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MACRA Final Rule: Key Implications
and Strategies for Success
November 10, 2016
Bruce Johnson, Shareholder [email protected] Sidney Welch, Shareholder and Chair, Healthcare Innovation [email protected]
Agenda
MACRA background and policy objectives
Key changes and implications of final rule
Alternative Payment Models (APM)
Merit-Based Incentive Payment System (MIPS)
Strategic implications, opportunities and challenges
Q&A
2
Sustainable Growth Rate
3
Medicare fee for service payment:
– RVUs per CPT x Conversion Factor, with adjustments e.g., “Sustainable Growth Rate” to limit Medicare expenditures to a budgeted amount
For the first few years of SGR, Medicare expenditures did not exceed targets and doctors received modest pay increases
In 2002, doctors faced a 4.8% pay cut
Every year since 2002, Congress passed legislation to temporarily defer pay cuts
Too Many Payment Patches
4
Law Cut Year Score (bil.)
PL 108-7 2003 $54.0
PL 108-173 2004, 2005 $0.2
PL 109-171 2006 -$0.4
PL 109-432 2007 $3.1
PL 110-173 2008 (6 mos) $6.4
PL 110-276 2008 (6 mos), 2009
$9.4
PL 111-118 2010 (2 mos) $2.0
PL 111-144 2010 (1 mo) $1.0
PL 111-157 2010 (2 mos) $2.0
Law Cut Year Score (bil.)
PL 111-192 2010 (6 mos) $6.0
PL 111-286 2010 (1 mo) $1.0
PL 111-309 2011 $14.9
PL 112-78 2012 (2 mos) $3.6
PL 112-96 2012 (10 mos) $18.0
PL 112-240 2013 $25.2
PL 113-67 Jan-Mar 2014 $7.3
P.L. 113-93 Apr 2014-Mar 2015
$15.8
Total Cost $169.5
Source: Congressional Budget Office 2015
Pre MACRA Goals
5 Source: Centers for Medicare & Medicaid Services (CMS)
CMS Payment Model Framework – 2015 and MACRA
Category 1 Fee for Service – No Link to Quality • 100% volume
Category 2 Fee for Service Link to Quality • Linkage to quality
and/or efficiency
Category 3 Alternative Payment Models using FFS Architecture • Track 1 MSSP ACO
Category 4 Population-based Payment • At risk Pioneer ACO
and others • “Advanced APMs”
CMS View of the Future
85%
90%
30%
50%
2016 2018
All Medicare FFS All Medicare FFS 6
MACRA’s Major Changes
7
Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) – Enacted April 2015 (bi-partisan support) – Final rule published November 4, 2016
MACRA’s Major Changes:
– Repealed Sustainable Growth Rate – Modifies/consolidates Medicare quality programs
(Meaningful Use, PQRS, Value Based Modifier) – Continues fee-for-service payments, but with potential
payment adjustments via: • “Merit-Based Incentive System” (MIPS) • “Alternative Payment Models” (APMs)
Final Rule Under MACRA
Notice of Proposed Rule Making -- May 9, 2016
Over 4,000 comments received
Final rule released Oct. 14, 2016, published in Federal Register Nov. 4, 2016
Comments received through due Dec. 19, 2016 – Final Rule Federal Register (81 FR 77008)
– https://www.federalregister.gov/documents/2016/11/04/2016-25240/medicare-program-merit-based-incentive-payment-system-mips-and-alternative-payment-model-apm
8
MACRA, MIPS, APMs – Oh My!
MACRA Merit-Based Incentive Program
Systems (MIPS) – PQRS – VBPM – EHR Incentive Program
Alternative Payment Models (APMs) – Accountable Care Organizations – Medicare Shared Savings Program – Qualified APM Participant (QP) – Partial Qualified APM Participant (Partial
QP)
9
Key Changes and Implications
1. Bi-partisan legislation
2. A “kinder and gentler” final rule
3. More “MIPS eligible clinician” exclusions, benefitting solo and small practices
4. Alternative Payment Model encouragement
5. Participation strategy choices and timing
6. Population vs. episode based APM participation options
10
Key Changes and Implications
7. Temporary reduction of excess of “nominal risk” standard applicable to APMs
8. Living in two worlds -- MIPS APM and MIPS eligible clinician
9. CEHRT expectation (and effective mandate)
10. Fairly minimal reporting requirements for MIPS participation in 2017 transition year
11. More eligible clinicians excluded from MIPS obligations (i.e., low-volume threshold)
12. MIPS requirements adjusted, but still complex
11
2019 2020 2021 2022 + beyond
Merit-Based Incentive Program (MIPS)
Medicare FFS payment adjusted based on performance score linked to: 1. Quality 2. Cost 3. Improvement activities 4. Advancing care information
+-4%* +-5%* +-7%* +-9%*
*$500M for “exceptional performance” adjustment through 2024
Alternative Payment Models (APM)
New payment approaches that incentivize quality and value: • CMMI Innovation models • MSSP ACO (Track 2 & 3) • Oncology Care Model • Comprehensive Primary Care
Plus • Other demonstration programs
Advanced APMs: • Not subject to MIPS +/- payment • 5% lump sum incentive payments
(2019-2024)
• Higher (.75%) Medicare Physician Fee Schedule update in 2026 and beyond compared to MIPS (.25%)
12
MACRA Payment Model
Source: Medicare Access and CHIP Reauthorization Act of 2015, Path to Value (CMS)
MACRA Implications as of November 10, 2016
Bottom Line: During 2017 performance year, most physician practices will be subject to MIPS, with potential impact on 2019 Medicare FFS reimbursement
13
Advanced APM Possible? (e.g., MSSP Track 2 or 3)
Yes – Subject to APM reporting requirements
No
APM (e.g., MSSP Track 1)?
Individual Reporting
APM Required Group/TIN Reporting
Stay
Group/TIN Reporting
“Pick Your Pace” -- 2017 Transitional Reporting Flexibility
2017 Participation Strategy MACRA Payment Implications for 2019
• Report all required MIPS measures
• For full 90-day performance period and up to the
full year
• Avoid up to the -4% MIPS payment adjustment
• Qualify to receive up to +4% payment adjustment
• Eligible for additional “exceptional performance”
adjustment
• Report for 90-day period (but less than full year)
• Report more than one quality measure, more
than one improvement activity, or more than the
required measures in the ACI performance
category
• Avoid up to the maximum -4% MIPS payment
adjustment
• Become eligible to receive up to the maximum
+4% adjustment
• Report one measure in each of the quality and
improvement performance categories, or report
the required measures of the ACI performance
category
• Avoid up to the maximum -4% MIPS payment
adjustment (but not eligible for +4% adjustment)
• Fail to report one MIPS measure or activity • Maximum -4% MIPS payment adjustment in 2019
14
Alternative Payment Models (APMs)
15
1
Advanced Payment Model Alternative to MIPS
Eligible Clinicians who participate in certain Advanced APMs are exempt from MIPS
Medicare (only) Option
(2019 and beyond)
Other Payer Combination Option (2021 and beyond)
Advanced APMs FFS Reimbursement Implications
(2019-2024) • Not subject to MIPS • +5% Lump Sum Additional
Incentive Payment for Part B Prof. Svs. during Base Period
(2026 and beyond) • Not subject to MIPS • Higher Medicare Fee
Schedule updates (.75% vs. .25%)
Participation in Advanced APM sufficient (regardless of whether performance goals achieved)
16
Advanced APM Requirements
Advanced APM requirements:
1. Use Certified EHR technology (CEHRT)
2. Professional service payments linked to quality measures
3. APM must bear financial risk or involve a medical home model (e.g., MSSP ACO, Track 2 or 3, NextGen ACO, CPC+ etc.), with other payers in 2021.
4. Advanced APM must meet payment or patient count thresholds
^Additional “All Payer Combination” Options begin in 2021
17
Eligible Advanced APM Entities 2017
– MSSP ACOs in Tracks 2 & 3 (not Track due to absence of financial risk)
– Next Generation ACOs
– Comprehensive Primary Care Plus Program
– Comprehensive ESRD Program arrangements
– Oncology Care Model (2-sided risk)
– Not Medicare Advantage organizations
2018 (expected)
– ACO Track 1+ (with risk TBD)
– Voluntary bundled payment model
– Comprehensive Care for Joint Replacement (CEHRT Track)
– Advancing Care Coordination through Episode Payment Models (CEHRT Track)
– Not MA -- except under All-Payer Combination Option beginning in 2021
18
Advanced APM Timeline
19
2017 Performance
Period for 2019
2018 Performance
Period for 2020
2018 Base Period for
2019 Bonus
2019 APM Bonus
2019 APM Bonus
2019 Base Period for
2020 Bonus
2020 APM Bonus
2019 Performance
Period for 2021
2020 Base Period for
2021 Bonus
2021 APM Bonus
2020 APM Bonus
2021 APM Bonus
2021 on
All Payer APM
Option Begins
2026 on
Higher FFS
Payment update to QPs
(.75% vs. .25% under MIPS
• APM “Performance Period” 2 years pre year of APM bonus payment
• Bonus based on Part B Professional Services in Base Period
Physician-Focused Payment Models (PFPM)
Additional APMs defined over time in which:
– Medicare is a payer
– Eligible clinicians play core role in implementing the methodology
– Targets cost and quality of services influenced by eligible clinicians
PFPM Technical Advisory Committee
– Review of proposed PFPMs
– Comments/recommendations to HHS Secretary
– Testing to be determined
– Typical 18 month APM review/development cycle
20
APM Strategic Considerations
21
Source: “How the Money Flows Under MACRA,” https://www.brookings.edu/research/how-the-money-flows-under-macra/
Merit-Based Incentive Payment System (MIPS)
22
2
MIPS Generally
23
MIPS consolidates and streamlines several existing Medicare penalty programs with consolidated reporting and timelines
MIPS eligible clinicians are: - Physicians - PAs - NPs - CNS - CRNAs - Groups that include such professionals
MIPS Excluded Providers
24
Some providers are excluded from MIPS: Qualifying APM participants Partial qualifying APM participants who report data under MIPS Low-volume threshold clinicians (billing ≥ $30,000 & for > 100
beneficiaries) Newly-enrolled Medicare participants (report following 1st year
enrolled)
Excluded clinicians may “voluntarily report” to gain experience with MIPS (like eligible clinicians who are new to Medicare program, for example).
CMS defines “non-patient-facing MIPS eligible clinicians” as an individual or group that bills 100 or fewer patient-facing encounters during a performance period.
MIPS Methodology
25
CMS will assign a composite performance score (CPS) based on performance over a year in:
– Quality (replaces PQRS and some parts of VM)
– Cost (replaces cost portion of VM)
– Clinical Practice Improvement Activities (new!)
– Advancing Care Information (formerly EHR meaningful use)
Publishes clinician’s results on Physician Compare
Penalty for every clinician scoring below median except for 2017, which has a 3 point threshold
MIPS Composite Score
0%
20%
40%
60%
80%
100%
120%
2019 (±4%) 2020 (±5%) 2021 (±7%) 2022 (±9%)
Quality
Cost
ACI
CPIA
26
MIPS Payment Adjustments
CY Max % Gain Max % Loss
2017 - -
2018 - -
2019 +4% -4%
2020 +5% -5%
2021 +7% -7%
2022 & beyond +9% -9%
27
MIPS Payment Updates
Zero for 2020-2025 but +5 percent incentive payment if in an Advanced APM from 2019-2024
2026+, 0.75 percent if in an APM, 0.25% for all others
28
Alignment of Strategy and Money
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Medicare Physician Fee Schedule Updates
0.5% 0.5%
0.5%
0.5%
0% 0% 0% 0% 0% 0% 0./75% or
0.25%
Merit-Based Incentive Payment System (MIPS)
• Quality • Resource use • Clinical practice
improvement • EHR meaningful
use
+-4%
+-5% +-7% +-9% +-9%
+-9%
+-9%
+-9%
Alternative Payment Models (APMs)
Excluded from MIPS
Source: Medicare Access and CHIP Reauthorization Act of 2015, Path to Value (CMS) 29
5% Incentive Payment
FFS UD
MIPS Measures for 2017
30
MIPS Reporting
31
MIPS eligible clinicians may elect to report data for the
four performance categories as an individual clinical, part of a group, or an APM group (consistent method must be used to report data across performance measures)
MIPS eligible clinicians may also report certain required data via third-party data submission entities (i.e., health information technology vendors, qualified registries, Qualified Clinical Data Registry, and CMS approved survey vendors) – If reporting as a group, all MIPS eligible clinicians must agree
to outsource reporting of same data categories
MIPS Data Submission Mechanisms
32
MIPS Performance
33
Top MIPS Performers
Score above the threshold, get a bonus
– Funded by those paying penalties to make it budget neutral
– Base bonus cannot exceed 300% of max penalty
– Exception for Exceptional Performance Bonus
• Additional $500 M/year
• From the 25th % above threshold (70 points in 2017)
2019 Max = 12% (3x4%) MIPS + 10% Exceptional Performance = 22%
34
Quality Measures Generally
Improvements to existing quality programs:
– Key change from 9 measures to 6; allows partial credit for measures.
– CMS tried to address concerns about wading through too many measures in the PQRS program to find applicable measures by developing measure sets by specialty.
– By Nov. 1 of the immediately preceding year, CMS will publish a final list of the quality performance measures.
– Acknowledges issues for sub-specialties.
– Provides bonuses for reporting through QCDRs.
35
Quality Measures Examples
36
Quality Measures Sample Tally Measure Type Submission
Method Points Total
Possible Points
High Priority Bonus Points
CEHRT Bonus Points
Title 1 Outcome Registry (1-10) 10
Title 2 High priority
EHR (1-10) 10
Title 3 High priority
Registry (1-10) 10
Title 4 Outcome Registry (1-10) 10
Title 5 (1-10) 10
Title 6 (1-10) 10
Title 7 (1-10) 10
Total ------------ ------------------ ? 70 ? ?
37
Cost Measures Generally
CMS proposes to use episode-based measures in this category, many of which are specialty specific, building off of CMS’s QRUR reports.
CMS analyzes Medicare administrative claims data rather than require reporting by provider to determine score
38
Cost Measure Examples
39
CPIA Measures Generally
MACRA specified that the CPIA performance category must include the following activities: Expanded practice access Population management Care coordination Beneficiary engagement Patient safety and practice assessment
By statute, CMS must give at least a 50% score to APM participants and 100% score for patient-centered medical home participants.
CPIA measured on a “60 point” scale – different CPIAs have different weights (e.g. “high-level” or “medium-level” activities) that contribute to an overall score.
CMS proposed more than 90 improvement activities Clinicians must perform CPIAs for at least 90 days of the reporting
period (which period may be increased in future performance years).
40
CPIA Examples
41
ACI Measures Generally
ACI replaces EHR Meaningful Use for Medicare physicians only
Goals:
– Simplify requirements (from 18 measures to 11)
– Increase flexibility (i.e., not “all or nothing”)
– Ease burden
– Facilitate exchange of information, emphasizing interoperabilitiy
42
Extends application to PAs, NPs, CNSs, CRNAs
CMS may reweight ACI portion of MIPS to 0% for some EPs
– Some hospital-based EPs
– EPs facing significant hardship: (1) Insufficient internet access; (2) Extreme and uncontrollable circumstances; (3) Lack of control over availability of CEHRT; (4) Lack of face-to-face patient interaction
– NPs, PAs, CRNAs, CNSs who submit no data
ACI Application
43
Use CEHRT
Report according to objectives and measures
Support information exchange and prevention of health information blocking, and cooperate with authorized surveillance of CEHRT
ACI Requirements
44
In 2017 reporting year, flexibility to use 2014 or 2015 edition CEHRT – EPs using only 2015 CEHRT, or a combination of 2014 and
2015 CEHRT can choose between objectives/measures corresponding to Meaningful Use Stage 3 OR those corresponding to Meaningful Use Modified Stage 2
– EPs using only 2014 CEHRT should comply with objectives/measures corresponding to Meaningful Use Modified Stage 2
Starting in 2018 reporting year, all must use 2015 edition CEHRT, Stage 3 objectives/measures
ACI Reporting
45
One-year reporting period
– Different than Meaningful Use 90-day reporting period for all participants in 2015 and new participants in 2015 and 2016
– MIPS EPs can submit data even if they do not have a full year’s data
Group reporting now available
– Not batch reporting with individual assessment, but assessment as a group
ACI Changes
46
ACI Scoring
47
MACRA requires CMS to provide technical assistance to MIPS eligible clinicians in small practices (i.e., 15 or fewer eligible clinicians), rural areas, and practices located in geographic health professional shortage areas
Details of the technical assistance programs to be developed by separate future rulemaking
Technical Assistance
48
Implications, Opportunities and Challenges
Complexity – MIPS replaces existing programs with new
– APMs limited, and build on other programs
Still fee for service – Financial incentives could increase spending
Choices – MIPS vs. APM participation and timing
– Single vs. Multispecialty strategies
– FFS and at-risk incentive structures
– Group vs. individual reporting
– What sources to use for reporting
Select Implications for Practices
Behavioral and operational “volume to value” changes
Potential “death knell” for small practices
Potential increased acquisitions/collaborations (health system employment, ACOs, CINs, large groups)
CEHRT essential and need for customized Health Information Technology
Technology/internet/data gathering capabilities
Potential impact and revisions to commercial payer contracts linked to MFPS
Commercial payer data reporting under All-Payer APMs
50
Select Implications for Health Systems
Complex financial models – inpatient, outpatient, ambulatory – shift from FFS to risk
Need to customize HIT to fit needs under new models, let alone interoperability
Alignment of hospitals meaningful use to physicians’
Addressing resource utilization in hospital-owned physician practices
Shift to lower cost ambulatory settings – decrease to hospital bottom lines?
Potential “downstream changes” (e.g., revisions in malpractice policies, premium shifts)?
MACRA reimbursement impact on “fair market value” in employment, service and purchase arrangements
51
Challenges: MIPS
If specialty physician doesn’t have outcome or high priority measure, they may be disadvantaged in MIPS
MIPS Quality measures propose administrative claims based on population health measures part of VBM, but they are hospital-focused, not physician focused
MIPS resources measures are based on VBM cost, so not translated to physicians
MIPS Advancing Care changes scoring but not measures
What happens to physicians who do not qualify as MIPS eligible clinicians? Impact of fact that APM bonus is based on Part B billings?
52
Challenges: APMs
Physician participation in more than one APM
Track 1 ACO withdrawal and migration to risk
“Other Entities” in ACOs do not count for attribution
Living in two worlds -- MIPS reporting due prior to QP determination
“Nominal risk” definition evolution
Physician ability to control risk in APMs
Operational details of APM and downstream relationships (e.g., what parties bear risk, relative amounts and mechanics)
APM-specific requirements/restrictions (e.g., MSSP single-purpose entity requirements, role in relation to episode-based APMs)
Dartmouth Hitchcock example -- Difficult to continue to achieve cost savings over time due to relatively low cost of care
53
MACRA Strategic Implications
Assume: Small/medium sized practice
Too late to participate in APM beginning on Jan. 1, 2017, so practice has reporting and participation options
– Uniform (individual or group) reporting required • Quality – individual or group
• Improvement Activities – individual or group
• Advancing Care Information – individual or group
• Resource (no action required)
Options: Invest, align or plan to hang it up? – Cost projections based on IT and other compliance requirements
– Potential alignment partners and/or relationship strategies
– Hang it up? (i.e., 25% of solo practice physicians age 55+)^
54
^Source: Physician Group Practice Trends: A Comprehensive Review, J.Hospital & Medical Management, Vol. 2, No. 1:3 (2016).
MACRA Strategic Implications
Assume: Current participant in MSSP Track 1 ACO, with performance period ending 12/31/18
Unless terminate MSSP ACO participation before Oct. 28, 2016, practice will report and be evaluated under APM/ACO rules – Quality measured at MSSP ACO entity level – Resource measured at ACO (under MSSP) – CPIA measured at APM entity level – Advancing Care Information at TIN level
1-2 years of existing participation and linkage to ACO provides (some)
time for strategic decision-making and action
MACRA fee-for-service realities (and limits) Growth of Medicare Advantage and other at-risk programs
55
Key Takeaways
• Affordable Care Act not repealed; MACRA was bipartisan
• ACA may be the appetizer; MACRA is the main course
• Significant “volume to value” changes in payment, which
require significant behavioral and operational changes
• Future changes to operations, performance and
relationships
• Keys to success and/or survival:
• Future Strategy
• Collective (organization-wide) performance
• Innovation (trial and error)
• Opportunity to shape own destiny
56
Resources
Seminars & Webinars: – http://sftp.polsinelli.com/publications/events/webinar/ri/1116/ri1116i.htm
– http://shop.americanbar.org/ebus/ABAEventsCalendar/EventDetails.aspx?productId=261978136
Articles
– http://www.polsinelli.com/intelligence/ealert-making-sense-of-macra-final-rule
– http://www.polsinelli.com/intelligence/ealert-macra-final-rule-part-2
– http://www.polsinelli.com/intelligence/ealert-macra-part-3
CMS
– https://qpp.cms.gov/
AMA “STEPS Forward”
– https://www.stepsforward.org/
57
Questions?
Sidney Welch Shareholder | Polsinelli PC Atlanta, GA 404.253.6047 [email protected]
58
Bruce A. Johnson Shareholder | Polsinelli PC Denver, CO 303.583.8203 [email protected]