollars and really understand how that might impact your business.
- You decide to nothing to avoid a penalty
- When you get your first check from Medicare in January of 2019, it will be 4% less than anticipated.
- Using the table above as a sample, in 2019 you will cost your business $60,000 or $5,000 a month.
- That money is directly cut out of the operations of your business.
- What costs will you cut to offset that loss?
- There will also most likely be inflation in the overall cost of doing business.
- Downsize staff, decrease provider salary, hold on new equipment purchases, etc.
- You are also behind and will need to catch up to avoid the next wave of penalties which will be 5%
- You decide to do the minimum requirement to avoid a penalty
- This is a reasonable step. Why do today what you can put off until tomorrow? Right?
- Using the table above as a sample, in 2019 you wil have a $0 impact to your business.
- Your practice will avoid the 4% impact on your Medicare payments in 2019 so that is the positive.
- I would assume, based on some simple research, that the overall cost of running your business will increase by 2019.
- Wages and benefits will be higher, utilities will cost more, etc.
- At least you didn’t lose the 4% and are just dealing with basic business inflation.
- However, you are behind and will need to prepare for the next year or your penalty will increase to 5%.
- You decide to do 90 days of reporting
- This is a positive step for your business.
- If you have implemented the program well and are performing well then you should see at least a 4% increase.
- Using the table above as a sample, in 2019 you will gain an additional $60,000 or$5,000 per month.
- You can say thank you to the person in Scenario #1 since this is a budget neutral program and their money is basically being paid to you
- The increase in payment occurs every time you get a check from Medicare. You could see an additional 4% attached to each check.
- What could you do with this new money?
- Hire additional staff to support your providers, increase provider salaries, install new equipment, get a bigger space, etc.
- You decide to do a full day reporting period and pay extra attention to your overall performance
- This is a VERY positive step for your business.
- If you have implemented the program well and are performing well then you should see the minimum 4% base incentive ++++
- If you have really watched your performance, and are above the number 70 on your composite score, you could recieve up to an additional 10% bonus
- That is a total of a 14% increase in your Medicare reimbursements.
- Using the table above as a sample, in 2019 you will gain an additional $210,000 or $17,500 per month.
- You can say thank you to the person in Scenario #1 since this is a budget neutral program and their money is basically being paid to you and also to your fellow tax payers for allowing the $500 million of bonus money to be used to transition us to a better healthcare payment system
- The increase in payment occurs every time you get a check from Medicare. You could see an additional 14% attached to each check.
- What could you do with this new money?
- Give your staff a nice bonus for all of the hard work they have done, give yourself a bonus for all of your hard work, invest the extra money back into the practice by purchasing better equipment, updated space, etc.
CMS has given everyone a great deal of flexibility and is trying to make it easy to participate. It is now up to you to decide at what level you want to engage in the MACRA program.