The Merit-based Incentive Payment System—the reimbursement system the government will use to move Medicare payments to a quality- and value-based approach—is in its initial year.

While 2017 is deemed a performance period, changes lie ahead, and providers may not realize the full implications of how they will be affected. The program combines three federal reporting programs—measuring quality, value and the meaningful use of electronic health records—into one. And it’s the balance of these three components that is shifting.

MIPS emphasizes quality measurements more at the outset, but the approach will eventually seek to grade clinicians based on their ability to control costs. The baseline for those calculations is being established by the Centers for Medicare and Medicaid Services this year. And experts believe that many providers don’t have all the information systems in place—or use them in combination—to accurately prepare for the shift.

Healthcare experts contend that providers need to start scrambling now to have the data to be able to ensure they’re able to gather and act on cost data—not just from their own practices, but all costs that assigned patients incur.

“Here’s the challenge: Where does the data come from that provides that kind of knowledge, on an almost real-time, ever-evolving basis?” says Rod Piechowski, senior director for health information systems at HIMSS. “Without baseline data, and someone having already done the analysis on all these different details, physicians aren’t equipped to make those kinds of cost decisions.”

Change in focus

This year, MIPS generally focuses on quality metrics, a category that accounts for 60 percent of a score derived from four categories of physician performance. By contrast, cost performance has no impact on reimbursement. That will change as the program progresses, with practices becoming impacted by the costs associated with caring for assigned patients.

Practices have had years of experience dealing with quality metrics, navigating both the Physician Quality Reporting System (PQRS) and meaningful use criteria of the federal EHR incentive payment program. But a systematic, analytical approach to cost accounting and management is not nearly as common, and the IT systems to support it is likely a multiyear undertaking, experts say.

Physicians navigating this imminent basis for Medicare reimbursement will be liable not just for their practice-generated cost but also Medicare spending by their patients, both as hospital inpatients and in post-acute settings.

Eventually, 30 percent of physicians’ MIPS score will be based on their cost habits and consequences of spending decisions. CMS will provide the calculations, generating an individualized report that providers will receive at the end of a reporting year from claims data.

To perform well under MIPS, medical groups and health systems can’t be in a position of waiting for their CMS reports—that comes too late to make improvements, says Karen Knecht, chief innovation officer of Encore Health Resources. “This will be one of the larger challenges [of MIPS]. CMS will do the calculations for them, but they’re going to want to anticipate what their calculated resource use will be.”

That makes 2017 crucially important. It’s a year of zero cost accountability for MIPS, and it’s an opportunity to figure out what data to identify and accurately capture; what analytical services will help track costs practicewide, down to the individual doctor; and the process to put this data in front of physicians so they make cost-effective decisions.

That calls for significant technology and operational change on top of the existing infrastructure for quality improvement, says Piechowski.

To achieve those aims or any others, a minimum level of IT infrastructure has to first be in place, says Tony Panjamapirom, senior consultant for research at the Advisory Board. The first is a certified EHR acting as a data collection system. Next is a performance monitoring system with the ability to bring together data from multiple information systems, not just the EHR.

Also See: 15 ways MACRA causes seismic shifts in healthcare IT

Data aggregation is required to support MIPS cost metrics and produce internal measures to act upon, along with at least a near-real-time performance reporting capability to feed results back continually to physicians so they see how they fare against their colleagues and national benchmarks, he says.

A cost management IT plan inevitably circles back to the importance of giving physicians data in a form they can grasp and is easy to work with. Physician buy-in can take years, says Jennifer Glendening, director of quality and clinical effectiveness for Cooper University Health Care, Camden, N.J. “I think the inpatient physicians have a better understanding, but the outpatient world is really going to be impacted heavily by the MIPS payment system. So we’re always looking for new ideas.”

Cost concentration

The CMS focus on cost assessment carries over into MIPS from an existing program that provides a payment differential under the Medicare physician fee schedule based on cost performance against a national benchmark. This Value-Based Payment Modifier program—which provides for differential payment to a physician or group of physicians under the Medicare Physician Fee Schedule based on the quality of care furnished compared with the cost of care during a performance period—will not be much different at all when it becomes part of MIPS in 2018, says Panjamapirom.

Cost measures will be grouped into three different types: total cost per attributed Medicare beneficiary; Medicare Part A and B spending per hospital admission; and costs relevant to certain procedures in episodes of care, a way to appropriately measure the performance of specialists.

The first type encompasses all costs incurred for a beneficiary, in any setting. The spending per hospital admission covers all costs from three days before the inpatient stay until 30 days post-discharge.

The time span and participating physicians in a patient care episode—10 such types of episodes in the first year—are triggered by codes in patient medical claims, and the provider responsible for a plurality of the resulting compiled costs becomes attributed to that episode, Panjamapirom says.

“Because it’s retrospective, you have to make sure you’re on top of the cost of the services you provide to the patient,” he emphasizes, and that includes using cost feedback to anticipate the areas that need to be brought under control. Physician groups can start by taking advantage of Quality and Resource Use Reports, produced twice yearly by CMS. The 2017 QRUR is slated for disclosure in the fall, according to CMS.

This category of MIPS could be crucial to financial success. “A lot of providers have done PQRS so far, they have done meaningful use,” Panjamapirom says. “It’s likely that the performance differentiator could be coming from the cost component of MIPS.”

Analyzing cost sources

The first steps in getting the data to drive better resource use include a cost-oriented grasp of the broad issues around inpatient length of stay, readmissions, mortality rate and other familiar performance measures, drilling down to the performance of individual physicians in a practice, experts say.

A good sense of how a provider organization uses resources can be attained through Healthcare Common Procedure Coding, which CMS and private insurers use in claims processing. A service of Premier, the national healthcare alliance, HCPC uses codes collected from hospitals to analyze physician resource utilization, says Lori Harrington, vice president of quality and regulatory solutions at Premier. It identifies the high-dollar, low-quality, high-volume overutilization of supplies and care sites, and regular reports issued to hospitals enable comparison of costs for every physician in a facility, she says.

For example, a combination of EHR data mining and contracted analytical services forms the foundation of a cost management function at Cooper University Health System that already has demonstrated it can save millions of dollars when used as a guide for process change and as a continuous source of cost context for physicians in their daily work.

Also See: 10 top MACRA trends challenging providers

Cooper makes use of several Premier analytical services to drive cost control and quality improvement in its inpatient, ambulatory and post-acute activities, says Glendening. The ambulatory performance improvement push uses the Premier tool in concert with the health system’s Epic EHR platform, drawing data from both sources to be analyzed by a data scientist and several data analysts on staff.

Places to improve stand out more when compared with how other organizations are doing. Quarterly reports from Premier compare Cooper with peer groups on issues such as patient safety, length of stay, readmissions, mortality and resource utilization. Last year the health system identified respiratory therapy and blood utilization as out of kilter on resource use, Glendening says.

Closer inspection in its own information systems of the flagged activities showed specific problems in plasma and red blood cell management, expenses in one small area that, along with other incremental expenses, add up to a higher cost of treating Medicare beneficiaries, and that’s what the cost category of MIPS will be tracking.

Medicare spending per beneficiary is challenging, partly because “a lot of these patients are readmitted multiple times, there’s a lot [of concern] over usage of resources when patients are here in the hospital, and we know that we need to get a little tighter with how we’re using the right resources for the right patient,” Glendening says.

Finding accurate data

The accuracy and completeness of cost-related data will figure highly into any success in managing how well resources are used. Precise documentation helps organizations uncover a problem sooner and address it before CMS determines the MIPS cost score.

With accurate data to analyze, providers can start identifying high-dollar, high-volume items and determine whether, for example, the administration is negotiating the best price for supplies. Only after coding and pricing are optimized can issues of resource use be taken on, Harrington emphasizes.

At Cooper, all goods and services are billed and charged through an upgrade in the Epic platform for the entire enterprise, instead of using a separate charge center. So all data sent to Premier comes through that one Epic source, says Glendening. Physicians understand better the impact and metrics of cost generated through Epic data and analyzed by the outside alliance.

Physicians practicing in the Cooper system are learning that everything they do affects cost, and “there’s a more conscious decision for every order that they place, and every admission versus observation status, for example,” she says.

The onset of MIPS demands for efficient physician practices will put even more pressure on their daily routine, making the presentation of data for cost decisions as important as the information itself. “Basically [CMS is] asking the individual physician to understand the underlying cost structure of the entire operation, its workflow and supply chain, while they are providing care,” says Piechowski of HIMSS.

Holistic approach

Once areas of concern regarding cost come into focus, a savvy choice of initiatives in other categories of MIPS can rack up points in those areas while having a positive effect on clinical cost and resource use, says Knecht of Encore. For example, opportunities abound in the category of practice improvement activities that can get at resource use problems at the same time.

The MIPS program is designed with a holistic approach to improving quality and lowering cost, though the mind-set often is to treat each category separately, Harrington says.

For example, a group of physician practices might be poor at coordinating care activities with hospitals and other points on a continuum of care, driving up test volume and leading to unnecessary, costly duplication. One way to achieve improvements is to establish effective care coordination and referral management that promotes better patient tracking across care settings.

In addition, one of the metrics on the quality pick list deals with closing the referral loop with specialists, measuring the percentage of referred patients for whom the referring doctor receives a report from the patient’s treating physician. And for good measure, one scoring possibility under advancing care information is to perform clinical information reconciliation during a transition of care or referral situation.

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