Riding out the Wave of MACRA in 2017
With the middle of October swiftly approaching, the year is quickly coming to a close. However, although the year may be ending the healthcare market is an ever-changing entity that continues to grow and better itself through acquisitions and technology. The Ambulatory M&A Advisor takes a look at some of the bigger steps looming in the future for the healthcare industry. Read about how the latest Medicare Access & CHIP Re-authorization Act (MACRA) movement has impacted consolidations and how value based payments are quickly becoming the norm based on these regulatory developments.
Don Weinbren, attorney with Trenam Law, says that when examining the current world of healthcare and the recent pushes for consolidation of businesses, many healthcare business owners are in the state of mind that bigger is better. Weinbren says this push for larger entities is a way for businesses to not only increase their availability and footprint in a geographic location, but also gets them a foot in the door when negotiating with managed care companies as the MACRA implementation in healthcare swiftly approaches.
“I think that is really what the reason for all of this consolidation is. That and the government’s move towards electronic medical records and the changes in reimbursement, especially the new ones coming up with MACRA,” Weinbren says.
Wienbren says with the oncoming changes in the current market and with it being so data intensive it becomes more and more difficult for a smaller practice to be able to maintain the systems because of the costs. Ultimately with MACRA being implemented, the smaller practices will have a difficult time catching up to their larger, consolidated market competitors.
Kenya Woodruff, partner with the law firm HaynesBoone says the purpose of MACRA is to change the way physicians are compensated. It is a continuation of the volume to value type of considerations when insurance companies are looking at reimbursement. There has been a lot of discussion about the physician pay fixes that congress has had to do every year because of the way in which it is re-based every year.
“MACRA is going to end the current sustainable growth rate formula and replace it with the newest format and formula for compensating physicians. MACRA will also incorporate some of the existing quality reporting programs that we have seen coming into play over the last several years,” Woodruff says.
When examining the current market and how physicians feel about the impending changes in reimbursement, Woodruff says the problem really lies in the lack of education among providers on MACRA.
“I think the vast majority of physicians are probably unaware of MACRA and the changes that are coming. That is one of the criticisms of MACRA going into effect in January 2017. Many physicians are really not aware of all of the details involved in this new compensation structure and may not have the tools to be able to report or control the things that they are going to be paid on,” Woodruff says.
According to Woodruff, Congress has given physicians four different options about the effective date and how physicians have options of when they are actually going to be subject to MACRA. Woodruff says that Congress does want to give physicians time to have their systems and personnel in place.
“I think the doubt is because MACRA encompasses a number of elements that are beyond the wall of the physician office. There is a significant concentration on population health management, on the continuum of care, and not all physician offices have that kind of infrastructure yet. They will have to have communication with other post-acute and acute partners that would enable them to effectively reach some of the goals that are in the payment system,” Woodruff says.
MACRA will reform payments in three different waves of change once implemented in 2017. The movement will put an end to the Sustainable Growth Rate (SGR) formula for determining Medicare payments for provider services in the market. MACRA will also create a new framework for rewarding health care providers for giving better care not just more care, thus reinforcing the larger steps towards value-based care over volume based care. Lastly, MACRA will combine the market’s existing quality reporting programs into one new system.
Woodruff says MACRA will open the doors Merit Based Incentive Payment Systems and Alternative Payment Methods. These models will have increased transparency of physician-focused payment models, and starting in 2026 will offer some participating health care providers higher annual payments.
Lee Ferber, CPA, co-chair and practice leader of Gettry Marcus CPA’s healthcare group, says that with the changes vastly approaching, the goal to success is to be a player in healthcare; one that is capable of participating in new value-based payment models; models that reward quality and coordinated care, as well as cost savings.
Ferber says that not only will keeping up with these payment models help ease the transition into MACRA, but will also help their businesses appeal as a valuable acquisition to the buyers in the market.
Ferber continues and provides some ways that modern centers can increase value, as well as benefit from certain enhanced tax deductions during these changes in the market.
“Getting the most out of technology would certainly be one way to increase value, both operationally and financially. This would mean having strong internal systems, which includes electronic medical records, practice management systems, compliance programs, and a patient portal. Also, developing a large referral network will certainly add value. In the end, really get yourself ingrained in the healthcare community so that you can maintain patient volume, always with the goal of providing quality and coordinated care, while controlling costs,” Ferber says.
Ferber adds that in this time of change it is beneficial for providers to also look for ways to communicate with commercial carriers.
In terms of clinical integration, Ferber says finding common ways for payors and providers to work together to be able to coordinate clinical care and help health insurance carriers improve care to their patients will be key to helping both parties through the MACRA transition.
If you have an interest in learning more about the subject matter covered in this article, the M&A process or desire to discuss your current situation, please contact Blayne Rush, Investment Banker at 469-385-7792 or Blayne@AmbulatoryAlliances.com.