Bracing for the Medicare Part B Overhaul: Pick a Path, Pick a Pace

The countdown has begun for the momentous Part B payment reforms created by the Medicare Access and Chip Reauthorization Act of 2015 (MACRA). On October 14, 2016, CMS released a final rule explaining, in nearly 2,400 pages, how its new Quality Payment Program, established under MACRA, will work when the first performance period goes live on January 1, 2017.

Through MACRA, Congress finally compromised and repealed the much-maligned sustainable growth rate (SGR) formula for Part B payments. While this aspect of the “doc fix” bill was widely publicized and easily understood, the other details of MACRA still remain a mystery to many. Recent surveys reveal that as of September, almost 30 percent of physicians had not even heard of MACRA, down from 50 percent in July.

The complexities of MACRA’s massive overhaul of Part B pose challenges to clinicians seeking to understand and prepare for its implementation. This concern was a common theme in the more than 4,000 comments CMS received on its proposed rule. CMS responded by outlining a staged approach to implementing MACRA reform in its final rule, calling CY 2017 (and perhaps CY 2018) a “transition year.” But the agency’s ultimate vision is ambitious and accelerates its transition to value-based accountable care.

Immediate Impacts: Out with the Old

The SGR is out, replaced by modest annual inflationary increases of 0.5 percent until 2019 and 0.25 percent starting in 2026. MACRA also sunsets three legacy quality reporting and performance programs: (1) the Physician Quality Reporting System (PQRS), (2) the Value-based Payment Modifier (VM) and (3) the Medicare EHR Incentive Program (commonly known as the “Meaningful Use” program). The legacy programs will officially end with their final payment adjustments in 2018 based on pre-sunset reporting periods.

In With the New: What is the Medicare Quality Payment Program?

The Medicare Quality Payment Program is not just a payment rule, it is a bold “milestone” effort to transform how care is delivered and to encourage Part B clinicians to transition from fee-for-service reimbursement to alternative payment models (APMs). The Quality Payment Program offers two paths: (1) the Merit-based Incentive Payment System (MIPS) and (2) Advanced Alternative Payment Models (Advanced APMs).

Through the Quality Payment Program, CMS is encouraging clinicians to accept risk for a defined episode of care or population through participation in the Advanced APMs with a 5 percent annual incentive payment. MIPS is the default pathway for clinicians who do not qualify to participate in an Advanced APM. Failure to participate in either an Advanced APM or the MIPS results in negative payment adjustments.

Who Must Participate?

Eligible clinicians include physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and groups that bill under Medicare Part B. Clinicians may elect to participate individually or as a group with a common tax identification number.

There are certain limited exclusions for:

  • Low Volume Clinicians: Clinicians with less than $30,000 in Medicare Part B allowed charges or 100 or fewer Medicare patients. CMS anticipates approximately 32.5 percent of eligible clinicians billing Part B services will qualify as low-volume clinicians in CY 2017.
  • New Medicare Enrolled Eligible Clinicians: New Medicare enrolled practitioners in their first year.

Picking a Path

Option 1: Advanced APMs

To participate in the Advanced APM pathway, clinicians must have a certain percentage of their patients or payments through an Advanced APM. The final rule describes the criteria for an APM to qualify as an Advanced APM.

  • As a threshold matter, the APM must be: an incentive model under Section 1115A of the Social Security Act (SSA), excluding a healthcare innovation award; the Shared Savings Program under Section 1899 of the SSA; or a demonstration under Section 1866 of the SSA, or a demonstration required by federal law.
  • Additionally, the APM must: (1) require participants to use certified electronic health record technology (CEHRT), (2) provide for payment for covered professional services based on quality measures comparable to those in the quality performance category under MIPS, and (3) either require that participating entities bear risk for monetary losses of more than a nominal amount under the APM, or be a Medical Home Model expanded under Section 1115A(c) of the SSA.

CMS is finalizing an initial set of Advanced APM determinations that will be released no later than January 1, 2017. CMS has already indicated the following APMs will qualify as Advanced APMs for CY 2017.

  • Comprehensive ESRD Care Model (Large Dialysis Organization (LDO) arrangement)
  • Comprehensive ESRD Care Model (non-LDO arrangement)
  • Comprehensive Primary Care Plus (CPC+)
  • Medicare Shared Savings Program ACOs – Track 2
  • Medicare Shared Savings Program ACOs – Track 3
  • Next Generation ACO Model
  • Oncology Care Model (two-sided risk arrangement)

CMS intends to change and grow this list as more APMs are proposed and developed in partnership with the clinician community and the Physician-Focused Payment Model Technical Advisory Committee. The agency anticipates (but has not formally confirmed) that the following APMs will qualify as Advanced APMs in CY 2018:

  • ACO Track 1+
  • New voluntary bundled payment model
  • Advancing Care Coordination through Episode Payment Models Track 1 (CEHRT track)

The final rule sets thresholds for the level of participation in Advanced APMs required for a Qualifying APM Participant (QP) for a year. Notably, the rule gives clinicians some credit for participation in non-Medicare APMs. CMS estimates that 5 to 8 percent of eligible clinicians will qualify for participation in Advanced APMs in CY 2017.

Option 2: MIPS

MIPS is the default pathway for eligible clinicians. CMS estimates that between 592,000 and 642,000 eligible clinicians will be required to participate in MIPS in CY 2017. But the agency anticipates that over time, an increasing number of clinicians will transition from MIPS into the Advanced APM pathway. Under MIPS, clinicians will receive payment adjustments based on data submitted in four categories: quality, improvement activities, advancing care information and cost. While the improvement activities category is new, the other categories contain elements of the legacy PQRS, VM and Meaningful Use programs.

While CY 2017 marks the first MIPS performance year, payments will not be impacted until CY 2019.

Physicians will receive a MIPS score of 1 to 100 and will be paid based on an adjusted scale. In calculating the score, CMS has weighted the categories. Notably, the cost metric will be phased in over time and is weighted at zero for the CY 2017 transition year.

Additionally, MIPS phases in both negative and positive payment adjustments over time.

CMS intends that MIPS negative and positive payment adjustments will be equally distributed to ensure budget neutrality and estimates each of the adjustments will be $199 million when payments are first made in 2019. Additionally, CMS will pay $500 million for exceptional performance payments to eligible clinicians whose MIPS score is at least 70.

Picking a Pace

Recognizing the complexity of the Quality Payment Program and the tight implementation timeline, CMS introduced a “Pick Your Pace” option for eligible clinicians under the MIPS that decreases the reporting timeframe and scope of data.

  • Minimum Reporting. To avoid the negative 4 percent payment adjustment, in CY 2017 clinicians can report one measure in the quality performance category; one activity in the improvement activities performance category; or report the required measures of the advancing care coordination performance category.
  • Medium Reporting for Part of CY. Clinicians can report for less than the full CY but at least a full 90-day period on more than one quality measure, improvement activity or required measure in the advancing care information performance category to both avoid the negative 4 percent payment adjustment and possibly receive a positive MIPS payment adjustment.
  • Full Reporting for Partial or Entire CY. Clinicians can fully report to MIPS for a 90-day performance period or the entire CY to avoid the negative 4 percent payment adjustment and enhance the possibility for positive MIPS payment adjustments.

Preparing for the Long Haul

Success under the Quality Payment Program will involve changes to technology, infrastructure, physician support systems and clinical practices. CMS is providing $100 million over the next five years in technical assistance to MIPS-eligible clinicians in small practices, rural areas and practices located in geographic health professional shortage areas (HPSAs) and is evaluating the impact of MACRA on solo and small physician practices.

Eligible clinicians, even those familiar with the legacy reporting programs, must adapt to a whole new system of reporting and scoring. The MACRA rule further incentivizes these clinicians to examine their readiness to participate in APMs and weigh potential incentives against possible downside risk.

To prepare for the impending Part B reform, hospitals and physician groups should evaluate their current employment and professional services arrangements to ensure incentives and practice patterns are aligned with rewards under the Quality Payment Program. And as eligible clinicians adapt to these changes, an examination of reimbursement under fee-for-service commercial contracts (that may reward volume) will be warranted to ensure clinicians are rewarded for achievements in delivering quality accountable care.