Audacious AI Blog

Estimating MACRA reimbursement over 5 Years, as Program Changes Kick In

Prior Results are not an indicator of future performance!  Whether you decide to join alternatives 2an ACO, or to remain independent,  your decision contractually impacts your next five years of Medicare reimbursement. Financially analyzing "join or not join" requires knowledge of ACO regulations, MACRA regulations and the nature of the contract offered by the ACO, and a series of assumptions unique to each practice and ACO.

Over a five-year planning period, regulatory and contractual changes will cause reimbursement patterns to vary under both MACRA and ACO.  Here are some of the variables to build into your financial model.  

Projecting future MACRA financials

The most important changes in MACRA come from regulatory implementation of the statutory plan envisioned by Congress.  The first five years of the program will use a transitional MIPS threshold artificially set by CMS, increasing each year, gradually approaching actual median data as specified by Congress (for 2022 reporting year).    

So far, the only data available to estimate those actual median values are in the 2017 reporting year, where actual median for 2017 was 88.9, and the mean was 77.  With 2019's threshold is at 30 points, then CMS has proposed 2020 to be 45 points, and  2021 to be 60 points.  

If your scores remain generally constant over the next two years, you will tap into an increasing pool of "revenue neutral" dollars (unless you fall below threshold and earn penalties).  This means that the assumptions for your financial model should adjust two key variables for each year:

  1. MIPS Threshold - which will set your unadjusted financial percentage; and 
  2. Scaling Factors for revenue neutral and performance pools - which will finalize your financial percentage based on national pool performance.  

Scaling factors for 2017 were 0.159 against revenue-neutral earnings (based on a MIPS threshold of 3 points).  In their 2019 Final Rule, with a MIPS threshold of 30 points, CMS uses an illustrative scaling factor of 0.358 for Bonus earnings.  For the 2022 reporting year (the first year in which the actual median is used), the scaling factors are designed to be very close to 1.00.  Straight-line extrapolation from 2019 to 2021 would result in Base scaling factors of 0.485 in 2020 and 0.811 in 2021.  Bonus earners would not change in 2020 and 2021, since the Bonus threshold stays constant at .358, jumping to 1.00 in 2022 when the artificial thresholds are replaced by actuals.   

The bottom line here is that MACRA reimbursement for a provider who has always scored well, reimbursement in 2022 and beyond could approach 10 times what was experienced in 2017.  

ACO changes  

For providers contemplating ACO membership, MACRA actually gets a little more complex.  Depending on the specific path and contract date between the ACO and CMS, MACRA / MIPS are still required through 2022 (2023 for new ACOs), even though the ACO (and provider TINs) are committed to achieving Advanced APM Status.  Of course, for providers who score well under MACRA, that is very good news. 

The bad news is that once the ACO achieves Advanced APM status (usually in the fourth year) MIPS reimbursement becomes set at 5% of Medicare payments, regardless of how well a provider performs on quality and PI.  (Compare this to the potential for +19% under MIPS).  At the point where the ACO achieves Advanced APM status, top MIPS performers are leaving 10% - 14% of Medicare payments on the table. 

Of course, the MACRA money left on the table could be offset by ACO benefits.  What a provider receives under ACO rules will depend on three key elements:

  1. The ability of the ACO as a group to achieve Medicare Shared Savings; and
  2. The contract between the ACO and physicians determining how savings are distributed to TINs; and
  3. Whether the ACO has a formal program designed specifically around MIPS / MACRA performance improvement.  

We have an interesting article on a simple approach to defining the maximum shared savings an ACO could distribute to providers, which we very often find to be less than what the providers could earn on their own under MACRA.  

One final factor in the ACO MACRA analysis is that under ACO rules, MIPS scores are aggregated across all provider groups.  In this model, each individual group's scores are diluted based on their physician count as a percentage of all physicians in the ACO. Since some ACOs have formal programs that help all providers improve their MIPS scores, membership can improve Medicare reimbursment in ways that while indirect, can be significant. 

Side by Side Analysis

The bottom line is that the decision to join / not join an ACO is a financial decision that should encompass a side-by-side comparison of alternatives, covering all six years of the ACO contract period.  

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MACRA Monitor database automates this complex projection!  Schedule a short call to see how we can support your financial projections, as well as longer term MACRA optimization efforts.