shutterstock_160531064.jpgHoward Deutsch co-wrote this blog post with Christina Corridon.

In its current form, the Medicare Access and CHIP (Children’s Health Insurance Program) Reauthorization Act (MACRA) of 2015 directly impacts the reimbursement rates and methodology of the physician fee schedule under Medicare Part B. However, MACRA is unlikely to have a significant impact on physician behavior or drug choice. Nonetheless, MACRA is part of a larger transition of payment based on volume to payment based on value (quality and cost reduction). Physicians will be penalized for continuing with “business as usual,” and newfound attention to tracking and reporting outcomes will be rewarded.

Thanks to widespread dissatisfaction with the Medicare fee-for-service program and the sustainable growth rate (SGR) formula, MACRA won bipartisan support in 2015 and is now in its first year of implementation. The SGR formula was enacted in 1997 to ensure that increases to the physician fee schedule didn’t outpace GDP, but its implementation was constantly delayed. Starting in 2019, all physicians meeting certain thresholds are required to participate in one of two tracks under MACRA’s Quality Payment Program.

The first track, the Merit-Based Incentive Payment System (MIPS), streamlines legacy quality metrics while transitioning physicians to a performance-based payment system. The second track, the Advanced Alternative Payment Models (APMs), is a novel payment system that links payment to performance and rewards physicians for taking on additional financial risk. Although most physicians, including those under existing APMs, are likely to seek out the MIPS track, the program aspires to better enable physicians to transition into risk-based APMs in the future.

Field-based roles should be sensitive to the demands and dynamics of MACRA, which likely will create some stress on physicians who must increasingly focus on points other than care delivery, and also increase their time, effort and investments in personnel and infrastructure for implementation. MACRA also will have downstream effects on how clinicians work together to deliver care. For example, smaller practices (not quite small enough to be exempt from participation) may consolidate into larger practices to lessen the burden of administrative tasks and infrastructure investments. Additionally, there will be an increased standardization of care as physicians looking to capitalize on reimbursement updates focus on similar metrics.


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Since implementation happens in stages, MACRA’s full impact isn’t known. Still, in these early years of implementation, the shifts in performance category weightings will prompt physicians to develop the necessary awareness and infrastructure to be stewards of costs and quality, which will become key components of performance-based payments. In addition, the reporting and infrastructure required for MACRA correlates to larger movements in the market that are being reflected in private payers as well. For instance, Novartis agreed to outcomes-based contracts with Aetna and Cigna for its heart drug Entresto in February 2016. In September 2017, the company announced an outcomes-based contract with CMS for its CAR-T therapy Kymriah, clearly showing that CMS is taking cues from private payers that are laying the groundwork ahead of them.

Amid all of these changes, manufacturers would benefit from considering near- to mid-term activities to account for shifting priorities within their customer bases, such as:

  1. Mapping their drugs’ existing marketing messages and collateral to performance metrics in order to increase the relevance of product messaging
  2. Tracking metrics measured by physicians within key accounts in order to create KAM/field team dashboards with customized messaging and beyond-the-pill offerings
  3. Monitoring stakeholders’ evolving roles and dynamics, and better understanding providers’ needs
  4. Informing and educating medical affairs teams on how to generate information and communication tied to MACRA performance metrics

As the landscape changes in the long term, manufacturers might want to think about the following stretch goals as well:

  • Considering performance measures in the design of clinical trials
  • Anticipating dramatic shifts to risk-sharing models and seeking to influence policy accordingly. Specifically, as APMs are likely to be capitation-based models, drug manufacturers are likely to benefit because drugs are, on average, cheaper than labor-intensive treatments.
  • Creating “outside the box” solutions to stretch beyond-the-pill offerings to focus on outcomes and events that are concerning to providers

As MACRA elevates the importance of tracking and delivering on outcomes (such as preventing ER visits), manufacturers also would do well to think about performance metrics in the design of clinical trials and innovative offerings that would address these needs.

Given MACRA’s infancy, providers have yet to fully experience its impact. Nonetheless, manufacturers will need to keep pace with implementation as these reimbursement changes signal a growing divergence from business as usual in the U.S. healthcare system.

Topics: patient outcomes, oncology, healthcare, reimbursement, manufacturers, value-based payments, value-based care, MACRA, payment model