Insource or Outsource?

The Bipartisan Budget Act of 2018 made modifications to the Merit-based Incentive Payment System (MIPS), Medicare’s physician payment system established by the Medicare Access and CHP Reauthorization Act (MACRA) of 2015. Among the key changes that kick-in starting in 2018 are:

  • Extending the MIPS transition years until 2022
  • Raising the MIPS performance threshold from 3% to 15%
  • Announcing that the total weight of the Quality & Cost categories must equal 60% of the total score. During the transition years, the cost category weight will be between 10% – 30%
  • Introducing new virtual groups for reporting MIPS and providing bonus points for small practices and for treating complex patients.

As many of these changes will take affect in 2018, providers need to commence with their MACRA/MIPS initiatives quickly to avoid penalties and optimize the payment incentives. In deciding on the best path forward, providers will be challenged as they work to comply with the new MIPS reporting requirements that are more complex and will require the use of technology, data and analytics. As a result, one of the critical decisions facing providers is to decide if they should insource or outsource MACRA/MIPS reporting.

The Challenges of Insourcing MACRA/MIPS

With costly capital expenditures (CAPEX) and operational expenditures (OPEX), MACRA/MIPS reporting investments have been unsustainable for many provider groups due to several factors including:

  • Reporting complexities that require providers to increasingly divert resources away from their core mission and business objectives
  • Having the requisite in-house analytical skills and advisory services for MACRA/MIPS. Even those providers who have strong internal analytic capabilities may find that they are unable to scale them to support MIPS reporting
  • Keeping up with the escalating quality reporting requirements. In 2017, providers could simply submit one measure to avoid penalties with a monitoring period of three months. This will ramp up significantly in 2018 and will require the use of technology, data and analytics.
  • The internal costs of analytics, establishing and tracking performance benchmarks, and workflow changes continues to increase due to the supply and demand of these skilled resources
  • The revenue for provider groups has been constant and/or decreasing due to value based care and other market forces.

These and other factors have left many healthcare providers dedicating a major portion of their time and in-house resources towards trying to scale and manage IT to address MACRA/MIPS reporting. It has also motivated many providers to consider outsourcing.

The Benefits of Outsourcing

Outsourcing MACRA as a service offers an alternative model for achieving the MACRA objectives and for driving continuous performance improvement year after year. It also can reduce CAPEX and OPEX costs while keeping resources focused on the organization’s core mission. The benefits of outsourcing MACRA/MIPS include:

  • Providing the flexibility to complement your existing capabilities by bringing in the precise resources you need whether it be from analytics, services or software companies
  • Enabling providers to gain access to MACRA/MIPS domain expertise in the form of advisory services that can fast track implementation and establish the foundation for continuous performance improvement
  • Alleviating the need to have internal resources such as analytic experts on-hold as outsourced services can be provided by the vendor organization as the need arises including:
    • Reporting – This includes employing technology and services to extract and aggregate clinical data from Electronic Medical Records, calculating quality measures and comparing performance. Outsourcing this data collection process can eliminate the burden and cost of what is otherwise a very labor intensive manual process
    • Analytic services – Performing predictive analysis that can project how providers’ performance will impact their reimbursement and can identify measures to improve performance.
    • Modeling Services – This enables providers to model different scenarios to weigh the cost/benefit of specific changes to the measures
    • Consulting Services – Advisory services can be used to improve measure scores for physicians and to provide guidance on work flow enhancements.

Outsourcing Fees

As provider organizations consider outsourcing services, it’s important to realize that service fees can vary significantly as can service fee models. While it may appear that a flat fee model is desirable, paying for different services from different service firms that charge using different pricing models may be more beneficial in some cases.

Provider organizations should think through which of the common service fee models best address their needs:

  • Time and Materials – Pay for advisory services on an hourly basis
  • Firm Fixed Fee – The entire MACRA project is paid for via a flat monthly fee or at agreed to milestones and can include data collection, advisory services, analytics, monitoring and project management.
  • Software – Pricing for the software analytics.

No model is perfect for every provider organization and each alternative must be analyzed in terms of resource, budget and desired outcomes.

It’s decision time for MACRA/MIPS

The Medicare Payment Advisory Committee, the American Medical Association and the Medical Group Management Association have all voiced concerns about the burden that MACRA/MIPS is placing on providers. While there are different ideas in the industry for changing or fixing MACRA/MIPS in the future, the fact remains that it is a highly complex program with new changes for 2018 that are likely to challenge providers and distract them from their core mission.

To avoid potential penalties and optimize the benefits from MACRA/MIPS in 2018, providers need to determine if they would benefit from bringing on outsourced services to manage their data collection, analytics, ongoing monitoring and project management needs. In partnership with the right outsource company, providers can position themselves to address and capitalize on the changing MACRA regulations and do so while reducing CAPEX and OPEX expenditures. Now is the time for provider organizations to decide on their path forward for MACRA/MIPS and ask “Can we go it alone?”

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