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The Imminent Restructuring of Medicare Reimbursements Driven by MACRA

Under Pressure

PHYSICIANS, GET READY. HEALTHCARE CHANGES YOU CAN’T AFFORD TO IGNORE.

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Under Pressure

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ContentAbstract ..............................................................................................4Introduction .......................................................................................5Medicare Payment Goals .................................................................6A New Way to Measure Quality ......................................................9Huge Annual Payment Adjustments .............................................10MACRA Rewards .............................................................................12Innovation & Technology ................................................................16Geneia ...............................................................................................18

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AbstractThere is a new timeline for change in healthcare reform. Leaders of healthcare delivery systems cannot afford to ignore this accelerated pace. The Centers for Medicare & Medicaid Services (CMS) are leading the charge with increased value and quality structures, and the commercial sector will not be far behind.

Physicians and physician-led practices must make the time to understand these seismic changes that fundamentally alter their Medicare reimbursements or watch them dry up.

While the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) impacts a wide breadth of issues, this paper focuses on the reimbursement structure changes that are impacting physician-led delivery systems with 15 or more medical professionals. It is expected that larger hospital systems and the commercial sector will soon face similar adoptions.

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IntroductionPhysicians and healthcare delivery system leaders are not prepared for the accelerated pace of change, nor the depth of change, that is happening right now in Medicare reimbursements. This year – 2016 – is the fulcrum, the tipping point. Physicians need to pay attention and take action today – and throughout this year – or be left wondering why their Medicare reimbursements have dried up.

The Centers for Medicare & Medicaid Services (CMS) have reset the bar for Medicare reimbursement and private payers will not be far behind. In the words of Andy Slavitt, acting administrator at the Centers for Medicare & Medicaid,

“Whether in ACOs, bundled payments, primary care, oncology or

soon to be specialty models we support as we implement MACRA, we

will reward for better care, higher quality care, more coordinated and

patient centered care – not simply more care. And our goal isn’t simply

to launch new models, but to support better outcomes and a simpler

delivery system.”1

What this means is that everyone must rethink their approach to the delivery of care. It is no longer a viable option to maintain the fee-for-service (FFS) mindset. New measures will push healthcare to the next level of reform where the patient is increasingly at the center of care and care payment.

The driving force behind all this is MACRA – Medicare Access and CHIPS Reauthorization Act of 2015. MACRA is a complex and multi-year initiative that steadily pushes healthcare to its next iteration of value-based care.

1 Slavitt, A., (Feb. 6, 2016). “Acting Administrator Slavitt Speech Before the National Rural Health Association.” CMS.

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In January 2015, the U.S. Department of Health and Human Services (DHHS) announced two new primary goals for value-based payments and alternative payment models (APMs) in Medicare fee-for-service payments:

Medicare Payment Goals:Shifting to value in three giant steps

Physician practice leaders need to understand how to become aligned with these new measures to maintain and grow revenue streams. Understanding the framework begins with the primary legislative driver, MACRA. In addition to repealing the sustainable growth rate (SGR), MACRA changes the way Medicare measures and rewards value over volume. It combines, modifies and transitions several existing value programs into something new, with the goal of putting the patient at the center of care and care payment.

1. By the end of 2016, 30% of Medicare payments tied to quality or value through APMs (categories 3-4), and 50% by the end of 2018.

2. By the end of 2016, 85% of Medicare fee-for-service payments tied to quality or value (categories 2-4), and 90% by the end of 2018.

These figures are staggering. Stop for a moment. Right now. Pause and estimate how large your Medicare patient population is. What would it mean to your practice to have reimbursements calculated differently for such a significant portion of your patients?

2018

2016

90%MedicareFFSPaymentstied to

Value

85%MedicareFFSPaymentstied to

Value

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Step One:Transform existing quality measures

Step Two:Establish tough objectives

Through MACRA, the DHHS has several objectives:

Provide several different pathways that have varying levels of risk and reward for providers to more closely link their payments to value

Expand opportunities for participation in APMs by providers

Reduce and minimize the reporting burden for APM provider participants

Increase transparency and understanding of each provider’s standing with regards to MIPS and/or APMs

Support multi-payer initiatives and the development of APMs in Medicaid, Medicare Advantage and other payer arrangements

Repeals sustainable growth rate (SGR)

Changes the way that Medicare measures and rewards value over volume

Combines several existing value programs into the Merit-Based Incentive Payment System (MIPS)

Establishes bonus payments for participation in qualified alternative payment models (APMs)

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Step Three:Drive real change, really fast

That is a significant amount of information to unpack. Let’s go back and look at what it means to have repealed the SGR. The SGR was designed to curtail a feared tendency that providers would increase services to increase reimbursements based on FFS. However, in practice, the SGR created an administrative scrambling that left providers and policy makers frustrated and it obstructed true reform.

In its place, MACRA provides modest annual reimbursement increases to allow delivery systems time to adjust from FFS to value-based measures:

June 2015: Fees increased by 0.5% automatically

2016 – 2019: Fees increase by 0.5% automatically

2019 – 2026: No automatic fee increases (path to increasing reimbursement via APMs or high performance)

Recall that the overall objective is to transform healthcare and to reward providers who give better care, not just more care. Better care is ultimately a good result for the healthcare system as a whole. This new fee schedule sends the message that providers who embrace value-based care delivery models and act toward value will have their successes rewarded. Those that do not will find their Medicare reimbursements virtually frozen in time for the next decade.

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A New Way to Measure Quality Merit-Based Incentive Payment System (MIPS)

Understanding how value will be measured is critical to making viable decisions for your practice to be ready for measurement year 2017.

To streamline measuring value, MACRA modifies and incorporates three existing value measurements into the new Merit-Based Incentive Payment System (MIPS). The measurements being modified are:

Physician Quality Reporting Program (PQRS)

Value-Based Payment Modifier

Medicare EHR Incentive Program

Beginning in performance year 2019, physicians who are rated via MIPS will receive a single composite score that factors in performance in four weighted categories:

Quality

Resource use

Clinical practice improvement activities

Meaningful use of certified EHR technology

Physician MIPS scores depend on meeting quality benchmarks, managing resource use, continuously improving clinical practices and using EHR technology in a way that improves outcomes.

2017

2019

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Huge Annual Payment Adjustments Up to 9% — up or down

Physician reimbursement rates will be altered according to their MIPS score. Providers will either receive positive, negative or neutral adjustments on an increasing scale beginning with +/- 4% in performance year 2019 (as measured in measurement year 2017). This rate will incrimentally grow until +/- 9% in 2022. This means that low-scoring

providers may see their Medicare

payments cut by up to 9%.

MIPS scores are crafty. Providers who neither improve nor get worse will not be able to easily maintain their status quo. Even a single point above or below the MIPS threshold will result in a positive or negative reimbursement rate alteration.

$Measurement

Year

MIPS

Payment

Year

2022

2019

2017

Payments adjusted up to

9%

Payments adjusted up to

4%

10

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Three Exceptions to MIPS AdjustmentsNot everyone faces the same risk

Not every physician-led practice will be evaluated via MIPS. There are three exceptions:

Providers in their first year participating as a Medicare provider

Providers in eligible alternative payment models who qualify for the bonus payment

Providers whose practices are below the low-volume threshold (15 or fewer medical professionals)

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MACRA Rewards:Up to 5% annual lump sum for APMsAlternative payment models represent a new way to structure Medicare payments. They focus reimbursement on quality and value. According to MACRA, APMs include:

CMS Innovation Center Model (other than a Health Care Innovation Award)

Medicare Shared Savings Program (MSSP)

Demonstration under the Healthcare Quality Demonstration Program

Demonstration required by federal law

Physicians already participating in APMs are clearly on the preferred path. The top tier – the providers considered ‘high performing’ or participating in ‘qualifying’ alternative payment models – will yield the greatest reimbursement bonuses. However, all providers participating in APMs will receive favorable MIPS scores and APM-specific rewards, even if they are not rated as high performing or participate in qualifying APMs.

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5% annual lump sum bonus payment 2019 – 2024

Higher fee schedule updates 2026+

APM-specific rewards

Excluded from MIPS adjustments

MACRA Rewards:For qualifying APM participants

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MACRA Rewards:Qualify for bonus payments

Eligible APMs are those practices with quality performance and value-based care systems already in place. The systems in place are comparable to MIPS. Therefore, CMS acknowledges that these systems are satisfactory and meet the overarching objectives of transforming healthcare. These types of systems:

Base payments on quality

Use certified EHR technology

Bear more than a nominal amount of financial risk OR be a medical home model expanded under Center for Medicare & Medicaid Innovation (CMMI) authority

To be qualified, a physician must have a certain percentage of Medicare patients or payments through a qualifying APM. In 2021, this percentage can be reached through a combination of Medicare and non-Medicare payer arrangements.

Earn favorable MIPS scores & APM-specific rewards for participating in APMs -- even if those APMs are not high performing or qualified.

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MACRA Rewards:For non-qualifying APM participantsIt is worthwhile to repeat that providers participating in APMs that are not high performing or do not meet the criteria for ‘qualified participant’ will still receive favorable MIPS scoring in the ‘clinical practice improvement category’ and still receive APM-specific rewards. This means that all APM participants earn rewards and are on the path to maximizing those rewards while minimizing their risks.

Alternative payment models and eligible APMs are the paths that offer the greatest potential risk and reward going forward.

MACRA is the vehicle that will drive Medicare and, eventually non-Medicare payment arrangements, to be based on value. The goal is to put the patient at the center of care and care payment. By offering the classic combination of carrots – in the form of attractive incentives – and sticks – in the form of stringent consequences – physicians and physician practices are being strongly steered down the path of alternative payment models.

The time to act is now. Physicians must carefully (but quickly) consider their path to value and get busy making it happen. Measurement year 2017 is nearly upon us. Providers with substantial Medicare patient populations must embrace innovation and the quality measures that provide the best opportunity for maintaining and growing their reimbursement structures.

MACRA:Looking ahead

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Innovation & TechnologyMaking it work for you

One of the goals of MACRA is to spur innovation – to encourage delivery systems to work with technology providers to develop platforms that take into consideration the unique needs of their providers, their patient communities and the larger communities in which they reside. The CMS has stated its belief that the transformational process will,

“be most successful when physicians and innovators can work together directly to create the best tools to care for patients.”1

Now that technology is available within virtually all care and cost settings, it is time to take everything to a new level of functionality, one that works within the natural clinical workflow, one that reconnects physicians to their patients without undue administrative burden, one that accurately predicts illnesses before they occur to avert and treat conditions and disease early.

2 Slavitt, A., & DeSalvo, K., (Jan. 19, 2016). “EHR Incentive Programs: Where we go Next.” CMS.

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GeneiaAbout usGeneia is a healthcare technology company that helps healthcare organizations, physicians, payers and employers better understand, evaluate and manage the health of patients, members and employees. Using our advanced analytics platform, remote patient monitoring tool, and education and research institute, we improve outcomes, lower cost and restore the Joy of Medicine throughout the healthcare landscape.

Sources

American Medical Association (2015). A Guide to Physician-Focused Alternative Payment Models. Center for Healthcare Quality and Payment Reform.

CMS (2015). The MACRA Path to Value.

CMS (2015). CMS Quality Measure Development Plan: Supporting the Transition to the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APMs).

CMS (2015). The Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APMs): Delivery System Reform, Medicare Payment Reform, and the MACRA.

Slavitt, A., (Feb. 6, 2016). Acting Administrator Slavitt Speech Before National Rural Association CMS.

Slavitt, A., & DeSalvo, K., (Jan. 19, 2016). EHR Incentive Programs: Where We Go Next. CMS

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