Welcome to the (Regulatory) Jungle

August 11, 2016

Welcome to the Regulatory Jungle

To say the rules and regulations monitoring the healthcare industry have changed in recent years would be an incredible understatement. Things are changing all of the time – so much so that entire professions and industries are necessary to not only keep up but to help clinicians to maintain their businesses.

The most recent evolution of the regulations passed by congress is MACRA (Medicare Access and CHIP Reauthorization Act).  The implementation plan for the legislation will be finalized in the fall of 2016. This legislation is the most recent effort in transitioning from a fee-for-service payment system toward a system based on fiscal accountability and the provision of high-quality care.

When it comes to regulatory changes, the first question is “how is this relevant to my business?” The regulations developed in the last few years have been controversial, murky, and complicated to interpret and negotiate. Understanding exactly why a clinician or practice should jump through the regulatory hoops is the first step toward embracing the new roles medical professionals are expected to fulfill in the modern medical landscape.

In the next several blog posts we will examine:

  • Why federal performance programs are important to clinicians and businesses;
  • The relevant alphabet soup of acronyms and terminology definitions;
  • The new legislation and what it means for clinicians; and,
  • The outlook for businesses as they aim to comply with the new regulations.

In many cases complying with federal reporting requirements involves changes to the way medical professionals conduct their business, requires data collection and submission, and requires meeting strict performance thresholds. In short, these new regulations sound like a major pain.

So why should practices comply? The first answer should be to measure and improve the quality of care we deliver.  Second, there is money to be made for demonstrating excellent performance. The alternative, either failure to participate or failure to meet performance standards, means loss of revenue and financial penalties.

January 1, 2017 marks the start of a year-long performance period during which clinician performance will be measured in four categories: Quality, Cost, Advancing Care Information and Clinical Practice Improvement Activities (CPIAs). (More detailed explanation in Alphabet Soup.) Performance in 2017 will affect Medicare Part B payments beginning in 2019. Based on performance to established thresholds, payments will be increased, decreased or remain neutral.

The MIPs program incentive structure is budget neutral. Essentially, this means that the poor performers (those who pay penalties) will be funding the high performers (those who are paid rewards). The high performers will earn a bonus of up to 12% in 2019, while the poor performers will experience up to a -4% penalty in the same year. Those percentages increase each year beyond 2019 for both high and low performers.

CMS anticipates many more “losers” than “winners” in the first year and estimates that $833 million will move from the poor performers to the high performers. Additionally, CMS has put aside $500 million for extra bonus payments for performance scores above the 25th percentile for 2019.

A more detailed explanation of the proposed plan for revenues and penalties in upcoming years can be found .

What is the bottom line?

Significant revenue gains and losses will begin in 2019, however, the evaluation period will begin with the start of 2017. This means that medical practices have less than 6 months to understand and implement processes to ensure the continued success of their businesses in the years to come.

The next few blog posts will be dedicated to the understanding of MACRA and its components, while the last in this series will scratch the surface of implementation and the outlook for the future.

Back to News