Understanding Medicare Reimbursement Reform

What is MACRA?

  • Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) enacts the Quality Payment Program, which consolidates current fee-for-service Medicare programs (Meaningful Use, Physician Quality Reporting System, and Value-Based Payment Modifier) into a single program called MIPS – Merit-based Incentive Payment System
  • Creates an exemption for certain clinicians from participating in MIPS through a new, completely separate alternative payment track for physicians participating in Advanced Alternative Payment Models (AAPMs)
  • Permanent repeal of the current, flawed sustainable growth rate (SGR) methodology or “the doc fix”, the postponement of cuts in Medicare payments to doctors which has been an annual occurrence in Congress for more than a decade.
  • MACRA dictates the baseline increases for clinicians in Medicare payments for the next 10+ years
  • MACRA goes into effect at the beginning of 2017 from a reporting perspective. From a payment perspective, results of the reporting beginning in 2017 will be reflected in payments issued beginning in 2019 – allowing for the tracking of a composite performance score under which all physicians will be graded under MACRA
  • These elements are: quality; cost; EHR usage; and practice improvement measure

To achieve these goals, CMS built MACRA and the QPP around six strategic objectives which were considered in the current rule-making, and in any future modifications:

  1. To improve beneficiary outcomes and engage patients through patient-centered Advanced APM and MIPS Policies.
  2. To enhance clinician experience through flexible and transparent program design and interactions with easy-to-use program tools.
  3. To increase the availability and adoption of robust Advanced APMS.
  4. To promote program understanding and maximize participation through customized education, outreach, and support that meet the needs of the diverse range of involved physicians, practices, and patients, especially small practices.
  5. To improve data and information sharing to provide accurate, timely, and actionable feedback to clinicians and other stakeholders.
  6. To insure operational excellence in program implementation and ongoing development.

How is Medicare changing with MACRA?

MIPS vs. APMs – Who is covered? 

All practices are subject to MIPS unless qualifying for an exemption:

  1. New practices: It’s your first year accepting Medicare payments
  2. Low volume: You bill less than $30,000 in Medicare per year or see fewer than 100 Medicare patients (*note: original rule had <$10K AND fewer than 100 so new rule is more flexible here)
  3. Qualified Participant in an APM: examples include Medicare Shared Savings Program (MSSP), Comprehensive Primary Care Plus (CPC+), Next Generation ACO Model

Small Practices 

Many small practices will be excluded from MIPS because of volume requirements. During 2017, any practice with less than $30,000 in Medicare Part B allowed charges or with less than 100 Medicare patients are exempt. However, beginning in 2018, small practices who do wish to participate have the option of forming a virtual group of up to 10 clinicians to participate together in the QPP.

Details of MIPS

  • Will create major variation in the reimbursements practices see – from a 19% increase due to performance bonuses and MIPS incentives, to a 9% decline based on MIPS penalties, between 2016 and 2020.
  • Fee schedule (PFS) increases planned from .5% per year between 2016-2019, and then .25% per year starting in 2026. Note that this increase is less than the expected rate of inflation.
  • MIPS incentives/penalties based on payment year:
    • 2019: +/- 4% of Medicare payments based on performance
    • 2020: +/- 5% of Medicare payments based on performance
    • 2021: +/- 7% of Medicare payments based on performance
    • 2022: +/- 9% of Medicare payments based on performance
  • MIPS Exceptional Performance Bonus can be as much as 10% on Medicare payments from 2019-2024, based on the MIPS scoring index which is still in process of being determined

MIPS Domains

  1. Quality (measurements like PQRS)
  2. Practice Improvement (transforming operational process)
  3. Advancing Care Information (rebrand of Meaningful Use)
  4. Resource Use

The Proposed Rule weighted: Quality 50%, Practice Improvement 15%, Advancing Care Information 25%, Resource Use 10%

The Final Rule removed the Resource Use requirement, and simplified the ability to perform in the domains of Practice Improvement and Advancing Care Information.

Impact on Independent Practices

  • MACRA is intended to accelerate the shift towards value-based care – which means that a portion of your practice’s Medicare payments are at risk and this share will grow over time
  • Ability to demonstrate performance on the domains above will determine whether your practice earns incentives or pays penalties
  • Demonstrating performance requires reporting – particularly on EHR use, quality measures, and practice improvement. A failure to report is the key criteria leading to penalties
  • MACRA encourages practices to participate in APMs like CPC+ or ACO’s like MSSP – Track 1, but also creates virtual groups that allow practices to be scored as a group but retain complete independence of their practice

Virtual Groups

From CMS:

MACRA also provides that solo and small practices may join “virtual groups” and combine their MIPS reporting. Many commenters suggested that we allow groups with more than 10 clinicians to participate as virtual groups. As noted, the statute limits the virtual group option to individuals and groups of no more than 10 clinicians. We are not implementing virtual groups in the transition year 2017 of the program; however, through the policies of the transition year and development period, we believe we have addressed some of the concerns expressed by clinicians hesitant to participate in the Quality Payment Program. CMS wants to make sure the virtual group technology is meaningful and simple to use for clinicians, and we look forward to stakeholder engagement on how to structure and implement virtual groups in future years of the program.

Final Modifications to MACRA
Key modifications from the Proposed Rule to the Final Rule:

  • More flexible timing. CMS has implemented transitional scoring and reporting policies for this first year. Due to the phased approach, more than 90 percent of MIPS eligible clinicians should receive a positive or neutral payment adjustment, and at least 80 percent of clinicians in small and solo practices should receive a positive or neutral payment adjustment, in 2019 which is the first year of adjusted payments under the new law.
  • Lower minimum requirements for providers. CMS increased the Medicare low-volume threshold which exempts more providers from either model. Specifically, the low-volume MIPS exclusion threshold is now $30,000 of Medicare billings or fewer than 100 Part-B beneficiaries, which will greatly increase the number of small practices that are exempt from MIPS.
  • Creation of new exemption tracks. More clinicians can qualify for be exempt from MIPS through participating in an Alternative Payment Model (APM). CMS will create a new MSSP Track 1+ model to qualify clinicians for Advanced APM treatment, and reopen several current models to enable more physicians to become Qualifying Alternative Payment Model Participants (“QPs”).
  • More financial flexibility. CMS has eased requirements to qualify as an APM. Also, the definition of participating in a patient-centered medical home (“PCMH”) has expanded, which increases the possibilities of favorable scoring for practices in the Improvement Activities domain of MIPS.
  • Reduced reporting burdens. In the first performance year, the Cost/Resource Use performance domain has been eliminated for all physicians and clinicians. Requirements for reporting in the Advancing Care Information domain decreased from eleven necessary measures, to five. Opportunities for bonus points in the Improvement Activities domain, including participating with certain EHR technology activities, has increased.
  • New standards for high and low performance. In 2017, CMS set a Performance Threshold of 3, which will result in a physician/clinician scoring less than 3 receiving a negative payment adjustment (-4 percent). A score of 3 can be achieved by submitting, for example, just a single Quality Measure in reporting. Clinicians who choose not to submit a report on a single measure or activity will receive the full negative adjustment of 4 percent. Also in 2017, CMS set an Exceptional Performance Threshold at 70, resulting in a physician/clinician scoring above 70 becoming eligible for additional funds from the $500 million exceptional performance pool.