MACRA Measuring the Financial & Strategic Impact · Premier has identified a decision making process and is seeing recurring themes across markets and will discuss those themes today

1 © 2017 PREMIER, INC.

MACRA – Measuring the Financial & Strategic Impact

HFMA Texas

Austin, TX

March, 2017


Overview

Objectives:

• Learn about key elements of the MACRA legislation

• Understand the strategic choices before health systems and the financial ramifications

• Determine the variables important to your organization

Themes:

• MACRA has more strategic implications than other Medicare Value Based Purchasing initiatives

• The greatest impact for health systems may come from indirect consequences, not assessed penalties or bonuses

• The correct strategic course may not be intuitive and financial managers should lead the way in assessing options


Market Pressures

1. Aging Population 2. Significant Spend Increase

15.5%16.0%16.5%17.0%17.5%18.0%18.5%19.0%19.5%20.0%20.5%

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

National Health Expenditures, per capita

3. Not Fiscally Sustainable 4. Chronic Conditions


Better Care. Smarter Spending. Healthier People

Volume to Value

Track 1:

Value-based payments2016

85% of all Medicare payments

201890% of all Medicare payments

Track 2:

Alternative payment models* 30% of all Medicare payments 50% of all Medicare payments

Focus Areas

Incentives

Care

Delivery

Information

Description

Promote value-based payment systems

– Test new alternative payment models

– Increase linkage of Medicaid, Medicare FFS, and other payments to value

Bring proven payment models to scale

Encourage the integration and coordination of clinical care services

Improve population health

Promote patient engagement through shared decision making

Create transparency on cost and quality information

Bring electronic health information to the point of care for meaningful use


Fee For Service Population Health Management

76.… 75.4%

67.9%64.8%

61.7%54.7% 51.3% 49.5%

23.6% 24.2% 25.6% 27.5% 29.1% 30.9% 32.5% 32.2%

0.0% 0.4%

6.5% 7.7% 9.2%14.4% 16.3% 18.3%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

2010 2011 2012 2013 2014 2015 2016 2017

Perc

en

t o

f M

ed

icare

Ben

efi

cia

ries

Projection for 2017

Trad

MA

ACO

Sources:

https://innovation.cms.gov/Files/fact-sheet/nextgenaco-fs.pdf

http://www.markfarrah.com/healthcare-business-strategy/An-Analysis-of-2017-Medicare-Business-Competition.aspx

FFS 2015#: 38 (http://www.cbo.gov/sites/default/files/cbofiles/attachments/44205-2015-03-Medicare.pdf) - 7.9M (the ACO population)= 30.1M

ACO 2016 #: 8.9M (http://www.hhs.gov/about/news/2016/01/11/new-hospitals-and-health-care-providers-join-successful-cutting-edge-federal-initiative.html)

MA 2015#: 17M (http://www.cbo.gov/sites/default/files/cbofiles/attachments/44205-2015-03-Medicare.pdf)

https://innovation.cms.gov/Files/fact-sheet/nextgenaco-fs.pdf

http://www.markfarrah.com/healthcare-business-strategy/An-Analysis-of-2017-Medicare-Business-Competition.aspx


Healthcare Implications

There is no new money

Increased strength of large physician groups

Continued growth of value-based payment models, including MACRA

Increased market competition for device and pharmaceuticals

Increased state control

Continued push toward consumer-driven healthcare

Growth in, and increased competition for, Medicare Advantage, private health plans

1

2

3

4

5

6

7


The MACRA Challenge

The MACRA legislation was made into law

in 2015, Interim Final regulations were

released in October of 2016 and the first

performance period began in January

The short time span between rulemaking

and implementation, and the lack of high

quality data, means providers must make

decisions with less than perfect

information

Premier has identified a decision making

process and is seeing recurring themes

across markets and will discuss those

themes today

In order for providers have time to think

strategically while preserving options for

2018 they must take 2 critical, non-

binding steps in May

“MACRA is the burning platform for progress in care delivery,

just as the ACA was in health care coverage,”

- Andy Slavitt, former Acting Administrator of CMS


Health systems which build advanced APMs may have

some employed clinicians remain in MIPS

Independent physicians, may feel threatened by MIPS and

drawn toward AAPMs, with or without

hospital partners

MACRA & MIPS= incentive to move toward population

health; a carrot, not a stick

Value Modifier and PQRS performance scores for employers

of large numbers of physicians

appear close to the mean

8

The APM bonus may not equal the total cost of

developing a two-sided risk ACO

The risk poised by MIPS is typically less than the risk

inherent in a two-sided ACO

more organizations to start an upside risk

ACO (that do not qualify for an APM bonus)

than two sided risk models

MACRA, by itself does not change the underlying economics of

health system management but is a

potential tool for physician alignment

MACRA appears to motivate

MACRA Readiness – Early Observations


MACRA Reform Timeline(MEDICARE ACCESS AND CHIP REAUTHORIZATION ACT OF 2015)

*Pay for reporting will continue past 2018 for eligible professionals that are unable to participate in MIPS, however this group has yet to be defined.

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Permanent repeal of SGR

Updates in physician payments M

IPS

Tra

ck 2018

4%

2026

0.5% (7/2015-2019) 0% (2020-2025)

AA

PM

Tra

ck

Measurement period

Measurement period

2017

-3.0%

Advanced APM participating providers exempt from MIPS; receive annual 5% bonus (2019-2024)

Merit-Based Incentive Payment System (MIPS) adjustments

2019

+/-4%

2020

+/- 5%

2021

+/- 7%

2022 & beyond

+/- 9%

MIPS exceptional performance adjustment; ≤ 10% Medicare payment (2019-2024)

0.75% update

0.25% update

Measurement periodNon-Advanced APM participating in MIPS with enhanced scoring and reporting; Potential to move to AAPM

0.25% update

MIP

S A

PM

Tra

ck

PQRS

Meaningful Use

Value-based Payment Modifier


10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

10% 0.1% 0.2% 0.3% 0.4% 0.5% 0.5% 0.6% 0.7% 0.8% 0.9%

20% 0.2% 0.4% 0.5% 0.7% 0.9% 1.1% 1.3% 1.4% 1.6% 1.8%

30% 0.3% 0.5% 0.8% 1.1% 0.4% 0.6% 0.9% 2.2% 2.4% 2.7%

40% 0.4% 0.7% 1.1% 1.4% 1.8% 2.2% 2.5% 2.9% 3.2% 3.6%

50% 0.5% 0.9% 1.4% 1.8% 2.3% 2.7% 3.2% 3.6% 4.1% 4.5%

60% 0.5% 1.1% 1.6% 2.2% 2.7% 3.2% 3.8% 4.3% 4.9% 5.4%

70% 0.6% 1.3% 1.9% 2.5% 3.2% 3.8% 4.4% 5.0% 5.7% 6.3%

80% 0.7% 1.4% 2.2% 2.9% 3.6% 4.3% 5.0% 5.8% 6.5% 7.2%

90% 0.8% 1.6% 2.4% 3.2% 4.1% 4.9% 5.7% 6.5% 7.3% 8.1%

100% 0.9% 1.8% 2.7% 3.6% 4.5% 5.4% 6.3% 7.2% 8.1% 9.0%

% of Organization’s Total Revenues from Eligible Providers’Fees%

of

EP

’s R

eve

nu

efr

om

F

FS

Me

dic

are

MIPS’ Maximum Penalty on Organization’s Total Revenues


Thinking Strategically About MACRA

MIPS

MIPS +

Non-Qualified

Alternative Payment

Model (APM)

Advanced

Alternative

Payment Models

Providers who do not meet

exclusion criteria and are not

part of an APM

Providers participating in a

non-Advanced APM or

partially qualified QPs

Providers participating in an

Advanced APM and meet

volume thresholds

TOTAL MIPS TRACKTOTAL NON-QUALIFIED

APM TRACK

TOTAL QUALIFIED

APM TRACK

57% of organizations change the preliminary

strategic direction after an assessment – with 75%

deciding to take less risk than originally thought


MIPS TRACK

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Measurement period


2019

+/-4%

2020

+/- 5%

2021

+/- 7%

2022 & beyond

+/- 9%



60%

0%

15%

25%

Merit-based Incentive Payment System (MIPS)

50%

10%

15%

25%

2019

30%

30%

15%

25%

Quality — PQRS Measures, PQIs (Acute and Chronic), Readmissions

Cost— MSPB, Total Per Capita Cost, Episode Payment

Advancing care information — Meaningful Use Objectives and Measures

Improvement activities — Expanded access, population management,

care coordination, beneficiary engagement, patient safety, social and community

involvement, health equity, emergency preparedness, behavioral and mental health

integration and Alternative payment models.

• Sets performance targets

in advance, when feasible

• Sets performance

threshold at 3; median or

mean in later years.

• Improvement scores in

later years


2019

+/-4%

2020

+/- 5%

2021

+/- 7%

2022 & beyond

+/- 9%

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Performance

Period 1


2020 2021

Any continuous 90-

days in CY 2017 is

performance period

for CY 2019

CY 2018 is

performance period

for CY 2020.

Cost/quality- Full

year;

ACI/Improvement-

any 90 days


• Exclusions from MIPS:

• New Medicare-enrolled eligible clinicians

• Enrolled during the performance year

• Not previously part of a group or billing under a different TIN

• Eligibility determined quarterly

• Clinicians below the low-volume threshold

• Less than $30,000 in charges OR

• Provides care for fewer than 100 beneficiaries

• Determination is at reporting level

MIPS: Eligible Clinicians

• Physical or Occupational Therapist,

• Speech-Language Pathologists,

• Audiologists,

• Nurse Midwives,

• Clinical Social Workers,

• Clinical Psychologists,

• Dieticians & Nutritional Professionals

• Qualifying/Partial Qualifying Advanced

APM Participants

• Non-Patient Facing MIPS ECs

• Individuals: bill 100 or fewer patient-

facing encounters

• Groups: More than 75% of NPIs under the

TIN meet the individual threshold

• Practitioners at only RHCs or FQHCs

• Physician,

• Physician Assistants,

• Nurse Practitioners,

• Certified-Nurse Specialists,

• Certified Registered Nurse Anesthetists

Years 1 and 2 Years 3+


Example of MIPS Potential: Highly Asymmetrical Risk Corridor for 5 Years

Potential Penalty Potential Bonus


MIPS Proposed Rule Estimated Impact by Practice Size (Pre-Revision)

Practice SizeEligible

Clinicians

Physician Fee

Schedule Allowed

Charges (mil)

Percent Eligible

Clinicians with

Negative

Adjustment

Percent Eligible

Clinicians with

Positive

Adjustment

Aggregate

Impact Negative

Adjustment (mil)

Aggregate Impact

Positive

Adjustment

(mil)

Solo 102,788 $12,458 87.0% 12.9% -$300 $105

2-9 123,695 $18,697 69.9% 29.8% -$279 $295

10-24 81,207 $9,934 59.4% 40.3% -$101 $164

25-99 147,976 $12,868 44.9% 54.5% -$95 $230

100+ 305,676 $18.648 18.3% 81.3% -$57 $539

Overall 761,342 $72,606 45.5% 54.1% -$833 $1,333


2017: Transition Year

• Test Participating: Submit some data to avoid a negative payment adjustment

• Submit Partial Year Data: Receive a small positive payment adjustment

• Submit Full Calendar Year Data: Receive a modest positive payment adjustment

CMS is offering a “Pick your Pace” plan for the first year of the Quality Payment Program to

allow clinicians to choose their participation level while avoiding a negative adjustment


Advanced APM Tracks

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Measurement periodAPM participating providers exempt from MIPS;

receive annual 5% bonus (2019-2024)

0.75%

update

(2026)


Inclusion in

Advanced APMs

triggers exclusion

from MIPS.

Advanced APM participating providers exempt from MIPS; receive annual 5% bonus (2019-2024)

.75% update 2026 T

rac

k 2

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

1 | Use certified EHR

technology,

2 | Pay based on MIPS

comparable measures

• Total payments exclude payments made by the Secretaries of

Defense/Veterans Affairs and Medicaid payments in states without

medical home programs or Medicaid APMs.

* Minimum of 25% of Medicare payments must be in APM, unless partial

qualifying at 20% with no 5% bonus and a choice of MIPS

Threshold of payments in an Advanced

APM:

Measurement period

Greater

update

vs. Track

1

program

3 | Bear more than

“nominal” financial risk

for losses

Advanced Alternative Payment Models (APM)

Entities must:

Advanced APM Overview


What Qualifies for Advanced APM

Comprehensive ESRD Care (CEC)

Comprehensive Primary Care Plus (CPC +)

Medicare Shared Savings Program

tracks 2 & 3*

Next Generation ACO Model*

Oncology Care Model (OCM) two-sided risk

arrangement

Proposed for 2018• Medicare Shared Savings Program track 1+

• Advancing Care Coordination through Episode Payment

Models (EPMs) Track 1

• Comprehensive Care for Joint Replacement

• New voluntary bundled payments program

* Known to Have Upcoming Open Enrollment & Encompass Majority of Medical Staff


Medicare ACOs: 26% - 50% Success


Evaluating Risk: Choice Between MIPS & Advanced APM

of Part B payments

of employed

clinicians at risk

under MIPS

of all Parts A & B

expenditures for a

population at risk under

MSSP Track 3


MIPS – APM Track

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Measurement period


2019

+/-4%

2020

+/- 5%

2021

+/- 7%

2022 & beyond

+/- 9%



CMS Preliminary Rule

The Intersection of MSSP and MIPS

Quality: 50%• Measures reported by APM

• Shared Savings Program ACOs submit quality measures to the CMS Web Interface

on behalf of their MIPS eligible clinicians

• The MIPS quality performance category requirements and benchmarks will be used to

determine the MIPS quality performance category score at the ACO level

Advancing Care Information: 30%• All MIPS eligible clinicians participating in the APM entity group submit through this category according to the

MIPS requirements

• Their performance is assessed as the weighted average score for TINs, which will yield one ACO group score

Improvement Activities: 20%• All MIPS eligible clinicians participating in the APM entity group submit through this category according to the MIPS

requirements

• They automatically receive half the points

• Models awarded full points: Shared Savings, Next Gen, Comprehensive ESRD Care, Oncology Care Model, CPC+

• Their performance is assessed as the weighted average score for TINs, which will yield one ACO group score

Cost: 0%• NotAssessed


ACOs in Texas

Sources: 2017_Medicare_Shared_Savings_Program_Organizations; Next_Generation_ACO_Models; Definitive Healthcare; Google My Maps

MSSP Track 1

MSSP Track 2

MSSP Track 3

NGACO

ESRD Model

• 46 Texas Medicare ACO’s in 2017:

• 33 MSSP Track 1 (not Advanced APM)

• 1 Track 2

• 6 Track 3

• 3 NextGen

• 3 ESCO

• Of the 37 ACOs active in 2015, 14 (38%)

generated $135 Million in shared savings

payments for 2015;

• Of those an estimated 70% were formed by

independent physician groups


List of ACOs on Map

# on Map ACO Name City # on Map ACO Name City

5 Amarillo Legacy Medical ACO Amarillo 11 CHRISTUS Health Quality Care Alliance (AKA CPG Quality Care Alliance)Irving

15 Essential Care Partners ACO Austin 32 USMD - Medical Clinic of North Texas (MCNT) Irving

17 Integrated ACO Austin 24 Prime Care Managers Longview

25 Seton Accountable Care Organization Austin 2 Covenant ACO Lubbock

6 Sunshine ACO Brownsville 4 Allied Providers ACO Lufkin

27 St Joseph Health Partners ACO Bryan 5 Rio Grande Valley Health Alliance McAllen

22 Premier Care Community Carrollton 20 MHT-ACO (AKA ACO Providers of Austin) McKinney

23 Premier Patient Healthcare Carrollton 14 East Texas Accountable Care Organization Nacogdoches

7 Baylor Scott & White Quality Alliance Dallas 26 Shannon Clinic San Angelo

19 Methodist Patient Centered ACO Dallas 6 Baptist Integrated Physician Partners San Antonio

30 TXCIN Dallas 31 UPSA ACO San Antonio

1 Baptist Accountable Care Dallas 1 Fresenius Seamless Care of Central Texas San Antonio

2 UT Southwestern Accountable Care Network Dallas 16 GHN ACO Seguin

3 Fresenius Seamless Medical Care of Dallas LLC Dallas 13 Collom & Carney Clinic ACO Texarkana

4 RGV ACO Health Providers Donna 2 ACO Providers Texas City

3 Alliance ACO Gonzales 29 Trinity Mother Frances CARECovenant (FKA Care Compact)Tyler

9 Buena Vida y Salud ACO Harlingen 10 Care4Texans Waco

33 VOP Accountable Care Harlingen 28 Texoma ACO Wichita Falls

1 Accountable Care Coalition Of Texas Houston

8 Baylor St Lukes Health Network ACO Houston MSSP Track 1

12 Chrysalis Medical Services Houston ESCO

18 Memorial Hermann Accountable Care Organization Houston MSSP Track 2

21 Physicians ACO Houston MSSP Track 3

1 Accountable Care Coalition of North Texas LLC Houston NextGen

3 Houston Methodist Coordinated Care Houston

1 Accountable Care Coalition of Southeast Texas Inc Houston

3 Accountable Care Coalition of Chesapeake, LLC Houston

2 Fresenius Seamless Care of Houston Houston


Results from First 25 Assessments

Remain in MIPS12%

Select APM-MIPS56%

Thoughfully Become

Advanced APM28%

Dumbly Become

Advanced APM4%

40% of clients believe they

have reached a conclusion

before the assessment begins

Of those, 60% change course

after seeing the numbers


Key Variables to Consider

• Ability to report and perform under MIPS

• If referral sources can report and perform, and what they might do if not

• Financial impact of bonuses or penalties under MIPS and Advanced APMs

• If those funds will flow to the individual providers or stay at the group level

• When will other payers move to Value Based Purchasing, including shared risk

• Ability to succeed (or at least not lose money) in an Advanced APM

• How the organization could use the federal waivers associated with some APM’s

to better align with providers

• Where this aligns with the organization’s Medicare / population health strategy


Retain Options & Create Time: MSSP & Track 1+

• If you do not submit a Notice of Intent to Apply by end of May, you will need to wait a full year to apply, reducing your options for 2018 reporting

• Completing the NOIA typically takes less than an hour of work

• Between May 1st and Noon ET on May 31st, go to the following website and click the link to the online NOIA (Notice of Intent to Apply):

– https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Application.html

• Submitting the NOIA does not compel the organization to apply, but if a NOIA is not filed by the deadline, the organization will lose the option to start a MSSP or Track 1+ ACO for a full year

• There are additional requirements throughout the year to complete an application and organizations do not have to make a commitment until the contract is signed in December

Contact [email protected] with any questions about the application process


QUESTIONS?


Bryan Smith, Principal

bryan_sm [email protected]

www.PremierInc.com

Brent Hardaway, Vice President

[email protected]

Documents

MACRA Measuring the Financial & Strategic Impact · Premier has identified a decision making process and is seeing recurring themes across markets and will discuss those themes today