On April 27, 2016, the Centers for Medicare and Medicaid Services (CMS) released the much-anticipated proposed rule, marking the first step in the implementation of physician payment reform under the Medicare Access and CHIP Reauthorization Act (MACRA). Enacted in April 2015, MACRA permanently repealed the Sustainable Growth Rate formula for determining Medicare payments for clinicians’ services, and established a new two-track system for physician payments based more on value and less on volume. The proposed rule, 962 pages in length, presents a longer path than initially expected toward alternative payments models (APMs), requiring a greater degree of risk associated with APM’s in order to receive incentive payments and less flexibility in meeting the necessary thresholds for eligibility. (Review CMS Fact Sheet of the proposed rule here).
Along with new policies, the proposed rule brings with it new terminology. For example, the “Quality Payment Program” is the term referring to both new tracks collectively, the Merit-based Incentive Payment System (MIPS) and the APMs.
Merit-based Incentive Payment System
Under the statute, MACRA provides an annual physician fee schedule (PFS) base update of 0.5 percent per year through 2019, and no update from 2020-2025. In addition, eligible clinicians will report under a single system which combines the current Physician Quality Reporting System (PQRS), Value Modifier (VM), and EHR Meaningful Use (MU) programs. The results from these reports will provide a positive, negative, or neutral adjustment based on performance in four performance categories: quality, resource use, clinical practice improvement activities and advancing care information.
- Quality: Based on the current PQRS measures in 2017, CMS proposes the weighting of this category to be 50 percent in 2019 and decrease over time. CMS has reduced the required number of measures to report to six in this proposal.
- Resource Use: CMS proposes the weighting of this category to be 10 percent for 2019 and increase over time. To measure costs, CMS will use administrative claims data. No separate reporting will be necessary.
- Clinical Practice Improvement Activities (CPIA): CMS proposes the weighting of this category to be 15 percent for 2019. Activities in this category must be performed for at least 90 days during a performance period. CMS proposes that Patient Centered Medical Homes (PCMHs) participating would receive the highest score in this category and other alternative payment models (that do not qualify for incentive payments) would receive an automatic 50 percent of the full score in this category.
- Advancing Care Information: Based on EHR MU, CMS proposes the weighting of this category to be 25 percent. This category will now include a base score for reporting, as well as a performance score. Clinicians will have the flexibility to choose which measures are relevant to their practice.
CMS proposes that quality measures applicable for the upcoming performance year will be published by November 1 of the prior year and that CMS intends to provide flexibility to eligible clinicians and groups to select the metrics that are meaningful to their practice. Participants will be scored in each category and given an aggregate Composite Performance Score (CPS) to be compared against a MIPS performance threshold in order to adjust payment. The proposed rule expects a large proportion of clinicians will come under this track in year one, and possibly longer, in contrast to the expectation of rapid uptake of APMs that was created at the time of enactment. For example, as a practical matter, CMS will not be able to review and approve many APMs in the near term, leaving more physicians to function under the default MIPS system.
- For 2017, the term “eligible clinician” includes physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists. CMS indicated its intent to add additional clinicians to the program in future years.
- The definition of eligible clinician excludes clinicians who are newly enrolled, those deemed “Qualifying Professionals” or “Partial Qualifying Professionals” under the new Advanced APM thresholds, or those individuals who fall under a low-volume threshold. The low-volume threshold is proposed as billing less than $10,000 in Medicare Part B charges or providing services to fewer than 100 Medicare Part B beneficiaries.
- CMS proposed a two-year lag between the performance and payment years in order to calculate rates. For the first year of MIPS payment, 2019, CMS proposes to use full-year data from 2017.
- CMS proposes the baseline period to establish the benchmark will be two years prior to the performance year. Thus, for the 2019 payment year, which relies on performance data from 2017, 2015 would be the baseline period.
- CMS proposes that any measures or categories that are not applicable to a clinician would not be counted towards the CPS. Alternatively, non-reporting would still provide a score of zero.
- CMS proposes opportunities for bonus points under the system for certain high-priority measures.
- CMS proposes an additional payment adjustment under MIPS for those in the top 25th percentile with exceptional performance as called for under the statute.
- CMS expects that in the first year, most eligible professionals would participate in the MIPS track and that the APM track would grow in future years.
Alternative Payment Models
Eligible clinicians participating in APMs have the opportunity to receive a 5 percent lump sum bonus payment from 2019-2024 if they meet Advanced APM criteria and certain threshold amounts. Not all APMs will meet the criteria of an Advanced APM. CMS will determine eligibility as a qualifying professional (QP) for all clinicians within an approved entity. QP status would be based on the collective evaluation of the group (i.e., the Advanced APM entity) meeting the criteria.
In the statute, Congress did not set specific risk thresholds more than “nominal” risk/loss. CMS proposes to define the amount of risk required to be eligible as total risk of at least 4 percent of the APM spending target, marginal risk of at least 30 percent, and minimum loss rate no greater than 4 percent. For many clinicians and entities, this risk is much greater than expected and would not include a number of models in which clinicians already participate. For example, CMS indicates that the only current models that would meet the criteria would be the Comprehensive ESRD Care (CEC) (LDO arrangement only), Comprehensive Primary Care Plus (CPC +), Medicare Shared Savings Program – Tracks 2 and 3 (MSSP), Next Generation ACO Model, and the Oncology Care Model (OCM) two-sided risk arrangement.
Advanced APM entities also must meet certain threshold amounts under the APM based on the percentage of payments received through the Advanced APM. CMS proposes to have a lower patient count threshold as well to provide flexibility for some models. Beginning in 2021, CMS will allow for the threshold to be met using an All-Payer Combination Option, including participation in APMs for Medicaid and Commercial Payers, including Medicare Advantage, in addition to their Medicare APM amounts. The thresholds increase each year to require greater commitment to the Advanced APM. At this point, it is likely that many already participating in APMs may not meet the proposed criteria. In this case, CMS expects these individuals to perform well in the MIPS program.
Physician Focused Payment Models (PFPM)
The law established a PFPM Technical Advisory Committee (PTAC) to review and recommend PFPMs to CMS for consideration to test. In the past year, many specialties have hoped that this body would provide an additional and more direct path towards participation in Advanced APMs and subsequent incentive payments. The proposed rule provides criteria for the PTAC to utilize and consider for models but also makes clear that CMS likely does not have the capacity to test all the models recommended by PTAC, is not required to approve these as Advanced APMs (and thereby qualify for payment incentives), and will require submissions for only “physician services”, though other provider types can be included. CMS also makes clear that in reviewing recommendations from the PTAC it will take into account whether a proposal adds to its existing portfolio of APM’s rather than duplicates or modifies existing models.
As a huge shift in the current system is set to begin with a performance year in 2017, clinicians face significant planning and changes before reporting begins on January 1, 2017. It is clear CMS used a great deal of stakeholder input to plan these programs. The proposal provides greater flexibility and options to achieve higher performance and subsequent payment, but also relies heavily on the MIPS program in the first few years. We expect a great number of public comments on the proposed rule, and anticipate many changes in the final rule to accommodate clinicians as they alter their practice patterns.
HLB will provide a more in-depth analysis of the proposed rule in the coming weeks. The comment period deadline for the proposed rule is June 27, 2016.
For additional information, please contact one of the following members of our Medicare Physician Payment Working Group: Marty Corry, Monica Massaro, William Eck or Kelly Carroll in Washington, D.C. at 202.580.7700; Robert Lundy, Charles Oppenheim, Hope Levy Biehl, Karl Schmitz or Jasmin Niku in Los Angeles at 310.551.8111; or Ben Durie in San Francisco at 415.875.8500.