Today, the Centers for Medicare & Medicaid Services ("CMS") published the much-anticipated Final Rule for the new Merit-Based Incentive Payment System ("MIPS") and Advanced Alternative Payment Models ("AAPMs") pathways to payment pursuant to the Medicare Access and CHIP Reauthorization Act of 2015 ("MACRA"). A copy of the Final Rule can be found here, and more information can be found on the CMS "Quality Payment Program" website. Referred to as the Quality Payment Program ("QPP"), CMS has finalized its MACRA program for significant reimbursement, compliance and operating changes for providers participating under the Medicare Physician Fee Schedule, which will commence January 1, 2017.

As background, MACRA permanently repealed the much-derided sustainable growth rate formula for calculating physician fee schedule payments and, in its place, implemented two performance-based incentive payment pathways. The two pathways are to either: (1) participate in MIPS and receive a positive or negative physician fee schedule adjustment associated with MIPS performance; or (2) participate in an AAPM, earn separate incentive payments and be excluded from participating in MIPS.

An "Eligible Clinician" under the QPP is a provider who bills under the Medicare Physician Fee Schedule for at least $30,000 per year or provides care for more than 100 Medicare patients per year and is: (1) a physician; (2) a physician assistant; (3) a nurse practitioner; (4) a clinical nurse specialist; or (5) a certified registered nurse anesthetist. If 2017 is the first year a provider is participating in Medicare Part B, the provider may be exempt.

The Final Rule includes program-specific details on how CMS will implement payment reform through MIPS and AAPMs by laying the groundwork for the continuing shift from volume- to value-based payment. Importantly, CMS acknowledges in the Final Rule the significant administrative burden associated with transitioning to MIPS and AAPMs and has provided substantial flexibility through various transition year participation options starting in 2017. This article summarizes key provisions as described in the Final Rule into specific "Options" to outline Eligible Clinicians' 2017 choices. Future articles will address specific and more detailed aspects of the Final Rule and will provide further analysis of the practical effect for the health care industry.

Merit-Based Incentive Payment System

MIPS consolidates the components of three existing CMS physician quality programs: the Physician Quality Reporting System; the Physician Value-Based Payment Modifier; and the Medicare EHR Incentive Program. Under MIPS, CMS will either positively or negatively adjust an Eligible Clinician's Medicare Part B reimbursement based on his/her performance in four categories derived from these existing programs: 1) quality; 2) cost; 3) advancing care information; and 4) clinical practice improvement activities. These payment adjustments will begin in 2019 and are based upon an Eligible Clinician's 2017 performance data.

2017 Transition Year Participation Options Under MIPS

With the start date quickly approaching, and QPP's broad impact, Eligible Clinicians should determine which 2017 transition year "Option" below best aligns with their strategic focus. Last month, CMS published a blog post that detailed four participation options for providers in 2017 to prepare for the transition. The Final Rule revises and updates these participation options for the 2017 transition year, which are summarized in the following Options. A key variable between these Options is the number of measures and activities submitted to CMS and the duration of the reporting period.

Option 1: Voluntary Exclusion (No Participation)

QPP is not mandatory, and Eligible Clinicians may voluntarily elect to not participate in MIPS for 2017. Selecting this Option will result in a four percent downward payment adjustment in 2019 to the Eligible Clinician's Medicare Part B reimbursement.

Option 2: Test Data Submission

This Option allows an Eligible Clinician to submit data on one or two measures only in order to avoid the four percent downward payment adjustment in 2019. The Eligible Clinician can elect to report a minimum amount of data that can include one measure from the quality performance category, one activity in the improvement activities performance category or more than the required measures in the advancing care information performance category. Unlike the next Option, this submission does not require a minimum number of days' data from the reporting period.

Option 3: Partial Data Submission

Eligible Clinicians can submit a minimum amount of 2017 data to CMS to avoid a negative payment adjustment in 2019 and could possibly receive a positive MIPS payment adjustment. Under this Option, an Eligible Clinician needs to submit data for at least a full 90-day period and during that time must report more than one quality measure, more than one improvement activity or more than the required measures in the advancing care information performance category. This Option is different than Option 2 because it requires an Eligible Clinician to submit more than just one measure and also requires the Eligible Clinician to submit data covering at least a 90 continuous day period. The increased reporting requirements provide additional benefit because Eligible Clinicians under this Option avoid a negative payment adjustment and could potentially receive a positive payment adjustment. The positive payment adjustment could be less than the full four percent available in Option 4.

Option 4: Full Data Submission

To maximize the prospects of obtaining a higher positive adjustment in 2019, an Eligible Clinician may elect to fully participate in MIPS for 2017. For full participation, an Eligible Clinician needs only to submit data on each of the required MIPS performance categories for a minimum period of 90 continuous days during 2017. An Eligible Clinician may elect to report data for periods longer than 90 days for 2017, but data submission for all 12 months of 2017 is not required. Under this Option, whether an Eligible Clinician receives an upward, downward or neutral payment adjustment in 2019 will depend on the Eligible Clinician's performance from scores received in three of the four MIPS performance categories: (1) quality; (2) improvement activities; and (3) advancing care information. During 2017, the fourth performance category on cost will be weighted to zero.

For full MIPS participation, an Eligible Clinician must submit data for a 90-day period on the following performance categories, which are assigned different scoring weights for purposes of computing an Eligible Clinician's MIPS score.

  1. Quality. For 2017, the quality performance category will be weighted to comprise 50 percent of an Eligible Clinician's MIPS score. An Eligible Clinician must report at least six quality measures (which must include at least one outcome measure) or one specialty-specific or subspecialty-specific measure set.
  2. Improvement Activities. The Final Rule reduces the number of activities required to achieve full credit in the improvement activity performance category, which comprises 20 percent of an Eligible Clinician's final score. An Eligible Clinician can engage in either two high-weighted or four medium-weighted activities. Small practices, rural practices or practices located in geographic health professional shortage areas, and non-patient facing MIPS eligible clinicians, will only be required to report on one high-weighted or two medium-weighted activities.
  3. Advancing Care Information. The advancing care information performance category will comprise 30 percent of an Eligible Clinician's MIPS score. The Final Rule reduces the total number of required measures to five.

2017 Transition Year Participation Options for AAPMs

As an alternative to the MIPS payment pathway, an Eligible Clinician may elect to participate in an AAPM. Eligible Clinicians participating in an AAPM are designated as "Qualifying Participants." For 2017, there are a limited number of AAPMs including the following.

  • Comprehensive ESRD ("CEC") Model (LDO arrangement);
  • Comprehensive ESRD Care ("CEC") Model (non-LDO two-sided risk arrangement);
  • Comprehensive Primary Care Plus ("CPC+") Model;
  • Medicare Shared Savings Program Track 2;
  • Medicare Shared Savings Program Track 3;
  • Next Generation ACO Model; and
  • Oncology Care Model (two-sided risk arrangement).

For those Qualifying Participants in an AAPM for 2017, a five percent positive adjustment will be awarded in 2019 if the Qualifying Participant achieves: 1) the specific measures and objectives of the AAPM; and 2) the necessary thresholds for the number of patient encounters and/or Medicare payment volume through the AAPM. Eligible Clinicians and Qualifying Participants should be mindful that not all ACOs qualify as an AAPM and certain ACOs will be subject to the MIPS pathway. CMS intends to continue to expand and create additional AAPMs through the rule-making process.

Practical Takeaways

Because it is quickly approaching, Eligible Clinicians should focus on "picking their pace" for the 2017 performance year. At a bare minimum, individual Eligible Clinicians and their practice groups should identify the required measures that need to be reported in 2017. Failing to report any measures will trigger a four percent negative Medicare Physician Fee Schedule adjustment in 2019.

Now is also the time to focus on developing and implementing strategies that will accelerate the transition from volume to value. To get started, health care organizations should review their reporting capabilities and performance related to reportable QPP quality measures and activities. Further, health care organizations should also stay up to date with CMS's announcements and interpretations regarding the Final Rule.

Over the coming weeks, Hall Render will continue to publish guidance on QPP and provide additional tools to help Eligible Clinicians and Qualifying Participants prepare for the new challenges.