Over the past few years, the Centers for Medicare & Medicaid Services (CMS) has been looking to find new and innovative ways to reimburse providers who provide care to Medicare beneficiaries. In April 2015, Medicare Access and CHIP Reauthorization Act (MACRA), a new and alternative payment method law that revamps fee-for-service payment, was signed in to law by President Obama.
MACRA is proposed to change the way Medicare pays clinicians and offers financial incentives for providing high value care. Overall, the goal of MACRA is to have a unified program for providers that offers flexibility. Specifically, MACRA impacts Medicare payments by:
- Repealing Medicare sustainable growth rate (SGR) formula
- Creating a new framework for rewarding physicians for providing higher quality care by establishing two tracks for payment:
- Merit-based Incentive Payment Systems (MIPs), and
- Alternative Payment Models (APMs)
In April 2016, CMS issued a proposed rule to MACRA, which plans to begin performance measurement for the MIPS and APMs future payments effective January 1, 2017. The first payment year for providers, which includes bonuses for MACRA, is set to go into effect in 2019. Under MACRA, providers will receive a 0.5% annual increase in Medicare payments until 2019, at which point providers will be required to choose between the two value-based tracks: MIPS or APMs.
Merit-based Incentive Payment Systems (MIPS)
Merit-based Incentive Payment Systems (MIPS) is a modified fee-for-service model that should impose greater certainty in annual payment updates, and physicians should no longer have the threat of double-digit cuts each year, as was common with the SGR system. For example, if Congress did not implement a fix to Medicare payments in 2015, there would have been a 21% cut in Medicare payments.
Most providers will begin being paid under MACRA via MIPS, since by default a provider that is not practicing in some type of APM will be on the MIPS track. Providers that choose MIPS face payment increases and/or reductions based on performance in four program categories.
MIPS consolidate three existing quality reporting programs: the Physician Quality Reporting System (PQRS), the Value-Based Payment Modifier (VBPM), and Meaningful Use (MU). MIPS also add a new program, called Clinical Practice Improvement Activities (CPIA). Each program category is weighted differently, and the composite score earned by a provider based on the four program categories is then used to determine physician payment for the following year. Providers will be able to choose the measures on which they will be evaluated. The four program categories include:
- Quality (50% of total score in year one) – based on Physician Quality Reporting System (PQRS)
- Resource or Cost Use (10% of total score in year one) – based on Value-Based Payment Modifier (VBPM)
- Advancing care information (25% of total score in year one) – based on Meaningful Use (MU) of certified Electronic Health Record (EHR) technology
- Clinical practice improvement activities (CPIA) (15% percent of total score in year one) – new program
Certain providers may be exempt from MIPS. These exemptions include: providers during their first year of Part B participation; providers have less than or equal to $10,000 of Medicare billing claim charges annually and treat less than or equal to 100 Medicare patients; and those providers that become qualifying participants (QPs) in Advanced APMs. It is also important to note, MIPS does not apply to hospital or facilities.
Alternative Payment Models (APMs)
Alternative Payment Models (APMs) reimburse Medicare providers based on value of services rather than service volume. In keeping with CMS’ trends, APMs ultimately look to incentivize quality and value of care by utilizing new payment models that reduce costs of care and support high–value services not typically covered under Medicare fee-for-service. Familiar examples of existing alternate payment structures include: Accountable Care Organizations (ACOs), Episode-Based Payments, and Patient-Centered Medical Homes (PCMHs). While some of these models use fee-for-service payment structures, they are nevertheless considered APMs because a component of payment is tied to value in some way.
The proposed rule by CMS provides for more specificity regarding Advanced APMs than MACRA and lists what particular models that would qualify as Advanced APMs. The proposed rule also would permit CMS to update this list annually to add new payment models that qualify to be an Advanced APM.
Providers can participate in a qualifying Advanced APM pathway and can become “qualifying participants” and earn incentives for participating. MACRA for the first five years provides a 5% lump sum bonus payment to physicians who participate in qualified Advanced APMs at certain threshold levels. The 5% bonus is computed as a lump-sum based on the aggregate amount of Medicare-covered services for that professional for the preceding year
Also, providers that receive a certain share of their revenue through qualifying Advanced APMs are exempt from MIPs requirements. It is important to note that provider participation in APMs that falls outside of the qualifying Advanced models approved by CMS will still help providers in their performance measurements under MIPS.
While the first year for MACRA is not until 2019, it is anticipated that performance in 2017 may determine the threshold for the first year of MIPS in 2019. Due to the complexity of MACRA, if you have questions or would like assistance in preparing for MACRA, contact Frier Levitt to speak to an attorney.
