MACRA Final Rules Are In: Here Is What You Need to Know

Many physicians are unaware of the Medicare Access and CHIP Reauthorization Act (MACRA), and the few who are aware of it are hoping it will go away. Guess what? It won’t. MACRA is the acronym for the law passed in 2015 that took effect in January 2017. The Merit-Based Incentive Payment System (MIPS) is part of MACRA.

On August 14, 2016, CMS released the final version of its Physician Quality Payment Program under MACRA and stated that it added flexibility such as its 90-day reporting program to overhaul how physicians are paid under Medicare while setting aside money to support small practices.

MACRA is the next generation of sweeping reform in healthcare legislation. This new rule will drive a mass transition to value-based reimbursement, whereby doctors and other providers will get paid based on the quality of their work and the steps that they have taken to improve their practices.

This legislation replaces the Sustainable Growth Rate formula (SGR). The new law takes existing physician quality reporting (pay for reporting) and meaningful use of electronic records and the value-based payment modifier (pay for performance) and rolls them into one giant program, MIPS. MIPS has one scoring system and reimburses you beginning in 2019 by gathering information starting in 2017. There is a huge improvement in the final rules, at least for 2017. CMS significantly lowered the bar to avoid a penalty in 2017. All you have to do is send in one quality measure for one patient one time in 2017 and you will not receive the 4% MIPS penalty in 2019. If you are experienced with other programs such as the Physician Quality Reporting System (PQRS) and Meaningful Use, you should be able to do quite well under MIPS.

A critical feature of the program will be implementing these changes at a pace and with options that clinicians choose. However, it is recognized that it will take time to understand the program. Physician groups will have to spend a tremendous amount of resources to educate providers, gather and analyze data, and report measures. The proposed MACRA rules are complex details and formulas. It will take a team of experts simply to explain the basics to most physicians and their staff. Physicians will be under financial pressure when making daily decisions about what is best for their patients. MACRA leaves all reporting in the hands of the provider, with the goal of improving cost by linking reimbursement to outcomes.

Who Can Participate in MACRA?

These policies are designed to get all eligible clinicians to participate in the program, so they are set up for successful care delivery as the program matures. Physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists who bill Medicare more than $30,000 a year or provide care for at least 100 Medicare patients qualify for MACRA. For providers new to Medicare in 2017, participation is not required next year. Hospitals and facilities do not qualify for MIPS.

Payment Tracks

The final rule includes two pathways for provider participation: MIPS and the Advanced Alternative Payment Models (APMs). The first pathway, MIPS, is designed for providers in traditional, fee-for-service Medicare. The second, Advanced APMs, is designed for providers who are participating in specific value-based care models.

Merit-Based Incentive Payment System

With MIPS, eligible clinicians will be measured and paid based on three primary metrics:

• Quality (formerly PQRS): 60%;

• Advancing Care Information (replaces Medicare Meaningful Use): 25%; and

• Improvement activities: 15%.

This is called the Composite Performance Score. Beginning in 2019, CMS will apply a positive, negative, or neutral payment adjustment, in a budget-neutral manner, to each MIPS-eligible clinician based on a Composite Performance Score across the performance categories listed above.

MIPS rolls together and sunsets three legacy CMS programs: Meaningful Use, PQRS, and the Value-Based Payment Modifier. Physicians will earn payment adjustments based on performance in four categories linked to quality and value that will be similar to the previous programs. Payment adjustments in the first year will be neutral, positive, or negative up to 4%. This will grow to 9% by 2022. Since CMS rolled out the proposed MACRA rule, it has settled on a gradual ramp up to full participation, allowing physicians to pick their pace from the following four options in 2017:

• No participation and an automatic 4% negative payment adjustment;

• Submission of a minimum amount of data (i.e., one quality measure) and a neutral payment adjustment;

• Submission of 90 days of data for a potential small positive payment adjustment or a neutral adjustment; or

• Submission of a full year of data for the potential to earn a moderate positive payment adjustment.

Although the truncated reporting period is something many providers had requested, CMS said those who report for the full year will be eligible for “exceptional performer” adjustments that would drive up their bonuses. Another option is 90-day reporting on some, but not all, measures. That means more than one quality measure, more than one improvement activity, or more than the required measures in the advancing care information performance category would be needed to avoid penalties or, possibly, receive a bonus. Lastly, clinicians can report in 90 days on just one measure to avoid paying any penalties. Failure to do that as a minimum would result in their Medicare payments being cut by 4%. If you have fully participated in MIPS, then you have to report only six quality measures selected from a list of 271 measures. (In 2017, eligible clinics must report on just one quality measure or perform one practice improvement activity to avoid a penalty in 2019.) But you may still find it difficult to track metrics across your Medicare population, and you must also report on the other categories of MIPS. Providers choosing MIPS will be paid higher or lower fees for each service provided based on their Composite Performance Score.

The final rule excludes from MIPS any physician or provider who bills less than $30,000 a year in Medicare patients. This threshold exempts approximately 384,000 providers, nearly half of whom work in practices of fewer than 10 physicians.

Alternative Payment Models

The second major track in MACRA is for physicians who participate in alternative payment models, such as Accountable Care Organizations (ACOs). That option ties their payments to savings generated in those models. If you also participate in APMs, you get special preferential scoring under MIPS. Some of these APMs carry no direct risk and can provide a boost in MIPS performance, but this track has a time limit of six years before you either have to move up to risk or move down to MIPS alone, depending on how you fared.

Advanced Alternative Payment Models

Advanced APMs represent a third path that involves even higher levels of reimbursement but assumes the highest risk. Participation in an Advanced APM allows physicians to earn a 5% percent lump sum incentive payment each year from 2019 through 2024 and avoid MIPS reporting requirements and payment adjustments. The final rule firms up details on what programs will qualify as Advanced APMs. First, to qualify, Advanced APMs must meet three requirements:

• Use certified EHR technology;

• Base payments on quality measures comparable to MIPS; and

• Require providers to bear more than nominal risk.

Beyond that, Advanced APMs must also be a model approved by CMS. The final rule identifies the following as Advanced APMs for 2017:

• Comprehensive ESRD [end-stage renal disease] Care Model (large dialysis organization [LDO] and non-LDO two-sided risk arrangements);

• Comprehensive Primary Care Plus Model;

• Medicare Shared Savings Program Tracks 2 and 3; and

• Next Generation ACO Model.

CMS has also signaled it plans to create additional pathways for participating in the Advanced APM track, including a new ACO Track 1+ model; the Comprehensive Care for Joint Replacement payment model; and the Medicare Diabetes Prevention Program. Providers choosing the APM path will participate in risk- based programs such as Medicare’s Shared Saving Program and receive a 5% bonus payment.

The intent of the MACRA bill is absolutely consistent with the administration’s goal of having 50% of traditional Medicare fee-for-service in APMs by 2018, but the Advanced APM for which you get a bonus under MACRA is only a subset of the administration’s definition.

How Will Small Practices Fare?

CMS made adjustments to the proposed rule to help small, independent practices participate. Those who fall below the requirements of at least $30,000 Medicare Part B charges or 100 Medicare patients are exempt from participating in 2017. CMS estimates this represents 32.5% of clinicians, but accounts for only 5% of Medicare spending. CMS also is offering an option for small practices and solo physicians to join together in virtual groups and submit combined MIPS data. The final rule also allots $20 million a year for five years for training and education of physicians in practices of 15 or fewer and those who work in underserved areas.

Getting Started

First know the terms and symbols:

• QPP: Quality Payment Program

• SGR: Sustainable Growth Rate (system used from 1996–
  2015)

• PQRS: Physician Quality Reporting System

• VM: Value Modifier or Valued-Based Modifier

• EP: eligible physician

• EHR: electronic health record

• ACO: Accountable Care Organization

• PCMH: Patient-Centered Medical Home

• APM: Alternative Payment Model

• PFPM: Physician Focused Payment Model

You should figure out your strategy now, as payments in 2019 are based on performance in 2017. Under the original proposal from the CMS, physicians would have to report on their performance for a full calendar year staring January 1, 2017. You will have to ask yourself the following questions to decide which strategy to take:

• Who are your eligible?

• How do you optimize MIPS reporting and performance?

• Should I participate in an APM, and do I want to do a MIPS APM or an Advanced APM?

• If you take on an Advanced APM model, how do you ensure success and maximize gains?

• How are you communicating your strategy to your organization, the clinicians you work with, and your community partners?

If your organization is to successfully navigate MACRA and flourish, then everyone needs to be on the same page.

Practices should immediately consult with their EHR vendors to find out when their products will be ready for MIPS. CMS will allow practices to use current certified EHRs until 2018. Then they must switch over to EHRs that meet the different certification standards. Starting in 2018, all physicians in the Quality Payment Program have to use an EHR system that has been certified to meet the standards originally designed or Stage 3 of the Meaningful Use Program. In 2017, physicians can continue to use their current EHR system if it has been certified under the previous standards. IT vendors expect the transition to be rocky, because very few vendors have been recertified. If you are stuck with an EHR system that has not been upgraded, then you have very little option but to upgrade. You will have to replace it with one that has been certified. The current EHR systems were not programmed to work with the MIPS quality measures. This is another large expense that many physicians cannot afford at this time. Practices might want to wait until receiving their upgrade before starting this process. While waiting for the EHR updates, you should evaluate your system to see how it can be used to support MIPS. If you decide that your current system will not support the capabilities that you will need for MIPS moving forward, then it is time to switch to a new EHR system.

Quality Performance Measures

To improve performance on quality measures, physicians need both historical data on their patient population and near real-time data on the services that they are providing to their patients. Much of their data will come from the EHRs. They will need benchmarking data to see how they will stack up to their peers in MIPS. Practices that have submitted data to the PQRS can access Quality and Resources Use Reports (QRUR) on the CMS’ Web portal. QRUR can help physicians see where they stand on quality measures compared with their colleagues.

Key Challenges

CMS did not reduce the lag time between reporting and incentive years, as many physicians had hoped. Most consultants believe that the rule misses the mark completely in this area.

The time lapse between the performance year and when physicians will receive feedback (August 2018) on care that they delivered as early as January 2017 means this information is not actionable for quality improvement purposes. If CMS wants this to be a quality program with a focus on education, they should provide real-time data that practices can use in time to respond and change. Another issue is that paying penalties is still a new experience for physicians in the current program. The first penalties were introduced only last year. Understandably, physicians are upset about this.

Summary of Significant Points

The Final Rules are set. I stress the importance of acting now and seeking help or funding for necessary upgrades.

These rules are very complex. It will be hard for smaller groups to grapple with the complexity, but that does not mean they have to seek other employment or aggregate up. They can form virtual groups or look to organizations that can help them understand what the changes are and then focus on quality reporting and improvement, at a minimum.

• Effective January 1, 2019, with a performance period scheduled to begin January 1, 2017, PQRS, Meaningful Use, and Value-Based Modifiers will be incorporated into and replaced by MIPS for physicians operating on the fee-for-service model.

• You may receive a bonus, penalty, or neither, depending on your Composite Performance Score, which will be determined by “quality”; “advancing care information,” which focuses on the electronic transmission of health information; and “improvement activities."

• In 2019, you may receive a bonus or penalty up to 4%, depending on how your composite performance score compares to other providers. This bonus/penalty amount will increase every year until it reaches 9% in 2022.

• Those with the highest scores will receive an additional bonus for “exceptional performance,” which can be up to 10% of their Medicare payments during each of the first six years of the program.

• Physicians in their first year of practice, providers receiving no more than $10,000 and seeing no more than 100 Medicare beneficiaries, as well as those in qualified Advanced APMs will not be subject to MIPS.

These rules finalize MACRA’s Quality Payment Program, which aims to reduce the administrative burden on physicians so they can focus on care improvement, promote adoption of value-based care, and smooth the transition to these new models of care. Time will tell . . .

Along with the release of the final rule, CMS rolled out a website for physicians that explains the program and helps identify what measures are most meaningful to their practice or specialty (www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/MACRA-
MIPS-and-APMs.html ). The agency also plans to answer questions about the Quality Payment Program by e-mail and phone with a service center.

Finally, I recently attended a healthcare seminar given by the law firm of Epstein, Becker and Green titled “The Future of Physician Groups.” This seminar discussed the latest physician consolidation trends in light of MACRA: “Bundles and Other Industry Changes—Winners and Losers.” This law firm has regular seminars and webinars that are excellent, and I highly recommend attending them; Jeffrey Becker is the contact there.

Also, review Medscape.com and search for “MIPS and Your Earning Power” for a complete list of references.