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Top Trends for Physician Practices in 2017

Top Trends for Physician Practices in 2017

As we approach 2017, physician practices are being challenged on all fronts. Payers are changing the way that physicians are paid, patient expectations are at an all-time high, hospitals are seeking new ways to align, and competition is mounting from new types of providers. To some physician groups, this unprecedented level of change will threaten their financial viability. To others, it will represent an opportunity to transform their group for future success. Here we take a look at the top 2017 trends for physician practices that will have the biggest impact.

Payers are Driving Value Based Reimbursement at a Faster Pace

Physician practices are facing rising pressure from payers to assume more risk for the delivery of high quality and lower cost care. In 2017, this is best represented by the launch of CMS' Medicare Access and CHIP Reauthorization Act ("MACRA"). In January 2015, the government announced a formal goal of shifting Medicare reimbursement from volume to value, including a goal of tying 30 percent of all Medicare payments to alternative payment models by the end of 2016. They accomplished this goal ten months early in March 2016.

The full impact the November election results will have on healthcare policy remains to be seen, but regardless, the move to value-based payments is likely to continue.  The government simply cannot afford to continue paying physicians primarily on volume.

 MACRA continues the trend toward value and gives practices the choice of two paths: the Merit-based Incentive Payment System (MIPS) or an Alternative Payment Model (APM). An overwhelming majority of groups will start 2017 under MIPS, where they will be measured on IT use, advanced clinical practices, and quality. Cost becomes an additional measure in 2018. Group performance will be graded on a curve, and better performing groups will earn a bonus while underperforming groups will face reductions in reimbursement. The APM path offers a 5 percent bonus to groups participating in risk-based contracts. Most groups should spend 2017 focused on improving MIPS performance and evaluating opportunities to move into APM.

Commercial payers are also shifting risk to physician practices. Today, most "value-based contracts" are really just fee-for-service arrangements with incentives for value. While the pace of change will vary by market, expect health plans to tie more reimbursement to value and risk in 2017.

To succeed under new payment models, medical groups will need to transform their practices and add new capabilities for population health and care management. The use of care teams will be necessary to support primary care physicians. New analytic capabilities will be necessary.  The investments will be significant but the alternative may be dire.

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