macra proposed rule: issues & opportunities

MACRA Proposed Rule: Issues & Opportunities

June 1, 2016

Polsinelli Reimbursement Institute

Sidney Welch [email protected]

Bruce A. Johnson [email protected]

Cybil G. Roehrenbeck [email protected]

Agenda

MACRA background and policy objectives

Proposed Merit-Based Incentive Payment System (MIPS)

Proposed Alternative Payment Model (APM) proposals

Implications, issues, concerns and opportunities

Q&A

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Physician Payment

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Based on a complicated formula: – Facility or Non-Facility Pricing Amount =

[(Work RVU * Work GPCI) + (Transitioned Facility or Non-Facility PE RVU * PE GPCI) + (MP RVU * MP GPCI)] * Conversion Factor (CF)

Initial conversion factor was created in 1992 and adjusted annually based on three factors: – The Medicare Economic Index (MEI)

– RVU budget neutrality

– Medicare expenditures for physician services as compared to a sustainable growth rate

Sustainable Growth Rate

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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 has passed legislation to temporarily defer these physician pay cuts

Too many payment patches

5

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

6 Source: Centers for Medicare & Medicaid Services (CMS)

CMS View of the Future

CMS Payment Model Framework

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 ACOs and others

7 CMS’ Better Care, Smarter Spending Healthier People (Jan. 2015)

MACRA

8

On April 14, 2015, the U.S. Senate passed the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”), and on April 16, 2015, the bill became law.

Proposed Rule Under MACRA

Notice of Proposed Rule Making (NPRM) published in the Federal Register on May 9, 2016 (pre-publication version posted on April 27, 2016).

Comments on the NPRM are due June 27, 2016.

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MACRA’s Major Changes

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Repealed the SGR and annual scheduled cuts

Established a path for physician participation in alternative payment models (“APMs”)

Consolidated penalty programs (MU, PQRS, VBM)

MACRA, MIPS, APMs – Oh My!

Medicare Access & CHIP Reauthorization Act of 2015 (MACRA)

Ends SGR Facilitates MIPS & APMs

Merit-Based Incentive Program Systems (MIPS) PQRS VBPM EHR Incentive Program

Alternative Payment Models (APMs) Accountable Care Organizations Patient Centered Medical Homes Bundled Payments Medicare Shared Savings Program

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MACRA Options

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Participate in FFS via the Merit-based Incentive Program (MIPs) – Subject to reductions or increases in Medicare reimbursement

based on quality performance scores – Reduced penalty risk – Statutory updates – Consolidated reporting

Participate in Advanced Alternative Payment Models (APMs) – Potential to earn five percent annual bonus – Subject to financial risk – Higher updates – Exempt from MIPs – Preferred treatment for medical homes – Specialty models encouraged

How will MACRA affect me?

13 Source: Centers for Medicare & Medicaid Services

New MACRA Goals

14 Source: Centers for Medicare & Medicaid Services

2019 2020 2021 2022 + beyond

Merit-Based Incentive Payment System (MIPS)

Adjusts Medicare FFS reimbursement based on performance score linked to: • Quality • Resource use • Clinical practice improvement • Advancing Clinical

Improvement (formerly EHR meaningful use)

+-4%* +-5%* +-7%* +-9%* * Possible 3x upward adjustment BUT unlikely

Alternative Payment Models (APM)

New payment approaches that incentivize quality and value, such as: • CMMI Innovation models • MSSP ACOs • Demonstration programs

Most advanced AMPs (those that bear risk): • Not subject to MIPS • 5% lump sum bonus payments

(2019-2024) • Higher fee schedule update 2026

and beyond

Basic MACRA Framework

Source: Medicare Access and CHIP Reauthorization Act of 2015, Path to Value (CMS) 15


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1

MIPS Generally

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The Merit-Based Incentive Payment System (MIPS) streamlines several existing Medicare penalty programs, creating a single system with consolidated reporting and timelines.

MIPS eligible clinicians are: Physicians, Physician Assistants, Nurse Practitioners, Clinical Nurse

Specialists, Certified Registered Nurse Anesthetists, and groups that include such professionals

After MIPS’ third year, the Secretary has discretion to add more providers to the list (e.g. physical or occupational therapists, clinical social workers, etc.)

MIPS Excluded Providers

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Some providers are excluded from MIPS: Qualifying APM participants Partial qualifying APM participants who report data under MIPS Low-volume threshold clinicians (billing ≥ $10,000 & 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 25 or fewer patient-facing encounters during a performance period.

MIPS Timeline

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Fall 2016

MIPS final regulations published

Jan. 1 2017

Beginning of Year 1

performance period

July 1 2017

Feedback report

Dec. 31 2017

End of Year 1

performance period

Jan. 1 2018

Beginning of Year 2

performance period

July 1 2018

Feedback report

Dec. 31 2018

End of Year 2 performance

period

Jan. 1 2019

Year 1 payment

adjustment

MIPS Methodology

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CMS will assign a composite performance score (CPS)

based on performance over a year in:

– Quality (replaces PQRS and some parts of VM)

– Resource Use (replaces cost portion of VM)

– Clinical Practice Improvement Activities (new!)

– Advancing Care Information (formerly EHR meaningful use)

CMS will also apply an “adjustment factor” to MIPS-eligible clinicians scores to determine total performance

MIPS Performance Category Weights

Quality 50% ACI

25%

CPIA 15%

Resource Use 10%

PY2017

Quality 45%

ACI 25%

CPIA 15%

Resource Use 15%

PY2018

Quality 30%

ACI 25% CPIA

15%

Resource Use 30%

PY2019

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MIPS Payment Adjustments

CY Max % Gain Max % Loss

2017 - -

2018 - -

2019 +4% -4%

2020 +5% -5%

2021 +7% -7%

2022 & beyond +9% -9%

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MIPS Data Submission Mechanisms

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Quality Performance Category

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.

– MIPS-eligible clinicians will be required to report on one cross-cutting measure and one outcome measure, but if not available, another “high priority” measure.

– Acknowledges issues for sub-specialties.

– Provides bonuses for reporting through QCDRs.

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MIPS Quality Performance Category

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MIPS Resource Use Performance Category

CMS proposes to use episode-based measures in this category, many of which are specialty specific, building off of CMS’ sQRUR reports.

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MIPS Clinical Practice Improvement Activities (CPIA)

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.

Clinicians must perform CPIAs for at least 90 days of the reporting period. 27

CPIAs in the Proposed Rule

CMS proposed more than 90 CPIAs, such as:

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Advancing Care Information (ACI) fka Meaningful Use

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

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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

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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

31 Source: Proposed Sec. 414.1375(b)

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

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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

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ACI Scoring

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Alternative Payment Models (APMs)

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2

Advanced Payment Model Alternative to MIPS

Eligible Clinicians who participate in certain Alternative Payment Models are exempt from MIPS

Medicare (only) Option

(2019 and beyond)

Other Payer Combination Option (2021 and beyond)

APMs FFS Reimbursement Implications

(2019-2024) • Not subject to MIPS • +5% Lump Sum Incentive

Payment for Part B Prof. Svs. during Base Period

(2026 and beyond) • Not subject to MIPS • Higher Medicare Fee

Schedule updates

Participation in Advanced APM entity sufficient (regardless of whether APM achieves performance goals)

Incentive Payments for Participation in Advanced APMs

Entities that participate in Alternative Payment Models (APMs) are eligible to qualify as an “Advanced APM” where, during the applicable Performance Period, the entity: 1. Require uses Certified EHR technology

2. Provides for payment for covered professional services based on quality measures comparable to measures under the MIPS performance category

3. Bears financial risk under the APM that is in excess of a nominal amount, or involves a medical home model

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Eligible APM Entities

Many existing entities participating in CMS initiatives may qualify as an Advanced APM based on proposed financial risk criterion including: – MSSP ACOs in Tracks 2 & 3 (track 1 ACOs would not because

track 1 does not entail any financial risk)

– NextGen ACOs

– Comprehensive Primary Care Plus Program

– Other programs sponsored by CMMI

– Full capitation arrangements

– Not Medicare Advantage organizations (except under Other Payer Combination Option

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Financial and Nominal Risk Standards

Financial Risk Requirements Nominal Risk Requirements

Total Risk (total potential liability)

Marginal Risk (maximum % in

excess of expenditure

target)

Minimum Loss Rate (maximum loss rate without

triggering repayment)

General Standard

AMP payer (e.g., CMS) must be able to: • Withhold payment to

AMP Entity or ECs • Reduce payments to AMP

entity or ECs • Require AMP Entity to

repay

• 4% or more of Expected Expenditures

• Must be at least 30% of Expected Expenditures

• No more than 4% of Expected Expenditures

Medical Home Model (less than 50 ECs assigned to TIN or subsidiaries)

All above plus: • Cause APM Entity to lose

right to all or part of guaranteed payments

• 2017, 2.5% of APM Entity Medicare Part A & B Revenue • 2018, 3% • 2019, 4% • 2010 and later, 5%

Advance APM Illustration

APM Requirements

– Total Risk must exceed 4% (15% in MSSP Track 3)

– Marginal Risk per APM must be 30% (40% minimum in MSSP Track 3)

– Minimum Loss Rate must be no more than 4% (maximum 3.9% in MSSP Track 3)

MSSP Track 3

Symmetrical Saving/Loss Options

Minimum Savings Rate 0% 0.5% 1.0% 1.5% 2.0% Symmetrical linked to # of Attributed Beneficiaries Minimum Loss Rate 0% -0.5% -1.0% -1.5% -2.0%

Shared Savings Maximum 75% of Shared Savings

Loss Rate Minimum and Maximum -40% to -75% of Shared Losses

Maximum Savings (% of Expenditure Benchmark) +20%

Loss Recoupment Limit (Stop loss) (% of Expenditure Benchmark) -15%

Becoming a QP or Partial QP

Percentage of Eligible Clinician patients and/or payments through an APM Entity

Example (patient count method): – # of APM Entity attributed beneficiaries receiving Part B professional services

during QP Performance Period/ Attribution-eligible beneficiaries receiving Part B professional services during QP Performance Period

10,000 Attributed Beneficiaries (under applicable attribution rules) = 25.64% 39,000 Attribution-Eligible Beneficiaries (receive 1 E&M Service)

Medicare Only Option

Threshold 2019-2020 2021-2022 2023 & Later

QP Payment 25% 50% 75%

Patient 20% 35% 50%

Partial QP Payment 20% 40% 50%

Patient 10% 25% 35%

Other Payer Advanced APMs

All-Payer Combination

Option

Threshold 2021-2022

2023 & Later

Additional Medicare Option Requirements

QP Payment 50% 75% Plus 25% payment threshold

Patient 35% 50% Plus 20% payment threshold

Partial QP Payment 40% 50% Plus 20% patient count threshold

Patient 25% 35% Plus 10% patient count threshold

Medicare Only Option counted first. If met, then no consideration of other payers and All-Payer Combination Option

Timeline for APMs & Qualified Participants

2017 2018 2019 2021 2026

Performance Period -- Whether Advanced APM and QP

Performance Period for 2019

Performance Period for 2020

Performance period for 2021 etc.

Other Payer Combination Option available to qualify as APM and QP

QPs eligible for higher fee-schedule updates

Base Period -- Determines incentive payment amount through EP TINs

None

Base Period for 2019 incentive payments

Base Period for 2021 5% Part B incentive payments etc.

Implications – The Good, Bad and Ugly

APM strategic choices – Select model from available options

Complexity – MIPS replaces existing programs with new – APMs build on other program infrastructure (e.g.,

MSSP, NextGen, CPC+)

Still fee for service – Financial incentives with potential to increase spending

“All in” considerations – Group reporting and evaluation requirements


Choices – Private (physician-owned) practices

• APM participation strategies

• Model selection – single or multispecialty (e.g., physician focused payment model possibilities)

– Hospital-affiliated practices • Timing of Advanced AMP engagement

• Model selection (primary care vs. multispecialty models)

– Other (e.g., investor-owned) practices • Concurrent attention to FFS and risk


Challenges – Migrating from shared savings to at risk – Risk thresholds

• Expenditure benchmarks • Medical Homes -- Part A and B revenues

– Risk funding mechanisms • Withholds • Repayment arrangements • APM entities or Eligible Clinicians

– Defining what parties bear risk, relative amount and mechanics

– Operational details of APM and downstream relationships – APM-specific requirements and other programs (e.g., MSSP

single-purpose entity requirements)

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%


• 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) 47

5% Incentive Payment

FFS UD

Implications: For Physicians

For many physicians, some of whom have been waiting for the ACA to be repealed, MACRA and its proposed rule herald a significant change conceptually – volume to value – which will require a significant change in behavior and operations

Disconnect or transitional assistance that payment model is still fee for service in MIPS?

Death knell” for solo or small providers? 70% of the penalties will be assessed to provider groups of less than 10.

Will we see increase in acquisitions/collaborations?

Comments/changes to lessen this financial impact?

Start running the numbers now. Don’t wait for the Feedback Report. Remember data gets reported to Compare and need to know accuracy and impact.

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Implications: MIPS

If specialty physician doesn’t have outcome or high priority measure, they will 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?

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Implications: APMs

Physician participation in more than one APM Track 1 ACOs withdrawal from program; migration to risk “Other Entities” in ACOs do not count for attribution, so

will impact ability to use APM For ACOs, physicians will receive the APM incentive

payment, not the ACO Does the MIPS “exceptional performance” exceed the

APM bonus? Won’t know if APM qualifies as an Advanced APM until

after MIPS reporting is due “Nominal risk” to be defined “over time” with associated

operational issues Physician ability to control risk in APMs

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Implications: TBD

Revisions to payor contracts

Could the changes in models result in revisions in malpractice policies, premium shifts?

Need to customize HIT to fit needs under new models, let alone interoperability

Alignment of hospitals meaningful use to physicians’

MD compensation under employment and professional services agreement will require revision

How to address resource utilization in hospital-owned physician practices

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Questions?

Sidney Welch Shareholder | Polsinelli PC

Atlanta, GA 404.253.6047

[email protected]

Bruce A. Johnson Shareholder | Polsinelli PC

Denver, CO 303.583.8203

[email protected]

Cybil G. Roehrenbeck Counsel | Polsinelli PC

Washington, DC 202.777.8931

[email protected]

Reimbursement Institute | http://www.polsinelliri.com

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