MACRA: New Medicare Reimbursement Models Sharp HealthCare

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1 MACRA: New Medicare Reimbursement Models Sharp HealthCare August 15, 2016 Nathan M. Bays, Esq. General Counsel, The Health Management Academy Executive Director, Advisors Caitlin Greenbaum, MPH Director, Health Policy & Strategy The Health Management Academy August 2016

2 Disclosure Our financial relationships are with the Health Management Academy as our employer. The information and opinions in this report were prepared by The Health Management Academy or one of its affiliates (collectively "Health Management Academy"). The information herein is believed to be reliable and has been obtained from public sources believed to be reliable. Health Management Academy makes no representation as to the accuracy or completeness of such information. Health Management Academy may engage in activities, on a proprietary basis or otherwise, in a manner inconsistent with the view taken in this research presentation. In addition, others within Health Management Academy, including strategists and staff, may take a view that is inconsistent with that taken in this research presentation. Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinions of Health Management Academy and are subject to change without notice. Health Management Academy has no obligation to update, modify or amend this report or to otherwise notify a recipient thereof in the event that any opinion, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. This report is provided for informational purposes only. Nathan Bays Health Management Academy/ Advisors August 2016 Any reproduction by any person for any purpose without Health Management Academy s written consent is prohibited. Copyright 2016 The Health Management Academy 2

3 Overview & Objectives: CMS Payment Reform Macro Issues - Provide background around the transition to value-based models - Explore the trajectory of value-based payments MACRA - Provide an overview of the structure of the reimbursement system established by MACRA - Discuss strategic implications of MACRA to providers 3

4 Within Large Systems, Very Few Are Moving Rapidly Source: The Health Management Academy 4

5 Value-Based Payment Models Have Been Slow To Arrive Source: The Health Management Academy 5

6 CMS Value Initiative Goals 2016 Value-based Payment Goal - 30% Medicare payments in alternative payment models - 85% of Medicare fee-for-service payments in VBP 2018 Value-based Payment Goal - 50% Medicare payments in alternative payment models - 90% Medicare fee-for-service payments in VBP Graphic Source: 6

7 SGR Repeal & Physician Value-Based Payments 7

8 SGR Repeal: How It Changes Medicare Physician Payments In April the methodology used to calculate physician payments for the Medicare program, also known as the SGR was repealed, and replaced with a new physician payment structure referred to as the Quality Payment Program 2017 Baseline Performance Year, 2019 Implementation: Physicians (or groups/virtual groups) elect to remain in fee-for-service subject to a new value-based regime ( MIPS ) or transition their practice toward risk-based models ( APMs ), and will be reimbursed differently under each track Bottom line: assuming no changes, fee-for-service as it currently exists will substantially move toward pay-for-performance and economic incentives will drive physicians toward alternative payment models over time ( APMs ) 8

9 Physician Payment Structure: The Next 10 Years Annual Updates In 2019, physicians elect to participate in one of two adjustment mechanisms: Merit Based Incentive System ( MIPS ) or Alternative Payment Model ( APM ) Programs Jan-Jun 0% Jul-Dec 0.5% 0.5% 0.5% 0.5% 0.5% 0% 0% 0% 0% 0% 0% MIPS:.25% Qualified APMs:.75% Source: The Health Management Academy 9

10 MIPS Eligibility Likely to Expand Over Time In first 2 years, eligible providers include: - Physicians (MD, DO, DDS, DMD, DPM, OD, DC) PAs, NPs, clinical nurse specialists, certified registered nurse anesthetists, and groups that include such professionals After 2021, HHS can determine other eligible professionals to subject to MIPS - Physical/occupational therapists, speech-language pathologists, audiologists, nurse midwives, clinical social workers, clinical psychologists, dieticians/nutritional professionals 3 Exclusions to MIPS participation 1. Falls below low-volume threshold Less than $10,000 in Medicare claims and fewer than 100 Medicare Part B patients 2. First year of Medicare Part B participation 3. Meeting certain levels of practice in Advanced APMs 10

11 Merit-Based Incentive Payment ( MIPS ) Track Measure Performance Two year look-back performance measurements begin in 2017 for 2019 adjustments 4 weighted categories Quality, Cost/Resource Use, Advancing Care Information/EHR Use, Clinical Practice Improvement EHR MU, PQRS, and VBM sunset in 2018, with certain measures incorporated into new MIPS categories Composite Score Based on scores in each performance category, participants receive an annual composite score between Score will be publicly available via Physician Compare Threshold Comparison Each clinician s score will be compared against a performance threshold to determine payment adjustments Performance threshold will based on the median of MIPS scores competition among peers Additional Adjustments Adjustments are budget neutral upward adjustment can be scaled up or down, with the scaling factor not to exceed 3 times the baseline adjustment Additional exceptional performance adjustment offered to small number of best performers 11

12 MIPS Reporting Options Individual Group APM Entity Reports at individual level for each of the 4 performance categories Receive individual score/payment adjustment at TIN/NPI level A group, defined by TIN, would be assessed as group across all 4 performance categories Receive individual score/payment adjustment at TIN/NPI level All MIPS clinicians in group receive the same annual score CMS will ultimately allow reporting through virtual groups, though not in 1 st performance year Option available to MIPS clinicians practicing in an APM deemed a MIPS APM All scores aggregated at APM Entity level All individuals in APM Entity receive the same annual score 12

13 Components of MIPS Composite Score 2017 Performance; 2019 Payment 2019 Performance; 2021 Payment Clinical Improveme nt 15% Resource Use 10% Quality 50% Resource Use 30% Quality 30% EHR Use 25% Clinical Improveme nt 15% EHR Use 25% Source: The Health Management Academy 13

14 Quality Domain Will look similar to PQRS in initial years CMS will incorporate more outcome measures over time Clinicians choose from list of 200+ measures, either individually or from a specialty measure set - Most clinicians will report on 6 measures (including 1 cross-cutting & 1 outcome measure if available) performance in these measures will influence score (receive 1-10 points for each reported measure) - CMS will calculate 2-3 population health measures based on practice size - Bonus points for EHR reporting, and additional outcome/patient experience measures Reporting: - Individuals can report through claims, QCDR, qualified registry, EHR, administrative claims (no submission required) - Groups (of 25 or more) can also report through CMS Web Interface (report all measures included interface and populate data for first 248 ranked and assigned beneficiaries) 14

15 Cost/ Resource Use Domain Beginning in 2017 PY: CMS will use total per capita cost & Medicare Spending Per Beneficiary measures, and selection of episode-specific measures - Each measure reported converted to score of 1-10 points Beginning in 2018 PY: New care episode, patient condition, and patient relationship codes will be included in claims - Relationship codes reported on claims will attribute patients to practitioner(s), and episode & patient condition codes will be used to compare similar patients/ episodes CMS will use per patient total allowed charges for all services under Parts A & B (and Part D, if determined appropriate) for the analysis of resource use Scores for individuals/groups based on administrative claims, no additional reporting 15

16 Clinical Practice Improvement Activities ( CPIA ) Domain Clinicians/groups choose from list of 90+ activities - Activities focus on expanded access, population management, care coordination, beneficiary engagement, patient safety/ practice assessments, & APM participation Maximum score 60 points clinicians can choose from high or medium weighted activities, worth 20 or 10 points each MIPS clinicians participating in PCMHs will be guaranteed maximum CPIA score; minimum half credit for participation in APM Reporting: - Individuals can report through attestation, QCDR, qualified registry, EHR, administrative claims (if feasible) - Groups (of 25 or more) can also report through CMS web interface 16

17 Advancing Care Information Domain Similar to Meaningful Use in initial years intended to be simpler and more flexible - No longer all or nothing Scoring: - Base Score: 6 yes/no or numerator/denominator measures that clinicians must meet (1) protect patient health information, (2) electronic prescribing, (3) patient electronic access, (4) patient engagement, (5) health information exchange, (6) public health/clinical data registry reporting) - Performance Score: Clinicians select from a set of measures that best fit their practice, around patient electronic access, patient engagement, health information exchange total possible points need 100 for maximum score Reporting: - Individuals can report through attestation, QCDR, qualified registry, EHR - Groups (of 25 or more) can also report through CMS web interface 17

18 Reimbursement at Risk Increasing Over Time MIPS Composite Performance Score Payment Year 0 to 1/4 Performance Threshold 1/4 Performance Threshold to Performance Threshold Performance Threshold Performance Threshold to Multiplied by Budget Neutrality Scaling Factor, if Applicable % % % % Linear Sliding Scale to 0% 0% Linear Sliding Scale to Maximum 4% Max 12% with scaling 5% Max 15% with scaling 7% Max 21% with scaling 9% Max 27% with scaling Source: The Health Management Academy 18

19 MIPS Reimbursement At-Risk Timeline Jan-Jun 0% Jul-Dec 0.5% Annual Updates 0.5% 0.5% 0.5% 0.5% 0% 0% 0% 0% 0% 0% MIPS:.25% Qualified APMs:.75% PQRS, MU, VBM Max Penalties -3.5% -6% -9% TBD PQRS, MU, VBM Measures Incorporated into MIPS MIPS Baseline Payment Adjustment (+/-) 4% (+/-) 5% (+/-) 7% (+/-) 9% (+/-) 9% (+/-) 9% (+/-) 9% (+/-) 9% MIPS Maximum Possible Payment Adjustment 12% 15% 21% 27% 27% 27% 27% 27% MIPS Exceptional Performance Adjustment $500 million provided annually by HHS Not to Exceed 10% Source: The Health Management Academy 19

20 Advanced Alternative Payment Model ( APM ) Participation Benefits Three primary benefits accrue to clinicians who practice through Advanced Alternative Payment Models and become Qualifying APM Participants: 1. The clinician is excluded from MIPS 2. For payment years , the clinician will receive a lump sum payment equal to 5% of the estimated aggregate payment amounts for Medicare Part B covered professional services from the prior year 3. For payment years 2026 and beyond, the clinician will receive an annual adjustment under the PFS that is 50 basis points greater than MIPS clinicians. 20

21 Advanced APM Qualification: Not All Value-Based Models Are Eligible Necessary Criteria for Qualification Authorized quality measures comparable to MIPS Certified EHR utilized Participant in an APM entity that bears more than nominal financial risk (or a medical home that meets expansion criteria) Included: MSSP Track 2, MSSP Track 3, Next Generation ACO, ESRD Care Model, OCM (2 sided) To Be Included As Models Become Active: CPC+, Bundles (Track 1) Not Included: MA, MSSP Track 1, Bundles (Track 2) Eligible APMs Source: The Health Management Academy

22 Advanced APM Qualification Thresholds Qualification Thresholds Physicians can qualify by meeting payment thresholds or by having a proportion of patients treated in an eligible APM. Thresholds primarily based on aggregate spending/patients across all clinicians in APM Entity, though clinicians can qualify individually. CMS will make Threshold Score calculations under both payment & patient count methods for each Performance Period and will use the most advantageous of the two scores % Medicare Payments Through Eligible APMs 25% 50% 75% % Medicare Patients Through Eligible APMs 20% 35% 50% % All-Payer Payments Through Eligible APMs 50% 75% Minimum 25% Medicare Minimum 25% Medicare % All-Payer Patients Through Eligible APMs 35% Minimum 20% Medicare 50% Minimum 35% Medicare Source: The Health Management Academy 22

23 MACRA Physician Payment Timeline Jan-Jun 0% Jul-Dec 0.5% Annual Updates 0.5% 0.5% 0.5% 0.5% 0% 0% 0% 0% 0% 0% MIPS:.25% Qualified APMs:.75% PQRS, MU, VBM Max Penalties -3.5% -6% -9% TBD PQRS, MU, VBM Measures Incorporated into MIPS MIPS Baseline Payment Adjustment (+/-) 4% (+/-) 5% (+/-) 7% (+/-) 9% (+/-) 9% (+/-) 9% (+/-) 9% (+/-) 9% MIPS Maximum Possible Payment Adjustment 12% 15% 21% 27% 27% 27% 27% 27% MIPS Exceptional Performance Adjustment $500 Million Provided Annually by HHS Not to Exceed 10% APM Bonus Payment APM Participants Excluded from MIPS 5% 5% 5% 5% 5% 5% Source: The Health Management Academy

24 The Advanced APM Track Provides Greater Financial Opportunity % annual lump sum for APM clinicians, % annual increase for APMs,.25% annual increase for non- APMs, % annual update, APM MIPS Assumes MIPS clinicians perform at the 50 th Percentile Source: The Health Management Academy

25 Participation Categories Between MIPS & APM Tracks MIPS eligible clinicians participating in Advanced APM models plus MSSP Track 1 & one-sided OCM but below partial qualifying thresholds Eligible clinicians meeting full participation thresholds in 6 Advanced APMs MIPS Eligible Clinician Please insert your text MIPS APM Participant Partial Qualifying APM Clinician Advanced APM Qualifying Clinician Eligible clinicians not meeting APM thresholds, or low-volume or new to Medicare exclusions Eligible clinicians not meeting Advanced APM thresholds, but coming close Source: The Health Management Academy 25

26 MIPS APMs: Qualifying Models Alternative Payment Model Advanced APM MIPS APM Comprehensive ESRD Yes Yes Comprehensive Primary Care Plus ("CPC+") Yes (only for participants in models with 50 or fewer clinicians beginning in year 2) MSSP Track 1 No Yes MSSP Track 2 Yes Yes MSSP Track 3 Yes Yes Next Generation ACO Yes Yes Yes Oncology Care Model ("OCM") onesided risk arrangement No Yes OCM two-sided risk arrangement Yes Yes 26

27 Favorable MIPS Scoring for Clinicians in MIPS APMs MSSP Participants Resource Use: Re-weighted to 0 Quality: Quality measures reported solely through APM Entity CPS Weights: RU points will be redistributed between ACI &CPIA Favorable Scoring: Guaranteed half CPIA points ACI & CPIA Reporting: Each participating TIN submits data; scores from each TIN averaged to weighted mean MIPS APM Entity level score Next Generation ACO Participants Resource Use: Re-weighted to 0 Quality: Quality measures reported solely through APM Entity CPS Weights: RU points will be redistributed between ACI &CPIA Favorable Scoring: Guaranteed half CPIA points ACI & CPIA Reporting: Clinicians submit individual data; scores aggregated and averaged at APM Entity level Other MIPS APM Participants Resource Use: Re-weighted to 0 Quality: Reweighted to 0 CPS Weights: Reweighted to 25% CPIA, 75% ACI Favorable Scoring: Guaranteed half CPIA points for most APMs; guaranteed full CPIA points for CPC+ ACI & CPIA Reporting: Clinicians submit individual data; scores aggregated and averaged at APM Entity level *MIPS APM provisions proposed for first PY; benefits will likely be extended in subsequent years 27

28 Considerations for Specialists Most specialists initially in MIPS Track, though options will increase over next several years CMS provided flexibility to ensure groups of specialists are not unfairly disadvantaged - Eliminating/reweighting performance categories if no/few applicable measures available Alternative requirements created for non-patient-facing & hospital-based clinicians: Non-patient-facing clinicians MIPS clinician/group billing 25 or fewer patient-facing encounters including telehealth in performance period. Quality: 1) Can report on specialty-specific measures (may be less than 6); 2) Not required to report crosscutting measures; 3) Can report through QCDR using non-mips measures RU: Not scored if case minimums not met CPIA: Lessened requirements only 2 activities needed for max score ACI: Reweighted to zero Hospital-based clinicians Clinician furnishing 90+% of covered professional services in sites identified by the codes used in the HIPAA standard transaction as an inpatient hospital or ER setting in the year prior to the performance year. ACI: Reweighted to zero 28

29 Considerations for Other Groups of Clinicians Small, Rural, & Geographic Health Professional Shortage Areas Practices Small = < 15 clinicians Rural = Counties designated as Micropolitan or Non-Core Based Statistical Areas using HRSA s Area Health Resource File HPSA = As designated under section 332(a)(1)(A) in the Public Health Service Act CPIA: - Any 2 activities needed for maximum score Advancing Care Information: - If significant hardship, may be exempt from category Lack of internet connectivity, extreme/uncontrollable circumstances, etc. Overall Support: - CMS will offer these groups additional support in transitioning practice under MACRA 29

30 Small Groups Will Likely Look For Partners Source: CMS 30

31 The Next Decade: Medicare Value-Based Payment Model Trajectory Shared Risk ACO Capitation Shared Savings ACO Single-site Bundling/ Multi-site Bundling Medical Homes: Basic/Medical Homes: Advanced Source: Centers for Medicare & Medicaid Services 31