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Presented by Thomas Donohoe | 303.801.3534 | tdonohoe@hallrender.com

Nowhere to Hide: The Inevitability of Payment Reform

Under MACRA and Its Effect on Rural Providers Montana Hospital Association Fall Convention and Trade Show 2016

Presentation Objectives Understanding of:

•Trends culminating in MACRA

•MACRA and its proposed payment programs

•Provider obligations under MACRA

•Industry reaction to the proposed rules

•Next steps to implement mechanisms to prepare for proposed payment programs under MACRA

And general fear . . .

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Buckle Up . . .

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The Road to MACRA • Sustainable Growth Rate (SGR)

– Designed as a mechanism for updating fees to the MPFS

– Provided a conversion factor applicable to Medicare payments for physicians' services for the following year

– Led to 17 overrides of scheduled fee cuts ($150 billion in cost)

• Continued move from volume- to value-based payments

– Hospital-based payment programs: HACs, readmissions, VBP

– Physician payment programs: PQRS, MU and VBM

• Patient Protection and Affordable Care Act of 2010 (ACA)

– Most significant overhaul to U.S. health care system since Medicare and Medicaid

– Introduced new payment models continuing trend of the shift to value-based payments (ACOs, etc.)

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The Road to MACRA • In early 2015, CMS announced that it would be setting benchmark

goals for value-based payments

– By 2016, 85%, and by 2018, 90% of FFS payments tied to quality

– By 2016, 30%, and by 2018, 50% of Medicare payments made through Alternative Payment Models (APMs)

• Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)

– In April, 2015, the president signed into law MACRA, repealing the long-criticized SGR

– MACRA replaced SGR with a new approach to paying clinicians for the value and quality of care they provide

– Proposed rule issued in May 2016 5

Proposed Payment Model: QPP The proposed rule established a unified framework called "The Quality Payment Program," which includes two payment models:

•The Merit-Based Incentive Payment System (MIPS)

•Advanced Alternative Payment Models (Advanced APMs)

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MIPS

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MIPS – The Proposed Rule • Streamlines and combines the current Medicare measures of value and

quality provided by doctors and other clinicians (PQRS, MU and VBM)

• Adds a fourth component to promote ongoing improvement and innovation to clinical activities

• Combined, creates the new following performance categories:

– Quality Reporting

– Resource Use

– Advancing Care Information (ACI)

– Clinical Practice Improvement Activities (CPIA)

• Adjusts FFS payments based on composite measure of quality and value

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MIPS – Medicare Part B Eligibility • Who is a MIPS eligible clinician (EC)?

• Who is NOT a MIPS EC? – First year Medicare Part B participants

– Below low-volume threshold

– Participants in Advanced APMs

Years 1 and 2 • Physicians • PAs • NPs • Clinical nurse specialists • Certified registered nurse

anesthetists

Years 3+ • Physical therapists • Occupational therapists • Language pathologists • Audiologists • Nurse midwives • Clinical psychologists • Dietitians

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MIPS – Performance Categories and Scoring

• Payment adjustments are determined by performance scores

• A single MIPS composite performance score (CPS) will factor in performance in the 4 categories on a 0-100 point scale

• Clinicians can choose the measure on which they will be evaluated for the quality, CPIA and ACI performance categories

• Non-patient facing ECs subject to modified reporting criteria and re-weighted performance

• Budget neutral payments

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MIPS – Reporting Mechanisms • Individual ECs

– Qualified registries

– EHRs

– QCDRs

– Medicare Part B claims (for quality only)

– Attestation (for CPIA and ACI)

• Groups (not reporting through APMs)

– The above plus • A CMS Web Interface (for groups composed of at least 25 ECs)

• A CMS-approved survey vendor for groups that elect CAHPS for MIPS survey as a quality measure

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MIPS – Scoring Weights

Source: CMS Quality Payment Program Training Slides, Extended Version, Slide 21 12

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MIPS – Quality Performance Category

• ECs must select 6* measures. These must include:

– 1 cross-cutting measure and 1 outcome measure, or another high priority measure if an outcome measure becomes unavailable

• Cross-cutting measure = measure that is broadly applicable across multiple settings and groups with a variety of specialties

• Outcome measure = looks at patient care outcomes

• High priority measure = looking at outcomes, appropriate use, patient safety, efficiency, patient experience or care coordination

• Individual or specialty measure set

• Population measures are automatically calculated

• Different reporting mechanisms = modified requirements

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Example of Individual Quality Metrics

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Source: 81 Fed Reg 28399-

400, Table A

Example of Specialty Sets Metrics

15 Source: 81 Fed Reg 28474, Table E

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MIPS – Quality Performance Category Measure Type

Submission Mechanism

Submission Criteria Data Completeness

Global Population

Individual EC Part B Claims Report 6 measures, one cross cutting and one outcome, or other high priority if outcome not available. If less than 6 measures available, report on all applicable measures. Select measures from either Table A, or Specialty Set in Table E

80 percent of MIPS EC patients

Also scored on Acute and Chronic Composite Measures Hospital Readmission composite applies only to Groups of 10 or more

Individual EC or Groups

QCDR, Qualified Registry, EHR

Report 6 measures, one cross cutting and one outcome, or other high priority if outcome not available. If less than 6 measure available, report on all applicable measures. Select measures from either Table A, or Specialty Set in Table E

90 percent of MIPS EC patients

Also scored on Acute and Chronic Composite Measure Hospital Readmission composite applies only to Groups of 10 or more

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Source: 81 Fed Reg 28190, Table 3

MIPS – Quality Performance Category Measure Type

Submission Mechanism

Submission Criteria Data Completeness

Global Population

Groups CMS Web Interface Report on all measures included in the CMS Web Interface AND populate data fields for first 248 consecutively assigned beneficiaries. If less than 248 beneficiaries are assigned, report data on 100% of assigned beneficiaries

Sampling Requirement for their Medicare Part B patients

Scored on All Three Global Population Measures

Groups CAHPS For MIPS Survey

CAHPS for MIPS Survey would fulfill the requirement for one cross-cutting measures and/or patient experience measure. Group would need to report 5 other quality measures by some other mechanism

Sampling Requirement for their Medicare Part B patients

Also scored on Acute and Chronic Composite Measure Hospital Readmission composite applies only to Groups of 10 or more

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Source: 81 Fed Reg 28190, Table 3

MIPS – Highlights of Quality Scoring • Each EC gets assigned 1-10 points based EC performance compared to benchmark

• For most reporting mechanisms: total possible points is 90

– (6 Quality Measures x 10 points + 3 Population Measures x 10 Points = 90)

– Can be different depending on the circumstances (i.e., specialties, or groups < than 10)

• Miscellaneous concepts

– If EC fails to submit a required Measure (i.e., cross-cutting or outcome), or not "data complete," then EC will receive 0 points for that measure

– If EC submits a measure, but it doesn't have a benchmark or doesn't meet case minimum, you get recognition for submitting the measure, but not included in score

– Bonus points available for submitting extra Outcome or High Priority measures with cap

– Bonus Points available for use of QCDR

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MIPS – Resource Use Measures • Evaluates EC cost efficiency in providing care

• Relies on administrative claims data rather than reporting by ECs

• Measures:

– Total per capita costs for all attributed beneficiaries (excludes Part D)

– Medicare spending per beneficiary (MSPB)

– Several episode-based measures (41 proposed)

• Patient attribution threshold lowered to 20 beneficiaries/episode

• Can be risk-adjusted to reflect external factors

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MIPS – Resource Use Scoring

Source: CMS Resource Use Training Slides, Slide 27 20

MIPS – CPIA Measures • Activities that improve clinical practice or care delivery and

are likely to improve care outcomes

• Defined annually with criteria; 90 activities available in proposed rule

• Examples

– Telehealth services

– After-hours availability (see example)

• Exceptions for groups with 15 or fewer ECs, ECs in rural areas and non-patient facing ECs (receive 50% of CPIA score regardless of level of activity)

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Examples of CPIA Measures

22 Source: 81 Fed Reg 28570, Table H

MIPS – CPIA Scoring • For a high score of 100% on the CPIA measure, the EC or group must earn

60 points by submitting:

– 3 high-weighted CPIAs (20 points each); or

– 6 medium-weighted CPIAs (10 points each); or

– A combination of the two

• Provider must perform activity for at least 90 days during the performance period

• Variations of credit for other activities

– PCMH – 100% of highest score

– APMs – at least 50% of highest score

– Participate in CMS's study on practice improvement – 100% of highest score

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MIPS – ACI Measures • Replaces EP program under MU

• Promotes flexibility as opposed to all or nothing approach under MU

• Scoring category based on 100 points (up to 131 points to be earned)

– Base score of 50 points across 6 categories

• Failure to obtain base score result in 0 total ACI score

• Immunization registry reporting is a required objective

• Failure to attest to "protecting patient health information" results in 0 total ACI score

– Additional performance score up to 80 points in 3 categories

– 1 bonus point for reporting to public health registry beyond immunization

• Exemption for hospital-based ECs

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MIPS – ACI Base Score

25 Source: 81 Fed Reg 28222, Table 6

MIPS – ACI Performance Score

26 Source: 81 Fed Reg 28225, Table 7

MIPS – Payment Adjustments

Quality score

weighted 50%

Cost score

weighted 10%

ACI score

weighted 25%

CPIA score

weighted 15%

Composite

Performance

Score (CPS)

CPS at threshold (tied to

average performance) = 0%

CPS above threshold = 0% to 4%

CPS below threshold = 0% to -4%

Depending on CPS distribution, upward

adjustments only could increase up to 3x to

maintain budget neutrality

Physicians with CPS scores

< 25% of threshold receive

maximum reduction

Up to $500 million available

2019-2024 to provide 10%

extra bonus for exceptional performance (> top 25% of

those above the threshold)

Maximum adjustment ranges increase to +/- 5% in 2020, +/- 7%

in 2021, +/- 9% in 2022 onward

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ADVANCED APMS

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Advanced APMs – The Proposed Rule

• Moves away from FFS payment to payment models focused directly at the patient and population level

• Definition:

– Advanced APMs are programs through which clinicians accept risk for providing coordinated, high quality care

– Must be a CMS Innovation Center model or a statutorily required demonstration and must generally:

• Require participants to bear a certain amount of financial risk

• Base payments on quality measures comparable to those used in the MIPS quality performance category

• Require participants to use CEHRT

• Differ from MIPS APMs

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Requirements of an Advanced

APM • Risk

– Entity meets the financial risk requirement if CMS withholds payment, reduces rates or requires the entity to make payments to CMS if its actual expenditures exceed expected expenditures

• Base Payments

– Advanced APMs must base payment on quality measures that are evidence-based, reliable and valid. One such measure must be an outcome measure from MIPS measure list

• EHR Technology

– At least 50 percent of the clinicians use CEHRT to document and communicate clinical care information in the first performance year. This requirement increases to 75 percent in the second performance year

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Examples of Advanced APMs • Medicare Shared Savings Program (Track 2 and Track 3)

• Next Generation ACO Model

• Comprehensive ESRD Care (CEC) (large dialysis organization arrangement)

• Comprehensive Primary Care Plus (CPC+)

• Oncology Care Model (OSM) (two-sided risk track available in 2018

• Episode Bundles*

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Risk Criteria for Advanced APMs • Total risk > 4% total expenditures captured by

model

– Not necessarily limited to spending on physician services

• Marginal risk > 30%

– Entity owes payer at least 30% of excess expenditures

• Minimum loss ratio < 4%

– First 4% of excess spending does not trigger losses

• When actual expenditures exceed expected spending, repayment can be made by:

– Direct payment

– Reduction in payment rates

– Withheld payments

Source: 81 Fed Reg 28308

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Advanced APMs – Becoming a QP

33 Source: 81 Fed Reg 28295

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Advanced APMs – The Incentives • Incentive payment equal to 5 percent of the QP's prior year's

Part B professional billings from 2019 to 2024

• Beginning in 2026, participants will qualify for a 0.75 percent increase in payments each year

• QPs will be excluded from MIPS

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MACRA Timeline

35 Source: CMS Website

THE EFFECT ON RURAL PROVIDERS

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MIPS – Effect on CAHs • Method I

– MIPS adjustment applies to payments made for items and services billed by ECs under the MPFS – would not apply to the facility payment to the CAH

• Method II

– If ECs have not assigned their billing rights to the CAH, the MIPS adjustment applies in the same manner as for ECs who bill for items and services in Method I CAHs

– If ECs have assigned their billing rights to the CAHs, professional services constitute "covered professional services" because they are furnished by an eligible clinician and payment is "based on" the MPFS, and MIPS payment adjustment applies 37

APMs – Effect on CAHs • ECs who furnish services at CAHs that have elected to be paid

for outpatient services under Method II will be eligible to become QPs and receive the APM incentive payment if they are part of an Advanced APM Entity

• Incentive payment will be made to the Advanced APM Entity

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MACRA – Effect on RHCs and FQHCs

• Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs)

– MIPS does not apply to FQHCs or RHCs, or to clinicians billing under the payment systems for FQHCs or RHCs

– However, MIPS applies to ECs who bill services under the MPFS (even if they practice in an RHC/FQHC) (e.g., moonlighting, private practice)

• Professional services furnished at CAHs, RHCs and FQHCs that meet certain criteria be counted towards the QP determination

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Other Effects • Low-volume exclusion

– Clinicians and groups with less than or equal to $10,000 Medicare charges or 100 Medicare patients excluded

• Insufficient measures and activities in a MIPS performance category, then not included in MIPS performance category (and other categories re-weighted)

• Streamlined metrics and reporting

• Technical assistance: $100M over 5 years to QIOs and Regional Extension Centers for practices of 15 or fewer ECs

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The Reality for Rural Providers • Penalization of small medical practices

– Fewer resources to invest in care infrastructure and fewer patients and providers to smooth out any outliers in the data

• Data collection is burdensome for rural providers

– Lack of HIT measures to report quality data

• Rural providers are essentially excluded from participation in Advanced APMs due to financial risk

– Operational risk of participating in an Advanced APM is more than nominal risk for rural providers

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INDUSTRY RESPONSE TO

PROPOSED RULE

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AHA Feedback on the Proposed Rule

• AHA comments from June 27, 2016

– Need expanded definition of Advanced APMs where downside risk comes from the substantial operational investment

– Offer better reporting mechanisms for hospital-based physicians

– Incorporate socioeconomic adjustments to performance calculation

– Ensure greater alignment between MU and MIPs ACI category

– Higher low-volume threshold for exemption

– Address data capture for CAHs billed under Method II for reassigned ECs 43

AMA Feedback on the Proposed Rule

• AMA comments from June 27, 2016

– There needs to be an initial transitional period from July 1, 2017 to December 31, 2017

– Physicians should be allowed to select a shorter reporting period or use the full calendar year if they believe it is more appropriate for their practice

– Reporting burdens for small, rural, HPSAs and similarly situated practices should be lowered

– Focus on a single total score rather than creating multiple scoring subcomponents

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NOSORH Feedback on the Proposed Rule

• NOSORH comments from June 27, 2016

– Need to develop rural-specific quality measures/measure adjustments to better judge rural providers

– Rural peer groups and rural-specific standards should be established for rural provider performance in all domains

– Risk adjustment mechanisms that include rural-specific factors should be established, with an emphasis on HPSA implications

– The volume criterion for exemption from MIPS should be raised and set even higher for rural underserved areas

– Exempted providers should voluntarily report to produce informative data 45

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NRHA Feedback on the Proposed Rule

• NRHA comments from June 27, 2016

– Comparisons should occur between equivalent cohorts

– Although the inclusion of rural providers is applauded, special considerations should be made for those that have not previously participated in PQRS, VBM or MU

– Need appropriate measures for low volume and rural providers

– Rural-relevant sociodemographic factors in risk adjustment should be included

– RHC ECs should not be subject to MIPS for the small number of claims that are submitted under the MPFS

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And Then This . . . • September 8, 2016 blog post by Andy Slavitt

• Outlined four high level, but vague, options for QPP participation

– Option 1

• Submit some data to under the QPP, including data from after January 1, 2017 and no negative payment adjustment (but broader participation expected in 2018 and 2019?)

– Option 2

• Submit data for a reduced number of days and still qualify for a positive payment adjustment

– Option 3

• Submit data for the entire 2017 performance year (same?)

– Option 4

• Participate in an Advanced APM for the entire performance year 2017 (same?)

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What Happens Next? • Final Rule expected on November 1, 2016

– Definitions of Advanced APMs?

– Low-volume thresholds and other exclusions?

– Details on flexibility with new options?

• Then what? – Determination of optimal reporting program: MIPS or APMs

– Understanding and election of measurements and reporting requirements

– Development of measurement and reporting infrastructure

– Strategic discussions on future reporting to maximize performance

• Move to Advanced APMs

• Increased alignment around reporting metrics with ECs

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Please visit the Hall Render Blog at http://blogs.hallrender.com for more information on topics related to health care law.

Thomas M. Donohoe 303.801.3534 tdonohoe@hallrender.com

This presentation is solely for educational purposes and the matters presented herein do not constitute legal advice with respect to your particular situation.

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