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MACRANOMICSFebruary 9, 2017
Overwhelming bipartisan support
On 3/26/15, the House passed H.R. 2 by 392-37 vote
On 4/14/15, the Senate passed the House bill by a vote of 92-8, and the President signed the bill.
2
MEDICARE’S SUSTAINABLE GROWTH RATE (SGR)Replaces the 1997 SGR formula, which capped Medicare physician per beneficiary spending growth at GDP growth rate
MACRANOMICS > MEDICARE ACCESS & CHIP REAUTHORIZATION ACT
3
MACRANOMICS > MEDICARE ACCESS & CHIP REAUTHORIZATION ACT
OVERVIEWStarting 2019, physicians must choose from or land in one of two paths: MIPS or APMs
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)
Merit-Based Incentive Payment System Alternative Payment Models MIPS APMs
However, their decisions will need to be made sooner than 2019, as the initial performance period for MIPS is 2017!
4
MACRANOMICS > MEDICARE ACCESS & CHIP REAUTHORIZATION ACT
MACRA IS PART OF A BROADER PUSH TOWARDS QUALITY & VALUEFebruary 2015 Goals
Medicare Fee-For-Service:
Track 1: Value-based payments
Track 2: Alternative payment models
2016 2018
85% 90%of all medicare payments
30% 50%of all medicare payments
of all medicare payments
of all medicare payments
Volume to VALUE
Focus Areas Description
Incentives
Promote value-based payment systems
- Test new alternative payment models
- Increase linkage of Medicaid, Medicare FFS, and other payments to value
Bring proven payment models to scale
Care Delivery
Encourage the integration and coordination of clinical care services
Improve population health
Promote patient engagement through shared decision making
InformationCreate transparency on cost and quality information
Bring electronic health information to the point of care for meaningful use
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MACRANOMICS > MEDICARE ACCESS & CHIP REAUTHORIZATION ACT
MACRA IS PART OF A BROADER PUSH TOWARDS QUALITY & VALUEIn January 2015, the Department of Health and Human Services announced new goals for value-based payments and APMs in Medicare
March 2016 Announcement:
Medicare Fee-For-Service:
APM goal reached 10 months ahead of schedule! In March 2016:
receiving care through providers participating in ACOs, bundled payment
arrangements, advanced PCMHs & other APMs
70%
30%
out of a projected $380B of Medicare
payments tied to APMs
$117B 10MMEDICARE PATIENTS
Track 1: Value-based payments
Track 2: Alternative payment models
2016 2018
85% 90%of all medicare payments
30% 50%of all medicare payments
of all medicare payments
of all medicare payments
Volume to VALUE
6
MACRANOMICS > MACRA TIMELINE
TIMELINE
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Fee schedule updates
0.5% 0.5% 0.5% 0 0 0 0 0 0 00.75
QAPMCF1
0.25 N-QAPMCF2
Consolidtation of PQRS3, Value Modifier and Meaningful Use Programs into one composite score
Qualifying APM participant
Physician Fee
1 Qualifying AMP conversion factor 2 Non-Qualifying APM conversion factor 3 Physician Quality Reporting System
+/- 9%+/- 4% +/- 5% +/- 7%
5% Incentive Payment
MIPS
Eligible AMPs
7
MACRANOMICS > MIPS
MIPS CHANGES HOW MEDICARE LINKS PAYMENT TO PERFORMANCEThere are currently multiple individual Quality and Value Programs for Medicare physicians and practitioners:
PHYSICIAN QUALITY REPORTING PROGRAM
(PQRS)
VALUE-BASED PAYMENT MODIFIER
MEDICARE EHR INCENTIVE PROGRAM
(MEANINGFUL USE)
MACRA streamlines those programs into MIPS Merit-Based Incentive
Payment System
MIPS
8
MACRANOMICS > MIPS
THE MACRA FINAL RULEFor the transitional year 2017, CMS established four paths providers may follow, each with the minimum performance threshold to avoid a
payment penalty reduced. The four paths are:
1. report under MIPS for 90 days;
2. report under MIPS for less than a year but more than 90 days and report more than one quality measure, more than one improvement activity, or more than the required measures in the advancing care information performance category;
3. report one measure in each MIPS category (besides resource use which is automatically reported) for the entire year; or
4. participate in an Advanced APM.
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HOW WILL PHYSICIANS AND CLINICIANS BE SCORED UNDER MIPS?
+ + + =
+ + + =
MEANINGFUL USE (25 PTS)
QUALITY PQRS (50 PTS)
RESOURCE USE - VBM (10 PTS)
CLINICAL PRACTICE
IMPROVEMENT (15 PTS)
100 PTS
MEANINGFUL USE (25 PTS)
QUALITY PQRS (45 PTS)
RESOURCE USE - VBM (15 PTS)
CLINICAL PRACTICE
IMPROVEMENT (15 PTS)
100 PTS
MEANINGFUL USE (25 PTS)
QUALITY PQRS (30 PTS)
RESOURCE USE - VBM (30 PTS)
CLINICAL PRACTICE
IMPROVEMENT (15 PTS)
100 PTS+ + + =
2017 REPORTING
2018 REPORTING
2019 REPORTING+
A single MIPS Composite Performance Score will factor in performance in 4 Weighted Performance Categories
MACRANOMICS > MIPS
NEW!
+ + + =MEANINGFUL USE (25 PTS)
QUALITY PQRS (60 PTS)
RESOURCE USE - VBM (0 PTS)
CLINICAL PRACTICE
IMPROVEMENT (15 PTS)
100 PTS2017 REPORTING
PROPOSED
FINAL
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THE MEASURES
ADVANCING CARE
INFORMATION
QUALITY PQRS
RESOURCE USE
CLINICAL PRACTICE
IMPROVEMENT
Assessment based on advancing care information measures/objectives
Information Security
Earn 50% for reporting and 50% for performance
Minimum of 6 Measures
At least one cross-cutting measure
At least one outcome measure (if avail)
2-3 claims based measures
Continuation of 2 Measures
Total cost per capita for all beneficiaries
Medicare Spending per Beneficiary
Episode-based Measures may be used in lieu of the two cost measures
No legislative mandate on number of CPIAs.
Medium & High weighting categories
Proposed: 3 high weighted or 6 medium weighted CPIAs
November 1, 2016 Final list of quality measures will be published in the Federal Register
July 1, 2017 CMS will provide performance feedback on quality and resource use performance categories
MACRANOMICS > MIPS
11
RESOURCE USEMany providers desired to transition to Episode-Based Measures and away from the general total per capita measures used in VM.
In lieu of the two traditional VM measures, episode-based measures for a variety of conditions and procedures that are high cost, have high variability in resource use, or are high impact conditions:
• MASTECTOMY FOR BREAST CANCER • AMI W/O PCI/CABG • ABDOMINAL AORTIC ANEURYSM • THORACIC AORTIC ANEURYSM • AORTIC/MITRAL VALVE SURGERY • ATRIAL FIBIRILLATION/FLUTTER, ACUTE EXACERBATION • ATRIAL FIBIRILLATION/FLUTTER, CHRONIC • CABG • HEART FAILURE, ACUTE EXACERBATION • HEART FAILURE, CHRONIC • ISCHEMIC HEART DISEASE • PACEMAKER • PCI • ISCHEMIC STROKE • CAROTID ENDARTERECTOMY • CHOLECYSTITIS • C DIFF COLITIS • DIVERTICULITIS • PROSTATECTOMY
• NEPHRITIS AND UTI’S • OSTROPOSIS • PARKINSON DISEASE • RHEUMATOID ARTHRITIS • HIP/FEMUR FX - IP • HIP/KNEE REPLACEMENT • SPINAL FUSION • ASTHMA/COPD • PNEUMONIA - IP • PNEUMONIA - OP • PE, ACUTE • URI, SIMPLE
MACRANOMICS > MIPS
12
NEW CLINICAL IMPROVEMENT ACTIVITIESClinical Improvement Activities will incorporate at least the following elements:
EXPANDED PRACTICE ACCESS
POPULATION MANAGEMENT
CARE COORDINATION
BENEFICIARY ENGAGEMENT
PATIENT SAFETY AND PRACTICE ASSESSMENT
PCMH
BOTTOM LINE
“Certified” PCMH and PCMH Specialty practices receive highest potential score and
APM participants earn 50% of possible score
If you are in primary care, becoming a PCMH is the answer! For subspecialists, becoming a PCMH neighbor / specialty practice will be a huge benefit!
MACRANOMICS > MIPS
13
MEASURE REPORTING
PERFORMANCE CATEGORY GROUP PRACTICE REPORTING MECHANISMS
Quality Claims Qualified Registry EHR CMS Web Interface (Group with >25 providers) CMS-approved survey vendor for CAHPS for MIPS Administrative Claims (no submission required)
Resource Use Administrative Claims (no submission required)
Advancing Care Information Attestation QCDR Qualified Registry EHR CMS Web Interface (Group with >25 providers)
Clinical Performance Improvement Activity Attestation QCDR Qualified Registry EHR CMS Web Interface (Group with >25 providers) Administrative Claims (if technically feasible, no submission required)
Groups may only use one submission mechanism per category
Bonus points will be awarded in the quality scoring section to groups utilizing QCDR, qualified registry, web interface, or CEHRT
MACRANOMICS > MIPS
14
HISTORICAL PERFORMANCE2016 Value Modifier Payment Adjustments (based on 2014 performance):
13,813 physician groups, as identified by their Medicare enrolled TIN, with 10 or more EP’s are subject to the value modifier.
128 GROUPS
8,208 GROUPS
59 GROUPS
5,418 GROUPS
(1%) WILL RECEIVE AN UPWARD ADJUSTMENT
OF EITHER 15.92% OR 31.84%
(59%) WILL RECEIVE A NEUTRAL, MEANING
NO ADJUSTMENT
(0.4%) WILL RECEIVE A DOWNWARD ADJUSTMENT
OF -1.0% OR -2.0%
(39%) WILL RECEIVE AN DOWNWARD ADJUSTMENT
AUTOMATICALLY OF -2.0%*
*Because they did not meet the minimum reporting requirements
MACRANOMICS > MIPS
15
HOW MUCH CAN MIPS AFFECT PAYMENTS?Clinical improvement activities will incorporate at least the following elements:
Based on the MIPS composite performance score, physicians and practitioners will receive positive, negative, or neutral adjustments up to the percentages above.
MIPS adjustments are budget neutral. A scaling factor may be applied to upward adjustments to make total upward and downward adjustments equal.
Those who score in top 25% are eligible for an additional annual performance adjustment of up to 10%, 2019-24 (NOT budget neutral)
MACRANOMICS > MIPS
Maximum adjustments
4% 5% 7% 9%
-4% -5% -7% -9%
2019 2020 2021 2022+
Merit-Based Incentive Payment System (MIPS)
Adjustment to provider’s base rate of Medicare Part B payment
16
MIPS CONSOLIDATION OF PQRS, MU, VBM
MEANINGFUL USE (25 PTS)
QUALITY PQRS (30 PTS)
RESOURCE USE - VBM
(30 PTS)
NEW! CLINICAL PRACTICE
IMPROVEMENT (15 PTS)
100 PTS+ + + =
Scoring
Performance Threshold
All providers scored
Mean or median determined = performance threshold
If MIPS score > threshold (mean or median), your medicare Part B fee schedule will be higher than what is published.
If MIPS score < threshold, you can expect a haircut on your entire Part B.
If MIPS score < 25% of threshold, the maximum penalty is applied.
If MIPS score is between 25-99% of threshold, you will face a linear declining penalty.
MACRANOMICS > MIPS
17
FFS PENALTY RISKS, BONUSES, UPDATES COMPARED
REPEALED LAW - SGR ENACTED LAW - MACRA
YEAR MAX P4P PENALTIES
MAX P4P BONUSES UPDATE SEQUESTER MAX P4P
PENALTIESMAX P4P
BONUSES UPDATE
2014 -2% 0.015 0.005 -2% No change No change 0.5%
2015 -4.5% +4.69 VBM 2015 bonus -0.21 -2% No change No change 0.5% (on 7-15)
2016 -6% VBM -2% No change No change 0.5%
2017 -9% VBM -2% No change No change 0.5%
2018 -10% or more VBM -2% No change No change 0.5%
2019 -11% or more VBM -2% -4% 4% (x3?) + 10* 0.5%
2020 -11% or more VBM -2% -5% 5% (x3?) + 10* 0%
2021 -11% or more VBM -2% -7% 7% (x3?) + 10* 0%
2022 -11% or more VBM -2% (thru 2023) -9% 9% (x3?) + 10* 0%
Top bonus could triple if many physicians get penalties and extra $ are available to increase bonuses. Exceptional Performers could earn another 10% funded with $500m a year in new money.
MACRANOMICS > MIPS
18
FFS PENALTY RISKS, BONUSES, UPDATES COMPARED
REPEALED LAW - SGR ENACTED LAW - MACRA
YEAR MAX P4P PENALTIES
MAX P4P BONUSES UPDATE SEQUESTER MAX P4P
PENALTIESMAX P4P
BONUSES UPDATE
2014 -2% 0.015 0.005 -2% No change No change 0.5%
2015 -4.5% +4.69 VBM 2015 bonus -0.21 -2% No change No change 0.5% (on 7-15)
2016 -6% VBM -2% No change No change 0.5%
2017 -9% VBM -2% No change No change 0.5%
2018 -10% or more VBM -2% No change No change 0.5%
2019 -11% or more VBM -2% -4% 4% (x3?) + 10* 0.5%
2020 -11% or more VBM -2% -5% 5% (x3?) + 10* 0%
2021 -11% or more VBM -2% -7% 7% (x3?) + 10* 0%
2022 -11% or more VBM -2% (thru 2023) -9% 9% (x3?) + 10* 0%
Top bonus could triple if many physicians get penalties and extra $ are available to increase bonuses. Exceptional Performers could earn another 10% funded with $500m a year in new money.
BUDGET NEUTRAL
SCALING FACTOR POTENTIAL: 36% HIGHER FEE SCHEDULE PAY FOR A PERFECT MIPS
SCORE IN 2022
MACRANOMICS > MIPS
19
MACRANOMICS > APMs
APMsQualified and Non-Qualified Providers in The Context of MACRA
Providers determined to be Qualified Providers “QPs” will qualify for incentive payments.
5% lump sum payment based on the estimated aggregate payment amounts for Part B covered professional services for the preceding year.
EPs determined not to qualify (non QPs) are subject to the MIPS fee schedule
% of payments or patients through an eligible alternative payment entity that EPs must have to qualify each year
0%
25%
50%
75%
100%
2019 2020 2021 2022 2023+
Providers Must Meet Certain Thresholds to be QPs
20
APMsWhat Qualifies as an APM?
MACRA stipulates that the specified percent (which differs depending on the year) of an EP’s payments during the most recent period must be attributable to services furnished through an “eligible alternative payment entity” (EAPM Entity)
A CMMI model under section 1115A (other than a Health Care Innovation Award); CPC+, Next Gen
Medicare Shared Savings Program (MSSP) - Track II (minimum)
A demonstration under the Health Care Quality Demonstration Program
A demonstration required by Federal law
An EAPM entity is an entity that:
Participates in an APM and requires participants to use certified EHR technology and provides for payment for covered professional services based on quality measures comparable to the MIPS quality measures established
Either bears financial risk for monetary losses under the APM that are in excess of a nominal amount or is an expanded medical home.
MACRANOMICS > APMs
21
APMsWhat Qualifies as an APM?
Major APM Categories 2014 2015 2016 2017 2018
Accountable Care Organizations
Bundled Payments
Medicare Shared Savings Program ACO*
Pioneer ACO*
Comprehensive ESRD Care Model (Capitated payment)
Next Generation ACO (Movement to global payment)
Bundled Payment for Care Improvement*
Comprehensive Care for Joint Replacement
Oncology Care (PMPM care management payment)
Advanced Primary Care
Comprehensive Primary Care*
Multi-payer Advanced Primary Care Practice*
Other Models
Maryland All-Payer Hospital Payments*
ESRD Prospective Payment System*
(Possible expansion)
CPC+ (PMPM care mgmt pymt insurer alignment)
CMS will continue to test new models and will identify opportunities to expand existing modelsModel completion or expansion
MACRANOMICS > APMs
22
APMsTo Qualify for 5% Bonus Within The APM Track?
Nominal amount of risk for monetary losses:
Marginal Risk 30%
4% minimum loss rate
4% total risk rate
At least 50% of participants use CEHRT in Year 1 and 75% in Year 2
Base Payment based on quality measures with at least 1 outcome measure
Be a medical home comparable to 115A of ACA Medical Home
MA Plans putting clinicians at risk qualify in 2021
25%
50%
75%
2019-20
2021-22
2023 +
Medicare only
Medicare* and all-payer
Medicare* and all-payer
Total payments exclude payments made by the Secretaries of Defense/Veterans Affairs and Medicaid payments in states without medical home programs or Medicaid APMs.
Total payments exclude payments made by the Secretaries of Defense / Veterans Affairs and Medicaid payments in states without medical home programs or Medicaid APMs.
MACRANOMICS > APMs
23
DEFINING NORMAL RISKAn entity must bear “more than nominal risk” to qualify as an APM
An entity must bear “more than nominal risk” to qualify an as APM.
1. Marginal risk >= 30%: the percentage of the amount by which actual expenditures exceed expected expenditures for which an APM Entity would be liable under the APM. (how cost overruns split)
2. Minimum Loss Rate <4% of expected expenditures: MLR is a percentage by which actual expenditures may exceed expected expenditures without triggering financial risk. (what is a forgivable overrun)
3. Total Potential Risk >4% of expected expenditures: TPR refers to the maximum potential payment for which an APM Entity could be liable under the APM. (stop loss)
Example APM: MR=30%, MLR=3%, TPR=5%
An APM has expected expenditures of $1,000,000
If actual expenditures had been $1,100,000. $100,000 excess
-$100,000 exceeds the minimum loss rate of 3% or $30,000. Cost sharing is on the remaining $70,000
-$70,000 x 30% MR = $21,000 cost share /penalty.
-$21,000 is 2.1% of the $1,000,000 expected expenditures and below the $40,000 TPR in this arrangement If actual expenditures had been $1,200,000. $200,000 excess
-Cost share in excess of MLR = $170,000
-$170,000 x 30% MR = $51,000 exceeds the 4% TPR
-Actual losses to the APM are capped at $40,000
1. MARGINAL RISK >= 30%:The percentage of the amount by which actual expenditures exceed expected expenditures for which an AMP entity would be liable under the APM (how
cost overruns split).
2. MINIMUM LOSS RATE < 4% OF EXPECTED EXPENDITURES:MLR is a percentage by which actual expenditures may exceed expected expenditures without triggering financial risk (what is a forgivable return).
3. TOTAL POTENTIAL RISK > 4% OF EXPECTED EXPENDITURES:TPR refers to the maximum potential payment for which an APM Entity could be liable under the APM (stop loss).
Example:
MACRANOMICS > APMs
24
MACRANOMICS > MIPS or APMs
POTENTIAL IMPACTAnalysis of Potential Impact Favors Participation in Alternative Payment Models:
-20,000,000
-15,000,000
-10,000,000
-5,000,000
0
5,000,000
10,000,000
15,000,000
2019 2020 2021 2022+
Penalty
Likely hospital volume reduction
Incentive
-20,000,000
-15,000,000
-10,000,000
-5,000,000
0
5,000,000
10,000,000
15,000,000
2019 2020 2021 2022+
Bonus Shared Savings
Potential downside risk & volume reduction
Alternative Payment Model (e.g., ACO)
Merit-Based Incentive Payment System
MIPS
APMs
MACRA Financial Impact Example:
5 hospital system Employs 250 physicians
$1.5M revenue per physician 40% Medicare
-18,000,000
-13,500,000
-9,000,000
-4,500,000
0
4,500,000
9,000,000
13,500,000
18,000,000
2015 2016 2017 2018
Penalty
Incentive
Current Program Impact (MU, PQRS, VM)
25
?WHAT SHOULD WE DO?
26
MACRANOMICS > THE REALITIES
REALITY NO. 1The Playing Field is Uneven
REALITY NO. 2
REALITY NO. 3
You Have Less Time Than You Think
APM is The Goal. Can We Get There By 2018? 2019? 2020?
2019 Forecast:
Performance bonuses up to 4% to about 412,000 providers
Penalties of up to 4% to about 346,000 providers, mostly in practices that have between one and 24 providers
The finalized version of the proposal has been released, giving physicians/IDNs an option to report for 90 days without taking a hit in 2019. If we chose not to participate in 2
EMPLOYED PHYSICIANS AS LOSS LEADERS
MACRANOMICS > THE REALITIES
Net Loss Per FTE Physician MetricsAnalysis of net loss per FTE physician metrics for hospital/IDS owned physician practices, as reported by 2015 MGMA cost survey reveals:
Pediatrics Dermatology Family Med
Internal Med ENT
Endocrinology Anesthesiology
Infec;ous Disease Pulmonary Medicine
Neurology Gastroenterology
Psychiatry Urology OB/GYN
Surgery: General Orthopedic Surgery Surgery: Vascular
Cardiology Surgery: Oncology Surgery: Trauma
Hematology/Oncology Surgery: Neurological
Surgery: Cardiovascular Surgery: Pediatric
-‐$800,000 -‐$600,000 -‐$400,000 -‐$200,000 $0 $200,000
-$782,263-$749,212-$609,131-$512,208-$497,990-$421,303-$388,260-$369,128-$333,665-$276,750-$252,635-$244,799-$237,860-$219,878-$216,504-$199,243-$196,492-$192,155-$166,310-$136,812-$136,518-$110,529
-$2,747$207
27
Net income, excluding financial support
28
VALUE vs VOLUME: TUG OF WAR
MACRANOMICS > STRATEGY
“We’re a schizophrenic organization…On Monday, Tom (Priselac) called me to tell me what a great job we’ve been doing in managing the full risk business…on Tuesday, the COO calls me to tell me that we need to meet urgently, because the OR volumes for the managed care lives are way down!”
-Tom Gordon, CEO, Cedars Sinai Medical Group
HOSPITAL / FINANCIAL STRATEGY
POPULATION HEALTH
Provide episodic care Production (volume-based) Caring for the sick PCP’S: Low revenue generating unit Specialists: Indispensable commodity
Enterprise Care Management Performance (value-based) Keeping people well PCP’S: Indispensable commodity Specialists: Support population needs
29
NEW SOURCES OF COMPETITIONNew competitors may enter your market
MACRANOMICS > STRATEGY
30
ACCOUNTABLE CARE
MACRANOMICS > IT ALL BOILS DOWN TO CARE MANAGEMENT
How savings are generated
Care Management
Lower Cost Site
Throughput (volume)
50%
15-20%
15-20%
15-20%Standardization
Integrated delivery network
Population Management
Well Care
Chronic Disease Management
Effective Use of Appropriate Clinicians
Medical Home
Bundled Payment
Post-Acute
Outpatient
ER Use
Extended Hours
Higher Occupancy
Narrower Network
Generic Use
GPO
Standardization
Appropriate Economic Indicators
31
MACRANOMICS > DISCUSSION
KEY QUESTIONS
Who are you EPs and how are they structured?
How much of your revenue is at risk under MIPS?
Do you feel confident in your ability to be in the incentive range of MIPS?
Does your organization view MACRA as a physician alignment opportunity?
Do you know which APM strategies are available and will cover your employed physicians and what percent this would represent of your total Part B professional revenue?
How big is your network and is it the right composition (e.g. primary care v/s specialists)?
What is your organization’s APM strategy?
How much risk would you need to take on in an APM?
What risk is there that someone else will become an APM first and shift market share?
Will your state Medicaid efforts count as APMs?
Will private payers provide contracts that align?
Does your primary care physician base have the care management expertise to be successful in APMs? Will MIPS get them there?
Are you prepared for the potential IP volume reductions that can come on the heels of MACRA in the next five years?
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