The MACRA Proposed Rule on MIPS and APMs: Summary and Key Takeaways

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1 The MACRA Proposed Rule on MIPS and APMs: Summary and Key Takeaways A White Paper May 2016 Impact Advisors LLC 400 E. Diehl Road Suite 190 Naperville IL Impact- Advisors.com

2 Executive Summary On April 27, 2016, CMS published a highly anticipated Proposed Rule that makes significant changes to the way ambulatory clinicians will be reimbursed by Medicare. Under the rule, payment adjustments to a provider s Medicare reimbursement would begin in 2019, but those bonuses and penalties would be based on performance in The proposed rule addresses two major provisions that were established by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA): 1) The Merit-Based Incentive Payment System, or MIPS, which will replace existing federal incentive initiatives for ambulatory providers including Meaningful Use, PQRS, and the Physician Value-Based Modifier with a system that ties a portion of Medicare Part B reimbursement to a clinician s performance across four (4) distinct categories. 2) Incentives for clinicians to participate in Alternative Payment Models (APMs). The proposed rule outlines criteria for APMs and Advanced APMs. Participants in regular APMs will receive favorable scoring in MIPS, while clinicians with significant participation in Advanced APMs will be exempt from MIPS and will receive an additional 5% Medicare bonus for the corresponding payment year. CMS is collectively referring to these two initiatives as the Quality Payment Program. The MACRA Proposed Rule on MIPS and APMs: Summary and Key Takeaways 2

3 MIPS (Merit-Based Incentive Payment System) The first major provision of the proposed rule would implement the Merit-Based Incentive Payment System or MIPS for ambulatory providers. MIPS would consolidate existing federal incentive initiatives including Meaningful Use, PQRS, and the Physician Value-Based Modifier under a single umbrella. Current penalties, such as the ones for failing to achieve Meaningful Use, would also be eliminated in Instead, under MIPS, eligible clinicians would receive annual bonuses or penalties (which CMS calls payment adjustments ) based on their aggregate score across four different performance areas. MIPS Payment Adjustments and Timing The maximum payment adjustment would start at +/- 4% of Medicare reimbursement in 2019 and would increase to as much as +/- 9% in 2022 and beyond (see Figure 1). In the first five years of the program, there would also be an additional bonus payment for exceptional performance available to providers in the top 25%. That additional bonus is capped at 10% per eligible clinician. Figure 1. Potential Payment Adjustments Under MIPS by Year *Maximum amount of incentive payments under MIPS could increase further for exceptional performers. Although MIPS payment adjustments will begin in 2019, the actual bonus or penalty in a given year will be based on performance two years earlier. So even though 2019 is the first payment year under MIPS, the first performance year and the real start of the program is actually 2017! Given that the Final Rule will likely not be out until the fall of 2016, clinicians could be in an extremely difficult position, with virtually no time to prepare. (See Figure 2.) The MACRA Proposed Rule on MIPS and APMs: Summary and Key Takeaways 3

4 Figure 2. Timing of Proposed MIPS Performance Periods and Payment Years Eligibility and Exemptions The changes under MIPS will impact a broad range of Medicare providers. In the first two years of the program, MIPS eligible clinicians will include ambulatory physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists. CMS has the authority to expand the definition of a MIPS-eligible clinician in future years, so the types of providers impacted could grow over time. There are only three scenarios under which a MIPS-eligible clinician will be exempt from the program:! Clinicians who are newly enrolled in Medicare! Clinicians who have less than $10,000 in Medicare charges and less than 100 Medicare patients; or! Clinicians with significant participation in an Advanced Alternative Payment Model (APM) The MACRA Proposed Rule on MIPS and APMs: Summary and Key Takeaways 4

5 MIPS Performance Categories and Scoring There are four (4) distinct performance categories that will collectively make up a clinician s MIPS Composite Performance Score (see Figure 3): Figure 3. MIPS Composite Performance Score Categories! Quality (50% of MIPS score in Year 1) The quality component replaces the current requirements of the Physician Quality Reporting System (PQRS). However, unlike PQRS, MIPS is not a pay-for-reporting program actual performance on the measures will matter. Clinicians would select six quality measures to report, including at least one cross-cutting measure and one outcome measure. If no outcome measure is available, a high priority quality measure can be reported instead. There will be more than 200 quality measures from which to choose, and clinicians will also have the option of choosing to report a pre-determined specialty measure set.! Advancing Care Information (25% of MIPS score in Year 1) This is the Meaningful Use component of MIPS although the CPOE and Clinical Decision Support measures would no longer be reported. A clinician s score would be made up of a base score and a performance score. Points towards the base score would be earned by reporting the measures associated with six existing Meaningful Use objectives. The performance score would allow clinicians to earn additional points for high performance on measures related to patient engagement and health information exchange. An important note: since the definition of eligible clinician in MIPS is broader than the definition of an eligible professional in Meaningful Use, many clinicians might be attesting to these measures for the first time.! Clinical Practice Improvement Activities (CPIA) (15% of MIPS score in Year 1) This component represents activities that have a proven association with improved health outcomes. Clinicians would select specific activities (such as timely communication of test results defined as timely identification of abnormal test results with timely follow-up ) from a list of more than 90. The activities are broken into distinct categories, such as population management, care coordination, beneficiary engagement, and others. MIPS eligible clinicians The MACRA Proposed Rule on MIPS and APMs: Summary and Key Takeaways 5

6 would need to perform a given clinical practice improvement activity for at least 90 days during the performance period to receive credit for that activity.! Resource Use (10% of MIPS score in Year 1) Don t let the name fool you: this is the cost component of MIPS. Although it is only 10% of the total MIPS score in 2019, CMS is proposing to increase the weight of resource use to 15% in 2020 and 30% in On the plus side, the measures for this component of MIPS would be solely derived from Medicare claims, so there would be no additional reporting requirements for eligible clinicians. On the down side though, this category will almost certainly be the hardest for eligible clinicians to control. Not only does each performance category in MIPS have a unique scoring methodology, each category is also weighted differently and those weights can change over time. For example, in Year 1 of MIPS, CMS is proposing that performance in the Quality category will make up 50% of a clinician s total MIPS score, but that would decrease to 30% in Year 3, while Resource Use would increase from 10% in Year 1 to 30% in Year 3 (see Figure 4). Figure 4. MIPS Composite Score Performance Category Weight To determine the amount of a clinician s incentive or penalty, CMS will compare that clinician s MIPS Composite Performance Score against the average MIPS performance score for all eligible clinicians. In other words, the actual value of a clinician s MIPS Composite Performance Score only matters relative to the scores of other providers. This will make it challenging for eligible clinicians to track their progress and to know where they stand especially in the first few years of the program. By law, MIPS must be budget neutral. This is a critical difference from programs like Meaningful Use, because it means that any incentive payment paid out to a high performing clinician will need to be offset by a penalty to lower performing providers. In fact, CMS is explicitly proposing to set the MIPS performance threshold at a level where roughly half of clinicians would pass (and be eligible for incentive payments) and roughly half would fail (and be subject to penalties). The MACRA Proposed Rule on MIPS and APMs: Summary and Key Takeaways 6

7 Submission Requirements Eligible clinicians would have the option of submitting MIPS performance information individually or at the practice level, but clinicians would have to use the same NPI or TIN for all four categories. For example, a clinician would not be able to report individually for the MIPS Quality category and submit information as part of a group for the Advancing Care Information category. APMs (Alternative Payment Models) The second key provision of the proposed rule focuses on incentives for providers who participate in Alternative Payment Models (APMs). CMS makes a distinction between regular APMs and Advanced APMs. Although the terminology is confusing, the difference is important. Clinicians with significant participation in Advanced APMs in a given year will be exempt from MIPS and will receive an additional 5% Medicare bonus for the corresponding payment year. (Participants in APMs that do not meet the criteria of an Advanced APM will receive favorable scoring in certain MIPS categories though.) Generally, to qualify as an Advanced APM, a model must: 1) require the use of Certified EHR Technology, 2) make payments based on quality measures comparable to those in MIPS, and 3) require participants to bear a certain amount of financial risk should actual expenditures exceed expected expenditures. Under the proposed rule, only the following APMs would qualify as Advanced APMs in 2017:! Medicare Shared Savings Program (Track 2)! Medicare Shared Savings Program (Track 3)! Next Generation ACO Model! Comprehensive ESRD Care (CEC) (Large Dialysis Organization arrangement)! Comprehensive Primary Care Plus (CPC+)! Oncology Care Model Two-Sided Risk Arrangement (available in 2018) The detailed criteria for what specifically constitutes an Advanced APM is complicated, but the important takeaway is that for the 2017 and 2018 performance periods, only certain Medicare models namely the ones above will meet the definition. Beginning with the 2019 performance period (which corresponds to the 2021 payment year), CMS is proposing to allow non-medicare APMs that satisfy the established criteria to qualify as Advanced APMs. To be eligible for the 5% Medicare incentive (and the MIPS exemption), a clinician would need to have significant participation in a qualifying Advanced APM. CMS is proposing to measure participation by either the percent of patients seen through Advanced APMs or the percent of payments received through Advanced APMs. The threshold would initially start at 20% of patients or 25% of payments, but would increase substantially in subsequent years. As a result, not many providers are likely to receive the bonus. The MACRA Proposed Rule on MIPS and APMs: Summary and Key Takeaways 7

8 As with MIPS, the performance period for the Advanced APM incentive will be two years prior to the actual payment year. So a clinician who meets the requirement of significant participation in an Advanced APM in 2017 will receive the bonus payment (and MIPS exemption) in Similarly, meeting the Advanced APM participation requirement in 2018 will result in a bonus payment in Figure 5. Requirements for Significant Participation in an Advanced APM by Performance Period It is important to note that MIPS and APMs is not a binary decision; there are intermediate options and benefits for clinicians who don t have enough participation in an Advanced APM or who are part of an Alternative Payment Model that doesn t meet the requirements for an Advanced APM. For example, certified patient-centered medical homes would automatically be given the highest possible score for the Clinical Practice Improvement Activities performance category in MIPS, and participants in certain other APMs would automatically earn at least half of the highest potential score in that category. Key Takeaways! The level of complexity of this proposed rule is staggering. Those who were hoping that CMS would deliver on its promise to make MIPS more streamlined and simple compared to meaningful use are likely to be disappointed. Bottom line, the time and resources required to digest the changes in the proposed rule and effectively plan for those changes will be significant.! The timing at least as proposed puts eligible clinicians in an extremely difficult position. The Final Rule on MIPS and APMs will likely not be out until the fall of 2016, but the first performance period begins in January That The MACRA Proposed Rule on MIPS and APMs: Summary and Key Takeaways 8

9 could give providers literally just a few months to prepare. Not only will clinicians need to understand the reimbursement changes and scoring, they will also need to begin making important decisions about participating in an APM.! It is important to re-iterate: the MIPS program and the APM incentives do not apply to hospitals or to Medicaid-only EPs. This proposed rule pertains to Medicare Part B (outpatient) reimbursement. It does not make any changes to existing Meaningful Use requirements for hospitals or for Medicaid EPs.! Small practices could be hit particularly hard by MIPS. CMS themselves estimate that under the proposed scoring, 87% of solo practices would be penalized in 2019, while 81% of large practices (those with more than 100 eligible clinicians) would qualify for incentives.! The additional 5% bonus for participating in an Advanced APM is interesting (especially given it also includes an exemption from MIPS), but the reality is most clinicians won t be in a position to meet the requirements. The initial list of qualifying APMs is fairly small, and the proposed threshold for participation is substantial (particularly in later years).! Perhaps the biggest takeaway is that MIPS must be budget neutral by law, which means there will be winners and losers. Although CMS continues to tout the potential financial benefits of MIPS to clinicians, it is important to remember that for every provider who receives an incentive payment under MIPS, there will be a corresponding provider who is penalized. The MACRA Proposed Rule on MIPS and APMs: Summary and Key Takeaways 9

10 About Impact Advisors Impact Advisors provides high-value strategy and implementation services to help healthcare clients drive clinical and operational performance excellence through the use of technology. We partner with industry-leading organizations to identify and implement improvements in quality, safety and value. Our Associates are experienced professionals with deep domain expertise and a commitment to delivering results. For more information visit: Follow us on Facebook and LinkedIn Copyright 2016 Impact Advisors, LLC. All rights reserved. These materials are provided to you by Impact Advisors as a professional courtesy for personal use only and may not be sold. Please appropriately credit/cite your source as Impact Advisors, LLC. All copying for commercial use requires written prior permission secured from impact-advisors.com. The MACRA Proposed Rule on MIPS and APMs: Summary and Key Takeaways 10