The Changing Healthcare System and Impact of MACRA

March 17, 2017

Lori Foley, PrincipalAaron Elias, Consulting Senior

PAYMENT TRANSFORMATION AND HOW IT IMPACTS MLP INSURERS

The Changing Healthcare System and the Impact of MACRA

Agenda

1

2

3

Introduction to MACRA and the Quality Payment Program (QPP)

Advanced Alternative Payment Models

Merit-Based Incentive Payment System

4 Implications for Malpractice Insurance Industry

MACRA and the QPP

Value-Based Reimbursement

FEE-FOR-SERVICE(FFS) PAYMENTS

POPULATION-BASEDAPMs

ADJUSTED FFSPAYMENTS

APMs INCORPORATINGFFS PAYMENTS

$ $ $

Bank

A Pay For Reporting

B Pay For Performance

C Pay/PenaltyForPerformance

A Total Cost of Care Shared Savings

B Total Cost of Care SharedRisk

C Retrospective BundledPayment

D Prospective BundledPayment

A Condition-Specific Population-Based Payments

B Primary Care Population-Based Payments

C Comprehensive Population-Based Payments

A Traditional FFS

B Infrastructure Incentives

C Care Management Payments

CMS VBR Goals*

By December 31, 2016: By December 31, 2018:

85% of Medicare fee-for-service payments tied to scoreson quality and efficiency measures

30% of traditional Medicare payments through APMs

90% of Medicare fee-for-service payments tied to scoreson quality and efficiency measures

50% of traditional Medicare payments through APMs

*The new administration and leadership of HHS may set new goals for CMS going forward, however, MACRA and value-based reimbursement generally has strong bipartisan support.

New Framework for Physician Payments

Advanced Alternative Payment Models

Merit-Based Incentive Payment System (MIPS)

Quality Payment Program(QPP)

Medicare Access and CHIP Reauthorization Act of 2015

CMS Goal: Adjusted FFS Payments CMS Goal: APMs Incorporating FFS Payments

Transition Period

Through December 31, 2018

Starting January 1, 2019

0.5% annual MPFS update (2016-2019)

Payment adjustments• Potential 2% PQRS reporting

penalty

• Potential 3% EHR meaningful use penalty

• Up to +/- 4% Value-Based Modifier bonus/penalty

Annual MPFS update:• 0% in 2020 through 2025

• 0.25% thereafter (0.75% for Advanced APM participants)

Payment Adjustments • 5% bonus for participation in

advanced APMs thru 2024

• Up to +/- 9% MIPS bonus/penalty

Years 1 and 2 Years 3+

Physicians (MD/DO, DPM, OD, DC, DMD/DDS) PAs, APRNs, CNSs, CRNA

Physical or occupational therapists, speech-language pathologists, audiologists, nurse midwives, clinical social workers, clinical

psychologists, dieticians/nutritional professionals

Eligible Clinicians

QPP by the Numbers

Quality Payment Program ParticipationAll Medicare Clinicians 1,380,209

Qualifying APM Participants 70,000 – 120,000Ineligible Clinician Types 199,308Newly Enrolled Clinicians 85,268Low-Volume Clinicians 383,514Total Excluded Clinicians from MIPS 738,090 – 788,090

Total MIPS Participating Clinicians 592,119 – 642,119

Advanced APMs

Advanced APMs (Traditional Medicare) Definite

Medicare Shared Savings Program

(Tracks 2 & 3 Only)

Next Generation ACO Model

Comprehensive ESRD Care (LDO arrangement and Two-Sided Risk)

Comprehensive Primary Care Plus

(re-open applications)

Oncology Care Model (Two-Sided Risk)

In DevelopmentMedicare Shared Savings Program

Track 1+Comprehensive Care for Joint

Replacement (CEHRT Track)

Episodic Payment Model (CEHRT and non-CEHRT Tracks)

Cardiac Rehabilitation Incentive Payment Model

Medicare Diabetes Prevention Program

New Voluntary Bundled Payment Program

Vermont Medicare ACO Initiative

Qualifying Participant

Qualifying Participant Higher % of patients or payments Bonus = 5% of MPFS payments

Payment Year 2019 2020 2021 2022 2023 2024QP Threshold 25% 25% 50% 50% 75% 75%Partial QP Threshold 20% 20% 40% 40% 50% 50%

Payment Year 2019 2020 2021 2022 2023 2024QP Threshold 25% 25% 50% 50% 75% 75%Partial QP Threshold 20% 20% 40% 40% 50% 50%

Medicare Option – Payment Amount Threshold

Medicare Option – Patient Count Threshold

Partial Qualifying Participant Lower % of patients or payments No bonus, no MIPS

Non-Qualifying Participant Subject to MIPS

Other Payer Advanced APMs Credit for participation in Other Payer Advanced APMs starting in 2019

Three criteria: (1) Use of CEHRT; (2) Quality measures; and (3) More than nominal financial risk or medical home model

Submission and approval process Still requires some level of participation in Advanced APMs

Payment Year 2019 2020 2021 2022 2023 2024

MCR MCR Total MCR Total MCR Total MCR Total MCR

QP Threshold - - 50% 25% 50% 25% 75% 25% 75% 25%

Partial QP Threshold - - 40% 20% 40% 20% 50% 20% 50% 20%

Payment Year 2019 2020 2021 2022 2023 2024

MCR MCR Total MCR Total MCR Total MCR Total MCR

QP Threshold - - 35% 20% 35% 20% 50% 20% 50% 20%

Partial QP Threshold - - 25% 10% 25% 10% 35% 10% 35% 10%

All Payer Combination Option – Payment Amount Threshold

All Payer Combination Option – Patient Count Threshold

MIPS Final Score Components

Quality Cost Performance

Improvement Activities

Advancing Care

Information

60%15%

25%

50%

10%

15%

25%30%

30%

15%

25%

2017 Performance Year



Impacts 2019 Payments



2017 Final Score Calculation

Multiply Each By Component Weight

Final Score

Quality Cost Performance

Improvement Activities

Advancing Care

Information

MIPS Payment Adjustments

2019 2022(and

beyond)

2020 2021

+4%

-4%

+5%

-5%

+7%

-7%

+9%

-9%

Up to 12% Scaling Factor




Performance Threshold*

*Performance Threshold will change each year

March 31, 2018

Deadline for individual/group to report on required

measures

Performance-To-Adjustment Cycle

Perform Submit AdjustFeedback

CY 2017

Period of time for which performance will be evaluated

2017 only: may elect 90-day continuous

performance period

Q3 2018

CMS reports on prior year

performance, including

calculation of Final Score and payment

adjustment for upcoming year

CY 2019

Positive or negative MPFS payment

adjustments based on 2017 Final Score

MIPS Participation Election

Final Score assigned to each NPI/TIN Group reporting must include all NPIs who reassign to

TIN; cannot pick and choose NPI who reassigns to TIN reporting as a group may

also report individually; CMS applies higher Final Score

Low-Volume Threshold For 2017, individual or group exempt from MIPS if:

$30,000 or less in allowable Part B charges; or Bill for services for 100 or fewer traditional Medicare

beneficiaries If elect group reporting, NPIs who would be exempt

if reporting individually are NOT exempt Two determination periods (both with 60-day claims

run-out) September 1, 2015, to August 31, 2016 September 1, 2016, to August 31, 2017

2017: Pick Your Pace2017 Reporting Option 2019 Payment Impact

No reporting 4% penalty on all MPFS payments

Report performance for minimum 90-day continuous period

One quality measure OR One clinical practice improvement activity OR All required measures for advancing care information

No penalty, no bonus

Report performance for minimum 90-day continuous period

More than one quality measure OR More than one clinical practice improvement activity OR More than the required measures for advancing care

information

Eligible for up to 12% bonus on all MPFS payments (amount varies based on Final Score and budget-neutral scaling factor)

Report performance on all required measures for minimum 90-day continuous period

Eligible for up to 12% bonus on all MPFS payments (amount varies based on CPS and budget-neutral scaling factor)

If CPS ≥ 70, eligible for additional Exceptional Performance Bonus (amount varies based on Final Score and distribution of $500-million annual fund; cannot exceed 10% of Part B allowed charges)

MIPS Components

Quality Reporting

Manner of Participation

Reporting Mechanism Measure Requirements Data Completeness

Individual Part B Claims6 measures (at least 1 outcome measure) OR

specialty-specific measure set

50% of Part B patients (60% in 2018)

Individual or Group

QCDRQualified Registry

EHR

6 measures (at least 1 outcome measure) OR

specialty-specific measure set

50% of individual’s or group’s patients who

meet measure denominator (60% in

2018)

GroupCMS Web Interface

(register by 06/30/17)

All measures included CMS-selected sample of Part B patients

Improvement Activities Reporting

90+ Improvement Activities Across 9 SubcategoriesEach Graded Medium (10 pts) or High (20 pts)

Expanded Practice Access

Population Management

Care Coordination

Beneficiary Engagement

Patient Safety and Practice Assessment

Participation in an APM

Achieving Health Equity

Integrated Behavioral and Mental Health

Emergency Preparedness and Response

Advancing Care Information Reporting

Base Score (Required) Measures(10 points each; Y/N or report numerator/ denominator)

Performance Score Measures(0 to 10 points each based on level of performance)

Security Risk Analysis Patient-Specific Education

E-Prescribing View, Download, or Transmit

Provide Patient Electronic Access Provide Patient Electronic Access

Send a Summary of Care Send a Summary of Care

Request and Accept Summary of Care Request and Accept Summary of Care

Secure Messaging

Patient-Generated Health Data

Clinical Information Reconciliation

Immunization Registry Reporting (Y/N)

Option 2: Clinicians with CEHRT 2015* (Reportable in 2017 and Beyond)

*CEHRT 2015 is required for MIPS Eligible Clinicians to successfully meet ACI requirements in 2018 and beyond

Cost Performance Component

Not included in 2017 Final Score calculation, but feedback provided

No additional reporting; CMS calculates from claims data Two categories of measures (attribution)

Two total cost-of-care measures Total per-capita costs Medicare Spending Per Beneficiary

Ten episode-based efficiency measures Reported in 2014 supplemental QRUR

Scored on deciles (like quality component)

Patient Relationship Categories

MACRA-mandated tools to compare relative cost performance among eligible clinicians/groups

Begin including codes on claims no later than 01/01/2018 CMS to publish codes in April 2017

Continuing care relationship Acute care relationship Care furnished pursuant to order from other practitioner

1)

Final Score Calculation

Sum of each of the products of each component score and each component’s assigned weight, multiplied by 100

Example: Quality = (55 points / 70 possible points) x 60% Advancing Care Information = (84 points / 100 possible points) x 25% Improvement Activities = (40 points / 40 possible points) x 15% FINAL SCORE = 83.14

1)

MACRA Implications for Malpractice Insurance Industry

Can Physicians Afford to Wait?Inaction Can Have a Significant Cost for Providers

CMS Estimates for 2019

Financial Impact of QPP AmountEstimated Increased Payments from Federal Government to Providers

MIPS Higher Performer Payment Adjustments $199 millionExceptional Performance (MIPS) $500 millionAPM Incentive Payments $333-$571 million

Estimated Decreased Payments from Federal Government to Providers

MIPS Lower Performance Payment Adjustments $199 million

Estimated Penalties and Bonuses

From Proposed Rule: Original estimates that

87% of solo providers were expected to receive a negative payment adjustment under MIPS

On the contrary, 81% of providers in groups of 100+ were expected to receive an upward payment adjustment

From Final Rule: Only 10% of solo

providers are expected to receive a negative payment adjustment under MIPS in 2019

Still, 98.5% of providers in groups of 100+ are expected to receive a neutral or upward payment adjustment in 2019

Changes to Final Rule Improved Outlook for Small Groups

Physician Consolidation

Many independent physicians in small practices feel pressure to consolidate or join larger group

Employment, affiliation, clinical integration are options Reasons:

Access to EHR Shared risk Economies of scale for reporting Improved negotiation position

Are There Alternatives?

Per MACRA, $100M in financial support for small practices Virtual groups coming Easier requirements in some MIPS components for small

groups of less than 15 providers Will small groups consider no longer accepting Medicare

patients?

Individual profile pages Participation in APM Final Score Component scores

Public Information on Physician Compare

Aggregate data Range of Final Scores and component

scores

Implications of Public Availability

Patient Decisions• How will patients use this

information to make decisions about healthcare?

Provider Decisions• How will providers change

their referral patterns?• High-cost providers left

out?

Pressure on Providers

Commercial PayersPerformance Scores Easily Replicated

Will other payers follow suit?

New Provider Recruitment Standards

Providers will carry their Final Score with them. This has implications for health systems, hospitals, and physician groups that are looking to recruit new providers:

1. Impact on future revenue potential

2. Reputational impact that affects the new organization

Malpractice Considerations

Provision under MACRA: plaintiffs may not use a provider’s performance on quality measures as the sole basis to prove negligence

But… what are the implications? Could public information increase claim awards? Facts regarding lack of participation in MIPS, especially the quality

component, may be introduced into evidence

The Role of CMS

Remember, CMS is partly the messenger Congress would have to change the following elements of MACRA:

Timing of payment adjustments MIPS category weights Types of clinicians subject to requirements “More than nominal risk” Range of penalties and bonuses

Future CMS rulemaking may alter timing, component requirements, etc.

Questions?

PERSHING YOAKLEY & ASSOCIATES, P.C.800.270.9629 | www.pyapc.com

Lori A. [email protected](404) 266-9876

Aaron M. EliasConsulting [email protected](404) 266-9876

mailto:[email protected]

mailto:[email protected]

The Changing Healthcare System and Impact of MACRA

Healthcare

Transcript of The Changing Healthcare System and Impact of MACRA