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MACRA Financials for Anesthesia Practices: What We’ve Learned So Far

Bryan Sullivan
Chief Quality Officer, Anesthesia Business Consultants, LLC, Jackson, MI

On March 26, 2015, the House passed the Medicare Access and CHIP Reauthorization Act (MACRA) with an almost unanimous vote. This decision set in motion a program that would change the way medical providers would be evaluated, and that would apply value-based medicine to American healthcare moving forward. The Centers for Medicare and Medicaid Services (CMS) then developed and deployed the Merit-Based Incentive Payment System (MIPS) and the Advanced Alternative Payment Models (APMs) to service this legislation.

While substantial literature is available regarding the content of MACRA legislation and operational deployment of CMS's MIPS and APM models, this review will focus on the legislation's financial implications for anesthesia providers. This financial insight has been somewhat difficult for practices and business professionals to acquire, as many sources of information are available, and in some cases, the information is conflicting. We will attempt to provide a cohesive review of the financial implications of the MACRA legislation for anesthesia and chronic pain management providers.

What CMS Will Tell You

In the memorandum, "Estimated Financial Effects of the Medicare Access and CHIP Reauthorization Act" (April 4, 2015), CMS estimated that from fiscal years 2015 through 2025, MACRA would increase combined federal spending for Medicare, Medicaid and the health insurance marketplace by $102.8 billion.

This represents a considerable investment from a budgetary perspective, and CMS further explained how the investment would be distributed through its yearly final rules. Thankfully, they summarized the schedule in which fees, bonuses and incentives are made available.

The key points of the timeline (Figure 1) showcase the steady incentive available for those providers participating in an APM and the graduated nature of MIPS over the years. From a high-level perspective, this would suggest that MIPS participation represents the highest level of bonuses available under MACRA. We know now that this isn't true.

Budget Neutral

One of the central requirements of the MACRA legislation is that it must remain budget neutral. This may seem out of alignment with the memorandum above, but keep in mind that the memorandum was talking about overall spending and not just how MACRA distributes funds. MACRA was designed to save the government an estimated $47.7 billion on overall spending in the same period versus the Sustainable Growth Rate (SGR) formula, which was one of the main reasons for its adoption.

The budget neutral requirement has placed CMS in an interesting position over the past couple of reporting years. With the initial "pick your pace" option, far more practices were able to avoid a penalty, and thus, not fund the bonus side of the program. Of course, CMS could have decided to bypass a flexible onboarding process with the initial years of MACRA to fund the initial bonuses of four percent, but as it was, the lack of funding on the penalty side deeply depressed the bonus for exceptional performers. Regardless of how the bonus side is balanced, the maximum penalty will be four percent in 2019, five percent in 2020, seven percent in 2021, and nine percent in 2022 and beyond.

While the requirement for budget neutrality persists for MIPS, no such requirement exists for the APM. Eligible providers receive a fixed five percent bonus for each of the first six years and a higher base payment rate. Bonuses in the APM program, as well as contractually specified bonuses or penalties, have no budget neutrality requirement.

The 2018 CMS final rule included projections that speak volumes regarding what they consider for the anesthesia specialty.

By reviewing the data in Tables 1 and 2, you can see that the number of providers expected to be neutral or to receive a positive adjustment constitute about 97 percent of all eligible anesthesia clinicians. This does not provide much room for an upside for providers, given MACRA's budget neutral nature.

Due to this adjustment, providers saw far less than the expected four percent bonus. Recently adjusted from above two percent, CMS has published that the maximum bonus anesthesia will receive will be 1.88 percent on Medicare Part B charges in calendar year 2019 for reporting year 2017. On average, if a provider collects $65,000 in Medicare Part B charges for a given year, the bonus will be $1,222 for exceptional performers. The number of hours spent on supporting MIPS annually can help identify the return on investment, but from a purely financial perspective, a few extra cases yearly would clearly supplant any bonus experienced.

Exclusion for Anesthesia

The final piece of the financial puzzle from CMS is the exclusions that are available to allow a group to opt out of MACRA altogether. If a provider were to look up their requirement to report through the Quality Payment Program page (, most anesthesia providers would see what is shown in Table 3.

This determination allows a group to skip the reporting requirement in a given year. This is re-evaluated every year, but it shows the provider can be excluded from reporting simply by reporting as an individual. As groups exit the MIPS program, further depression will be experienced on the bonus side of the payment.

Inflation Effect

Unfortunately for all those participating under MACRA, the program is designed to be a program of attrition. Not unlike other entitlement programs, inflation will continually have an effect on those providing services that will benefit those receiving care. Inflation applied to the long-term operation of MACRA elicits some startling results (see Figure 2).

Under MIPS, when adjusted for inflation, top-performing providers will be operating below today's earnings. Under Advanced APMs, in addition to the five percent bonus and the gain share option, providers can earn a true bonus. APM participation introduces a new aspect to the group's model if it is not already participating in an APM. It represents the only way to earn future dollars that are worth more than today's.

What Now?

Groups have made decisions to continue with MIPS for three primary reasons: requirements by insurance carriers, requirements by hospital contracts and public reporting. Even if a practice is not required to report to CMS and no current contracts with their facilities or payers necessitate reporting, longitudinal data for such an influential program may contribute to future value as it showcases a commitment to quality in light of degrading financial benefit. In light of this, we recommend taking a balanced approach when making a decision on future MACRA participation.

The reality of the shift to value-based care under MACRA fell short of the initial hope. Budget neutrality, exclusions for anesthesia and inflation have forced groups to re-evaluate their role with MACRA. From a purely financial perspective, it is hard to justify continued participation for no other reason than to protect a portion of future earnings. However, many groups will continue to report in spite of the negative financial picture, as participation provides the most flexibility in negotiations with payers and facilities and serves as a continual performance metric.

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