Final Rules Under MACRA: A Step Toward Paying Physicians For Quality

I.     Introduction

The Centers for Medicare and Medicaid Services (“CMS”) recently published final rules implementing the Medicare Access and CHIP Reauthorization Act (“MACRA”). MACRA sunsets the Sustainable Growth Rate (“SGR”) formula in favor of a new payment system intended to incentivize clinicians to provide higher quality care, and also streamlines several existing quality reporting systems into one. Together, these changes make up the Quality Payment Program (“QPP”), which gives clinicians the opportunity to choose incentives through either the Merit-based Incentive Payment System (“MIPS”) or Advanced Alternative Payment Models (“APMs”). The stated objectives of the QPP are to support care improvement by focusing on better outcomes for patients, decreased provider burden, and preservation of independent clinical practice; promote the adoption of APMs that align incentives across healthcare stakeholders; and advance existing efforts of delivery system reform.

II.     Merit-based Incentive Payment System

      MIPS borrows from three existing reporting programs: the Physician Quality Reporting System (“PQRS”), the Value-based Payment Modifier (“VM”), and the Electronic Health Record (“EHR”) for Eligible Physicians (“EPs”). This final rule confirms the previously proposed MIPS performance standards, and establishes reduced standards and flexible performance periods for the 2017 calendar year (the “Transition Year”); the specifics of the Transition Year are discussed in part IV of this Client Alert.

Through MIPS, clinicians will report under the following performance categories:

     A.     Quality Performance

      The Quality category replaces PQRS and the quality component of VM. Rather than reporting on the nine PQRS measures, clinicians choose to report on at least six measures, thus allowing for greater diversity in specialty practices and reducing clinician-reporting burdens. Within these six measures, clinicians must report at least one outcome measure, and if one is not available, they must report on one other high priority measure. Such measures include appropriate use, patient safety, efficiency, patient experience, and care coordination measures. If less than six measures are relevant to the clinician’s practice, then the clinician must report on each measure that is relevant. Alternatively, clinicians may opt to report a “specialty measures set” that is tailored to specific conditions and specialties. In order to participate fully in the Quality category, clinicians must submit six quality measures, or one specialty- or subspecialty-specific measure set. Clinicians who report at least one of six quality indices will satisfy the MIPS performance threshold during the transition year. Groups who use the CMS Web Interface to report measures, however, will have to submit more than one quality measure.

     B.     Clinical Practice Improvement Activities

The Clinical Practice Improvement Activities (“CPIA”) category measures clinician efforts to improve their clinical practice, and rewards initiatives taken to coordinate care, engage beneficiaries, and maximize patient safety. Clinicians select the activities most appropriate for their practice (from over 90 proposed). Clinicians’ CPIA scores are composites of the weighted scores of their clinical practice improvement activities.

          i.  During the Transition Year, clinicians will only be required to report four medium-weighted or two high-weighted activities (rather than six medium-weighted or three high-weighted activities) in order to receive the maximum score in this performance category.

          ii.  In order to achieve half of the highest score, a clinician must report at least one medium-weighted activity.

          iii.  Small practices, rural practices, or practices located in geographic HPSAs, as well as non-patient facing clinicians, need only report two medium-weighted activities, or one high-weighted activity, in order to receive full credit in this category.

C.  Advancing Care Information

     The Advancing Care Information (“ACI”) category replaces the Medicare EHR incentive program for physicians. In contrast to the current “meaningful use” program, the ACI does not mandate an “all-or-nothing” EHR measurement reporting system, but instead requires clinicians to adopt a customizable set of measures that illustrates how they use certified EHR technology consistently in their medical practices. Clinicians report “measures of interoperability and information exchange,” and are rewarded for their performance on measures that are most relevant to their practice. In order to fully participate in the advancing care information performance category, clinicians must submit all five required measures; clinicians who report on these required measures will satisfy the transition year performance threshold. The overall score in this category is a composite of a base score and a performance score, as described below.

i.  The Base Score (Participation Score)

     The Base Score provides up to 50 points toward the ACI score. Unlike the proposed rule, the final rule only requires that 5 measures be reported, while all other measures will be optional to report. Reporting on all five of the required measures earns a MIPS eligible clinician 50%, and reporting on the optional measures allows a clinician to earn a higher score.

                               OBJECTIVES      MEASURES
Protect Patient Health Information
Security Risk Analysis
Electronic Prescribing
Patient Electronic Access
Provide Patient Access

Patient-Specific Education (Optional)
Coordination of Care Through Patient Engagement
View, Download or Transmit (VDT) (Optional)

Secure Messaging (Optional)

Patient-Generated Health Data (Optional)
Health Information Exchange
Send a Summary of Care

Request/Accept Patient Care Record

Clinical Information Reconciliation (Optional)
Public Health and Clinical Data Registry Reporting
Syndromic Surveillance Reporting (Optional)
Electronic Case Reporting (Optional)

Public Health Registry Reporting (Optional)

Clinical Data Registry Reporting (Optional)
            ii.  The Performance Score

Clinicians may earn up to 80 points within the Performance Score category by selecting the measures that best accommodate the needs of their practices from the following objectives:

Patient Electronic Access
Patient Access

Patient-Specific Education
Coordination of Care Through Patient Engagement

Secure Messaging

Patient-Generated Health Data
Health Information Exchange
Send a Summary of Care

Request/Accept Patient Care Record

Clinical Information Reconciliation
Public Health and Clinical Data Registry Reporting
Immunization Registry Reporting

          iii.  The Public Health Registry Bonus Point

      Because immunization registry reporting is no longer required as a part of the Base Score, clinicians who report to one or more public health or clinical data registries beyond the immunization category receive a 5% bonus score for doing so. This benefit is only available to MIPS eligible clinicians who earn a base score.

   iv.  The ACI Composite Score

The clinician’s base score, performance score, and bonus point are totaled, with the potential for a total of 155 points, which will be capped at 100 points when the base score, performance score and bonus score are added together. So long as clinicians earn at least 100 points, they receive the full 25-point potential in the ACI performance category. Should clinicians earn less than 100 points in total, their performance score decreases accordingly.[1] During the Transition Year, clinicians may receive a bonus score for engaging in “improvement activities that utilize CEHRT and for reporting to public health or clinical data registries.” The Transition Year also offers participants relaxed reporting requirements and scoring standards.

     D.  Resource Use

      The score in this category (which replaces the cost component of the VM) is based on Medicare claims, thus requiring no reporting from clinicians. According to CMS, “clinicians that deliver more efficient, high quality care achieve better performance, so clinicians scoring the highest points would have the most efficient resource use.” Each measure under this category is worth up to 10 points, and in order for a cost measure to be scored, clinicians must see a minimum of 20 patients. The scoring under this category is based on more than 40 episode-specific measures, and the scores of all of the measures applicable to a particular clinician are averaged.[2]

During the Transition Year, the resource use category will be given a relative weight of zero percent. MIPS scoring in 2017 will thus be measured using the other three performance categories. Reducing the weight of the cost category allows clinicians and groups to gain familiarity with the MIPS cost measures without having a negative impact on their payments. Although scores will not be actually calculated, performance will be measured based on certain cost indices and communicated back to clinicians. Beginning in 2018, the relative weight of this category will steadily increase to 30% by 2021.

 Weights by Performance Category Over Time

Performance Category 2019 MIPS Payment Year 2020 MIPS Payment Year 2021 MIPS Payment Year and Beyond
Quality 60% 50% 30%
Resource Use 0% 10% 30%
CPIA 15% 15% 15%
Advancing Care Information 25% 25% 25%

III.  Advanced Alternative Payment Models

      Advanced APMs are those APMs in which clinicians accept financial risk for providing coordinated, high-quality care. Those AMPs that satisfy the requirements of Advanced APMs allow eligible clinicians, who would alternatively participate in MIPS, to become Qualifying APM Participants (“QP”) and earn incentive payments for their participation in Advanced APMs.

     A.  Standards for Advanced APMs

To be considered an Advanced APM, an APM must meet all three of the following criteria:

          i.  The APM must require participants to use certified HER technology (CEHRT);

               a.   At least 50% of eligible clinicians in each APM Entity must use the certified health IT functions; this 50% threshold will remain consistent for the subsequent year.

          ii.  The APM must provide for payment for covered professional services based on quality measures comparable to those in the quality performance category under MIPS; and

          iii.  The APM must either require that participating APM Entities bear risk for monetary losses of a more than nominal amount under the APM, or be a Model Medical Home.

      B.  Standards for Other Payer Advanced APMs

To qualify as an Other Payer Advanced APM, a payment arrangement with a payer must   meet all three of the following criteria:

          i.  The APM must require participants to use CEHRT;

     ii.  The APM must provide for payment for covered professional services based on quality measures comparable to those in the quality performance category under MIPS; and

          iii.  The APM must require participants to either bear more than nominal financial risk if actual aggregate expenditures exceed expected aggregate expenditures; or be a Medicaid Medical Home Model.

C.  Timeline for Advanced APM Participation

     Starting in 2019, an eligible clinician that participates in an Advanced APM may become a QP. Between 2019 and 2024, QPs will be granted an incentive payment that represents 5% of Part B covered professional services payments from the previous year. Starting in 2026, QPs may receive higher incentive payments.

In 2019 and 2020, clinicians can only become QPs by participating in Advanced APMs. Starting in 2021, however, clinicians can become QPs by participating in a combination of Advanced APMs and Other Payer Advanced APMs. Likely beginning in 2018, the developing Medicare ACO Track 1+ Model will be available (and voluntary) for ACOs either currently participating or seeking to participate in Track 1 of the Shared Savings Program.

     D.  Intermediate Options

Both QPs and Partial QPs do not qualify as MIPS eligible clinicians and are therefore excluded from MIPS payment adjustments. All other MIPS eligible clinicians participating in APMs are subject to MIPS requirements and payments. The most recent APMs, however, evaluate their participants on criteria similar to MIPS reporting criteria. Clinicians participating in these MIPS APMs will be subject to APM scoring standards, so long as the APMs meet the following criteria:

          i.  The APM entity participates in the APM under an agreement with CMS;

          ii.  The APM requires that APM entities include at least on MIPS eligible clinician on a Participation list; and

          iii.  The APM bases payment incentives on performance on cost and utilization and quality measures.

     Those clinicians who participate in Advanced APMs, but who fail to meet the participation minimums necessary to be exempted from MIPS, must adhere to MIPS reporting requirements and will receive MIPS payment adjustments.

IV.  The Transition Year

Due to the variety of clinical practices and their respective needs, the Transition Year (calendar 2017) will “allow physicians to pick their pace of participation for the first performance period.” Clinicians eligible to participate can choose from the four different options described below:

          1)  Clinicians may report to MIPS for the full year and increase their likelihood of qualifying for a positive adjustment. Clinicians who perform exceptionally (as indicated by the data they report) will be entitled to an “additional positive adjustment” throughout the initial 6 years of the program.’

          2)  Clinicians may report to MIPS for less than the full year, but for at least a 90-day period. Clinicians choosing this option must report more than one measure in the quality, improvement activity, or advancing care information performance categories to prevent a negative MIPS payment adjustment and perhaps warrant a positive MIPS payment adjustment.

          3)  Clinicians may report one measure within each category, or simply report the required measures within the advancing care information performance category, in order to prevent a negative MIPS payment adjustment. If clinicians fail to report any measures, their score will receive the four percent negative adjustment.

          4)  Clinicians may participate in Advanced APMs, so long as they meet the required Medicare payment or patient thresholds, and will be eligible for a 5% additional incentive payment in 2019.

     During the Transition Year, the MIPS “performance threshold” will be reduced from 4 points to 3 points. Those clinicians who receive a score of 70 or above will qualify for the “exceptional performance adjustment,” which will be pulled from an allocated pool of $500 million. In order to participate fully in the program and receive the exceptional performance adjustment, MIPS eligible clinicians should report measures within all three performance categories.

V.  Potential Challenges to Clinicians

      The implementation of the MIPS program presents several challenges. While the Transition Year will make it more feasible for a greater number of clinicians to participate, the logistics remain complex and the benefits less straightforward. Clinicians may experience a delay of two years or more between performance reporting and payment adjustments. Additionally, because MIPS indices will be reported and measured at the individual physician level, but distributed at the Taxpayer Identification Number (“TIN”) level, practice groups could be affected by the performance of former group members. Finally, many participants may find it very challenging to anticipate their performance scores and reimbursement rates due to the complex performance score calculation process and the possibility that even within a specific TIN, physicians could be reporting across specialties, and therefore might be evaluated based on dissimilar measures and awarded disparate performance scores.

VI.  Conclusion

The final MACRA rule aims to shift the American healthcare system away from volume-centered, fee-for-service reimbursement toward value-based payment, while attempting to ease and incentivize the transition for clinicians. It is clear that CMS thoroughly considered the comments it received in response to its proposed rule, and the resulting adjustments in the final rule appear generally reasonable. Despite those adjustments, however, the implementation of MACRA will be complex and cumbersome, and will likely require significant administrative oversight and investments in technical infrastructure. Although the final rule eases the burden of the changes for smaller practices, provider organizations with greater resources will continue to be at an advantage.

This Client Alert was prepared with significant assistance from Kozak & Gayer legal intern Eliza Mette, a third-year student at the University of Maine School of Law, who will be joining the firm on a full-time basis in late summer 2017.

[1] CMS has indicated that it will reweight the ACI category to zero in order to accommodate those clinicians for whom the “objectives and measures” are irrelevant, and will duly adjust the relative weights of the other performance categories.

[2] As with ACI, CMS will reweight the Resource Use category to zero for clinicians who do not meet the patient volume criteria necessary to receive scored cost measures, and reweight the other MIPS performance category scores to compensate.