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MACRA – Measuring the Financial & Strategic Impact
HFMA Texas
Austin, TX
March, 2017
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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
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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
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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
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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)
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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
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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
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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
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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
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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
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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
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MIPS TRACK
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Measurement period
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)
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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
Merit-Based Incentive Payment System (MIPS) adjustments
2019
+/-4%
2020
+/- 5%
2021
+/- 7%
2022 & beyond
+/- 9%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Performance
Period 1
MIPS exceptional performance adjustment; ≤ 10% Medicare payment (2019-2024)
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
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• 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+
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Example of MIPS Potential: Highly Asymmetrical Risk Corridor for 5 Years
Potential Penalty Potential Bonus
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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
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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
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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)
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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
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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
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Medicare ACOs: 26% - 50% Success
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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
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MIPS – APM Track
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Measurement period
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)
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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
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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
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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
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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
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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
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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
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QUESTIONS?
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Bryan Smith, Principal
bryan_sm [email protected]
www.PremierInc.com
Brent Hardaway, Vice President