CMS PROPOSES KEY PROVISIONS OF MACRA PHYSICIAN PAYMENT SYSTEM FOR 2019

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1 Thursday, April 28, 2016 CMS PROPOSES KEY PROVISIONS OF MACRA PHYSICIAN PAYMENT SYSTEM FOR 2019 The Centers for Medicare & Medicaid Services (CMS) late yesterday issued a proposed rule implementing key provisions of the new physician payment system required by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The law repeals the flawed Medicare sustainable growth rate methodology for updates to the physician fee schedule and requires CMS to establish new physician quality and value-based payment programs that start in calendar year (CY) Eligible clinicians will participate in one of two tracks the default Merit-based Incentive Payment System (MIPS) or alternative payment models (APMs). The rule proposes most of the key policies for the 2019 MIPS and APM tracks. The rule also proposes policies related to blocking of health information and electronic health record (EHR) surveillance that apply to all hospitals, critical access hospitals (CAHs) and physicians. Select highlights of the proposed rule follow. MERIT-BASED INCENTIVE PAYMENT SYSTEM (MIPS) The MACRA sunsets three existing physician quality performance programs the physician quality reporting system (PQRS), Medicare EHR incentive programs for eligible professionals, and the value-based payment modifier (VM) and consolidates aspects of those programs into the MIPS. Starting in 2019, the MIPS will be the default payment system for eligible clinicians. The MIPS must assess eligible clinicians on four performance categories quality measures, cost measures, clinical practice improvement activities (CPIAs) and meaningful use of EHRs. Based on their MIPS performance, eligible clinicians will receive positive or negative payment adjustments of 4 percent in CY 2019, rising gradually to a maximum of 9 percent in CY 2022 and beyond. Eligible Clinicians and Group Reporting. As required by the MACRA, CMS proposes to apply the CY 2019 MIPS to physicians, physician assistants, nurse practitioners, clinical nurse specialists and certified registered nurse anesthetists. In addition, CMS proposes to exempt several categories of clinicians from the MIPS, including qualifying APM participants, partially qualifying APM participants, clinicians in their first year of accepting Medicare patients, and clinicians who fall below a low-volume threshold during the performance period.

2 Similar to the PQRS and VM programs, CMS proposes to allow eligible clinicians to participate in MIPS as individuals or as group practices. A group practice would be identified as a group of two or more clinicians who have reassigned their billing rights to a single tax identification number (TIN). Performance Period and Data Reporting Mechanisms. CMS proposes to use CY 2017 as the performance period for CY 2019 payment adjustments under the MIPS. This performance period applies to all measures and activities for each category under the MIPS. CMS further proposes that most CY 2017 performance data be submitted to the agency by March 31, CMS states this timeframe is necessary to allow for a sufficient amount of performance data, and to allow enough time to calculate performance and apply adjustments for CY CMS also proposes that clinicians and groups would have multiple options for submitting data, including registries, EHR reporting, Medicare claims-based reporting and attestation. However, CMS proposes that clinicians and groups choose only one submission mechanism for each MIPS performance category. Performance Categories. CMS proposes the measures, activities and data submission standards for each of the four MIPS categories. In addition, CMS proposes the weight it would assign to each category in determining a Composite Performance Score (CPS). The CPS would be used in determining payment adjustments. CMS s proposals, and the proposed weight for each category for CY 2019, are briefly summarized below: Quality (50 percent of CPS). CMS proposes that eligible clinicians and groups report at least six measures. Among the six measures, CMS would require the reporting of at least one cross-cutting quality measure and one outcome measure. The proposed rule includes a list of available measures. In addition, CMS proposes that, for group practices of 10 or more clinicians, it would calculate up to three additional claims-based measures reflecting avoidable hospital admissions and readmissions, and include them in the quality score. Cost (10 percent of CPS). CMS proposes to calculate two overall cost measures currently used in the VM program total cost per capita, and Medicare spending per beneficiary. In addition, CMS proposes to calculate several clinical condition and treatment episode cost measures. Clinical Practice Improvement Activities (15 percent of CPS). The MACRA requires that CMS establish a MIPS performance category that rewards participation in activities that improve clinical practice, such as care coordination, beneficiary engagement and patient safety. CMS proposes a list of over 90 activities from which clinicians can select to fulfill this category. Each activity is assigned a weight towards the overall score. CMS proposes, as required by the MACRA, that physicians participating in certified patient-centered medical homes would automatically receive the highest score. However, for other CPIAs, physicians generally would need to participate in more than one activity to receive the highest score American Hospital Association 2

3 Advancing Care Information (25 percent of CPS). CMS proposes to designate the historical meaningful use performance category as the advancing care information performance category. CMS indicates that this would restructure requirements toward a holistic approach to health IT. Within this category, CMS proposes to shift from the meaningful use all or nothing scoring approach to a scoring methodology that recognizes multiple paths to achievement. CMS proposes to emphasize performance in three of the six objectives included in the current meaningful use Stage 3: Patient Electronic Access, Coordination of Care and Health Information Exchange. CMS also proposes to eliminate the separate requirements for clinical quality measure reporting within the advancing care information performance category. Instead, the agency would require the submission of quality data for measures specified for the quality performance category, and would encourage submitting quality measure data using certified EHR technology MIPS Payment Adjustments. As required by the MACRA, CMS proposes to cap the adjustment at +/- 4 percent for CY Eligible clinicians and groups with CPS above a designated performance threshold would receive positive adjustments, while those below would receive negative adjustments. As the MIPS is required to be budget neutral, CMS proposes to apply a sliding scale to ensure the agency does not pay out more in incentives than it recoups in penalties. CMS estimates the MIPS will result in over $1.6 billion in incentives and penalties in CY The MACRA also mandates that CMS pay out up to $500 million in exceptional performance bonuses to high performers on the MIPS. This payment adjustment is above and beyond the budget-neutral adjustment described above. CMS proposes to apply an additional adjustment factor of up to 10 percent to clinicians and groups whose CPSs are above a CMS-designated exceptional performance threshold score. INCENTIVES FOR PARTICIPANTS IN ALTERNATIVE PAYMENT MODELS (APMS) The MACRA provides incentives for physicians who participate in advanced APMs. These include a bonus payment of 5 percent of payments for professional services in 2019 through 2024; exemption from MIPS reporting requirements and potential payment cuts; and higher base payment updates beginning in In this rule, CMS proposes the criteria by which physicians and other professionals would qualify for these incentives. Identification of Medicare Advanced APMs. The MACRA specifies that only models that meet certain requirements qualify as advanced APMs for purposes of the incentives. Specifically, the law mandates that the model require participants to use certified EHR technology and to tie payment for covered professional services on quality measures comparable to those in the MIPS quality performance category. In addition, the model must require that entities participating in the APM (known as APM entities) bear risk for monetary losses of more than a nominal amount, or be a medical home model expanded under Center for Medicare and Medicaid Innovation authority American Hospital Association 3

4 Use of Certified EHR Technology. CMS proposes that participants in the APM models use technology that meets the current definitions of certified EHR technology. In addition, the agency proposes that an advanced APM must require at least 50 percent of eligible clinicians who are enrolled in Medicare (or each hospital, if the hospital is the APM participant) to use the certified health IT functions to document and communicate clinical care with patients and other health care professionals. Quality Measurement. Recognizing that different measures may be appropriate for different payment models, CMS proposes a flexible approach by which the quality measures on which an advanced APM bases payment must include at least one of the following types of measures, provided the measures have an evidence-based focus and are reliable and valid: Any of the quality measures included on the proposed annual list of MIPS quality measures; Quality measures that are endorsed by a consensus-based entity; Quality measures developed under CMS s authority to develop new measures; Quality measures submitted in response to the MIPS call for quality measures; and Any other measures that CMS determines to have an evidence-based focus and be reliable and valid. Financial Risk for Monetary Loss. CMS proposes two standards for financial risk for monetary loss one that applies generally to entities participating in advanced APMs, and another that applies to medical home models. The generally applicable financial risk standard proposed by CMS would require that an APM entity incur some of the financial loss when actual expenditures exceed projected expenditures. The loss can occur through withheld payments for services, reduced payment rates, or required repayment to CMS. For medical home models, CMS proposes that the model include provisions that potentially withhold payment for services; reduce payment rates; require repayment to CMS; or eliminate the right to all or part of an otherwise guaranteed payment(s) if either actual expenditures for which the entity is responsible exceed expected expenditures, or the entity s performance on specified performance measures does not meet or exceed expected performance. Beginning in 2018, CMS proposes to limit the medical home model financial risk standard to APM entities owned and operated by organizations with 50 or fewer clinicians. Finally, CMS proposes that full capitation risk arrangements would meet the financial risk criterion. However, the agency notes that Medicare Advantage is not a Medicare advanced APM. Nominal Amount of Monetary Loss. CMS proposes three parameters for the amount of risk an entity must accept: a maximum allowable minimum loss rate (MLR), or the percentage by which actual expenditures can exceed projected expenditures without triggering financial loss; marginal risk, or the percentage of loss an entity must accept if 2016 American Hospital Association 4

5 actual expenditures exceed projected expenditures; and total potential risk, or the maximum potential payment for which an entity could be liable. Specifically, CMS proposes a maximum MLR of 4 percent; marginal risk of 30 percent of any losses; and total potential risk of at least 4 percent of expected expenditures. For medical home models, CMS proposes that the total amount that an APM entity potentially forgoes or owes CMS must be at least the following percent of the entity s total Medicare Parts A and B revenue: percent percent percent 2020 and beyond 5 percent Application of Criteria to Current APMs. Applying the proposed criteria to current APMs, CMS notes that the only models that would qualify as advanced APMs are Medicare Shared Savings Program Tracks 2 and 3, the Next Generation ACO model, the Comprehensive End-stage Renal Disease Care model, and the two-sided risk model in the Oncology Care program. The newly announced, but not yet implemented, Comprehensive Primary Care Plus initiative would qualify as a medical home. Determining Qualifying APM Participants. To qualify for the APM incentive as a qualifying professional (QP), physicians must meet certain thresholds for APM participation. The statute gives CMS authority to use either patient count or payment amounts when determining whether a physician meets the threshold. CMS proposes to consider both measures and to apply the one that allows a physician to qualify. Further, when multiple physicians participate in an APM entity, CMS will consider whether the group collectively meets the threshold, and if so, will award QP status to all physicians in the group. CMS proposes to use a performance period aligned with the MIPS performance period, and thus will assess APM participation in 2017 for the 2019 APM bonus payment. All-payer APMs. Beginning in 2021, the statute instructs CMS to consider physician participation in APM arrangements across payers, including Medicare Advantage, Medicaid and private payers. CMS proposes criteria for these other payer APMs that are similar to those proposed for Medicare APMs. Physician-focused Payment Models. The MACRA establishes a process for the proposal of physician-focused payment models (PFPMs) to a technical advisory committee, which will make recommendations to CMS on the approval of proposed models. CMS proposes to define PFPMs as Medicare payment models that include physician group practices or individual physicians as APM entities and that target the quality and costs of physician services. The agency also proposes criteria that proposed PFPM must meet to be considered for approval American Hospital Association 5

6 INFORMATION BLOCKING AND EHR SURVEILLANCE Information Blocking. The proposed rule implements a provision of MACRA that requires all hospitals, CAHs and physicians that participate in the meaningful use program to attest that they did not knowingly and willfully take action to limit or restrict the compatibility or interoperability of their certified EHR. However, the agency goes beyond the MACRA provision to also require two additional attestations. The second attestation includes highly specific criteria concerning how the technology is implemented to conform with standards, allow patient access to information, and support secure and trusted bi-directional exchange of structured health information with other health care providers, including unaffiliated providers, and with disparate certified EHR technology and vendors. The third attestation states that the hospital, CAH, or physician responded in good faith and in a timely manner to requests to retrieve or exchange electronic health information, including from patients, healthcare providers, and other persons, regardless of the requestor s affiliation or technology vendor. CMS also proposes to require these attestation of clinicians participating in the MIPS and APMs. While the AHA strongly supports the goals of information sharing to improve care, engage patients, and support new models of care, we are concerned that the current technology and infrastructure do not support the level of exchange contemplated by these attestation statements. EHR Surveillance. The Office of the National Coordinator for Health Information Technology (ONC) has recently proposed mechanisms for private and public sector entities to provide surveillance of certified EHR technology as it is implemented in the field. CMS proposes to require hospitals, CAHs, and physicians that participate in the Medicare and Medicaid EHR incentive programs or the MIPS program to demonstrate that they are cooperating with the EHR surveillance and oversight activities. NEXT STEPS Comments on the proposed rule will be accepted through June 27. The final rule will be issued no later than Nov. 1. Watch for a more detailed AHA analysis of the proposed rule in the coming weeks. Additional resources on the new physician payment system can be found at If you have further questions, contact Akin Demehin, senior associate director of policy, at (202) or ademehin@aha.org, or Melissa Jackson, senior associate director of policy, at (202) or mjackson@aha.org American Hospital Association 6