MACRA is Required by Law to Be Budget Neutral – What’s The Impact? – MACRA Monday

Posted on January 2, 2017 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

This post is part of the MACRA Monday series of blog posts where we dive into the details of the MACRA Quality Payment Program.

In my last post on MIPS benefits and the “Pick Your Pace” options, I published an old slide which highlighted the potential positive and negative payment adjustments under MIPS. Thanks to Lynn Scheps from SRSsoft (she also wrote our previous Meaningful Use Monday series of blog posts), it was pointed out to me that there’s one big caveat to how much positive payment adjustment you’d receive under MIPS. I don’t know how I missed it on page 1282-1286 of the final rule. It was such an important point, that I wanted to dive into all the details in a MACRA Monday post of its own.

This all gets pretty technical, pretty quickly, but we’ll try to make this as simple to understand as possible. The core issue at hand is that the MACRA program has to be budget neutral. This means that the MACRA penalties have to offset any MACRA benefits that are paid to participants. Since Pick Your Pace has made it so very few practices will receive the 4% MACRA penalty, that means that there won’t be as big of a pool of incentives available to those who do participate in MACRA.

The math gets pretty complicated, but this chart illustrates how the adjustments you receive could be effected by the need to make the program budget neutral:

This chart is illustrative, but I also believe that it’s a decent representation of what’s likely to happen given the lack of MIPS penalties that will be assessed. If the chart is accurate, most MIPS participants will receive less than a 1% incentive and exceptional performers will be less then 2.4%. That’s quite a big difference between the 4% that was originally discussed.

Now remember that CMS was stuck in a tough position. They had a legal requirement to make it budget neutral. They could have continued with the 4% positive payment adjustment, but that would mean that a whole bunch of practices would get a 4% negative payment adjustment. Instead, they chose to do Pick Your Pace to give people a chance to avoid the penalties. Now those people are happy, but exceptional performers pay the price because there’s no budget to reward the exceptional performers.

At least this is how I read the legalese. If anyone has any other nuances I missed, please let us know in the comments. Next week we’ll start diving into more of the MIPS Categories and changes to the MIPS Composite Score.

Be sure to check out all of our MACRA Monday blog posts where we dive into the details of the MACRA Quality Payment Program.