An Overview of Value-Based Payment Models & MACRA Trudi Matthews, Senior Policy Advisor, External Affairs, UKHC & Managing Director, Kentucky Regional Extension Center November 2016

Kentucky REC Description Kentucky Regional Extension Center Overview UK’s Kentucky REC is a trusted advisor and partner to healthcare organizations, supplying expert guidance to maximize quality, outcomes and financial performance REC Service Lines Kentucky REC Description Physician Services Meaningful Use Privacy & Security Consulting Patient Centered Medical Home (PCMH) Consulting Value Based Payment & MACRA Preparation Support Kentucky Medical Professions Placement Services (KMPPS) Hospital Services HIPAA Security Assessment Electronic Quality Reporting Support To date, the Kentucky REC’s activities include: Helping bring over $100 million incentive dollars to providers throughout the Commonwealth Assisting more than 3,400 individual providers across Kentucky, including primary care providers and specialists Helping more than 95% of the Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) within Kentucky Working with more than 1/3 of all Kentucky hospitals Supporting dozens of practices and multiple health systems with meaningful use, practice transformation and preparation for value based payment

Kentucky REC & the Great Lakes PTN CMS established the Transforming Clinical Practices Initiative (TCPI) to help clinicians achieve large-scale health transformations through collaborative and peer-based learning networks Great Lakes PTN is one of 29 Practice Transformation Networks (PTNs) GLPTN works with 10 Support and Alignment Networks (SANs) GLPTN State Level Leadership: Indiana University (primary grant recipient) University of Kentucky (Kentucky) Purdue Healthcare Advisors (Indiana) Northwestern University (Illinois) Altarum Institute (Michigan) ** For GLPTN network only

Moving to Value-Based Payment Understanding the What & Why

What is Value Based Payment? Quality Cost VALUE

Volume to Value Based Shift Recent legislative, regulatory and marketplace developments suggest that the transition from volume to value-based payment is accelerating from a “testing” phase to a “scaling” phase Pioneer ACO Program Launched April 2013 Bundled Payments for Care Improvement (BPCI) Medicare Access and CHIP Reauthorization Act (MACRA) Enacted April 2015 July 2016 Cardiac & CJR Episode Payment NPRM Released January 2012 October 2012 Hospital Value Based Purchasing Program CMS Announces Value-Based Payment Goals; Value Modifier Program Begins January 2015 April 2016 MACRA NPRM, Medicaid Managed Care Final Rule Released March 2010 October 2016 Affordable Care Act Enacted MACRA Final Rule Released Testing Phase Scaling Phase

2015: CMS Accelerates Shift to Value-Based Payment In January 2015, the Department of Health and Human Services announced new goals for value-based payment and APMs in Medicare New acronym: APMs= Alternative payment models

April 2016 - Medicaid Managed Care Regulations CMS & State Medicaid Agencies may require a Managed Care Organization to: Implement value based purchasing models for provider reimbursement Participate in multi-payer delivery system reform or performance improvement Phase out of supplemental payments – with option to move payments into value-based payment models

Commercial Insurers Accelerate VBP  “Our industry is in the midst of a profound shift from fee-for-service, or volume-based care, to value-based care. Aetna has successfully built more than 72 ACO relationships with providers, growing from very small numbers in 2011 to more than 2 billion dollars in revenue today. …We plan to maintain 75 percent of our medical spending in value-based contracts by 2020.” Charles Kennedy, MD, chief population officer for Healthagen, Aetna Source: Health Care Learning & Action Network

Overview of Medicare Access and CHIP Reauthorization Act (MACRA) Final Rule Released in October 2016

MACRA Final Rule: Creates QPP, a New Medicare Part B Payment Program APM MIPS Merit-based Incentive Payment System Alternative Payment Models

MACRA Glossary of New Terms New program name for MACRA’s change in Medicare Part B payments Quality Payment Program (QPP) New pay for performance approach under Medicare Merit-Based Incentive Payment System (MIPS) New payment models (e.g., ACOs) that move away from fee-for-service reimbursement Alternative Payment Models (APMs) New term for Medicare eligible providers Eligible Clinicians Overall clinician score from 0-100 calculated based on four weighted performance categories Final Score Category of activities that replaces the Medicare EHR Incentive Program for meaningful use Advancing Care Information (ACI) Category of activities under MIPS that affects 15% of score; includes activities aimed at improving care Improvement Activities

MACRA Eligible Clinicians (ECs) Physicians, PAs, NPs, CNS, CRNA After 2020, CMS may expand to other clinicians in Medicare FFS: PT, OT, NMW, CSW, Clinical Psychologists, Dieticians and Nutrition professionals 5 Types of Eligible Clinicians (ECs) Hospitals/Medicare Part A payments FQHCs/RHCs and Medicaid Providers Not covered by MACRA: 1st year ECs “Non-patient facing” provider Low volume providers who do not bill at least $30,000 under the Medicare Physician Fee Schedule or care for more than 100 Medicare patients yearly Advanced APM Qualifying Provider not scored under MIPS Exclusions:

MACRA Timeline October 14, 2016: Release of Final Rule Jan – Dec 2017: 1st Performance Period for MACRA March 31, 2018: Reporting Deadline for First Year Jan – Dec 2019: 1st Payment Year = +/- up to 4%

2017 Transition Year: “Pick Your Pace” Options QPP Test Only Option 1: Partial Year Option 2: Full Year Option 3: Advanced APM Option 4:

MIPS: A Consolidation of 3 Programs MERIT-BASED INCENTIVE PAYMENT SYSTEM (MIPS) Physician Value-Based Modifier Physician Quality Reporting System EHR Incentive Program and Meaningful Use

Maximum MIPS Payment Adjustments Notes: Losers fund winners Top performers: - Up to 3X more with scaling factor - Additional bonus up to 10% from $500 M funded separately Source: Leavitt Partners - MACRA: Quality Incentives, Provider Considerations, and the Path Forward

 How will MIPS measure performance? Providers will receive a MIPS final score based on 4 weighted performance categories:  Improvement activities Advancing Care Information MIPS Final Score 0-100 Quality Cost CY19 60% 0% 15% 25% CY20 50% 10% CY21 30%

Quality % CPS: Measures: Requirements Methods: Makes up 60% of your final score for PY 2017 Replaces PQRS; # of measures from 9 down to 6 measures 200+ measures to choose from 6 Measures are reported Except for: Groups using CMS web interface report 15 quality measures MIPS – APMS report via CMS web interface 1 measure must be: Outcome measure OR High-priority measure Measures updated each year Specialist sets available Methods for reporting: QCDR EHR Qualified Registry Web interface (groups only) Claims (individual only)

Cost % CPS: Measures: Requirements: Method: Score is based off of Medicare claims, including: Measure 1: Spending per Beneficiary (MSPB) Measure 2: Total costs per capita for all attributed beneficiaries Makes up 0% of your final score for PY 2017 In later years scored higher ECs will get feedback on this category in Quality and Resource Use Report (QRUR) New 10 episode-specific cost measures When clinician bills Medicare for diagnosis code gets included in episode Minimum # of patients sample. Typically 20 or > 35 for MSPB No data submission required Validation of data is important!

Improvement Activities % CPS: Measures: Requirements: Method: Makes up 15% of your final score for PY 2017 Full points for: Certified PCMH/PCSP Medical Home Model or Certain APMS MIPS - APMS get 50% of full pts 90+ Activities in 9 subcategories Access Population Management Beneficiary Engagement Care Coordination Patient Safety Equity …among others! 2-4 Activities required: Highly weighted = 20 pts Medium weighted = 10 pts Medical home, transformation or public health activities have higher weight Simple attestation suffices for reporting Must be performed for a 90 consecutive day period

Advancing Care Information % CPS: Measures: Requirements: Reporting: Makes up 25% of your final score Replaces Medicare EHR Incentive Program 5 requirements in base score, can report more in for additional points Flexible Scoring: Base Score Performance Score Bonus New Data Blocking Requirements Group/TIN Level reporting like PQRS

How does MIPS Affect FQHCs & RHCs? Page 185 of the Final Rule: [CMS is] finalizing our proposal that services rendered by an eligible clinician under the RHC or FQHC methodology, will not be subject to the MIPS payments adjustments. However, these eligible clinicians have the option to voluntarily report on applicable measures and activities for MIPS, in which the data received will not be used to assess their performance for the purpose of the MIPS payment adjustment. Note: RHC= all-inclusive rate methodology FQHC =prospective payment system methodology BUT!

IT DEPENDS ON HOW RHCs & FQHCs BILL! RHCs must look at how much you bill traditional Medicare Part B using a 1500 claim form (versus using UB-04 claim form for the all-inclusive rate) Determine: How much do we bill Medicare Part B? If < $30K or 100 pts = no MIPS – meet low volume exemption If more than > $30K, non-participation could mean a penalty Determine how volume applies as individual ECs or as a group How many eligible clinicians are billing Medicare Part B? Need to exclude non-patient facing, first year providers, etc. When in doubt, use Option 1: report something! Scenario: Five RHC eligible clinicians are a part of the same TIN and each bills $10,000 in Medicare Part B charges. Group has the option to report as a group and be subject to MIPS as a group (meaning they all get one group quality score) or to report as individual eligible clinicians and take the low-volume exemption.

MACRA Final Rule: Creates QPP, a New Medicare Part B Payment Program APM MIPS Merit-based Incentive Payment System Alternative Payment Models

What’s the big deal about APMs? Stated intention of CMS that more and more of its $ will be spent in APMs over time 5% Annual Participation Bonus for Advanced APM participants from 2019-2025 Favorable scoring under MIPS for all APM participants Annual update after 2025 is 0.75% for APM entities versus 0.25% for MIPS entities

Advanced Alternative Payment Models Advanced APM participants are eligible for 5% bonus payment. But, only some APMs are risk-bearing Medicare payment models that qualify for this bonus payment. Next Generation ACO Model Medicare Shared Savings Program – Tracks 2 & 3 Comprehensive Primary Care Plus (CPC+) Comprehensive ESRD Care Model Oncology Care Model Two-Sided Risk Arrangement (in 2018) Cardiac & CJR Episode Model (in 2018) In new MACRA NPRM, Advanced APMs include: MACRA does not change how any particular APM rewards value. APM participants who are not “Qualifying Providers” (QPs) will receive favorable scoring under MIPS.

Not Every APM Will Qualify for 5% APM Bonus Most physicians and practitioners who participate in APMs will be subject to MIPS and will receive favorable scoring under the MIPS clinical practice improvement activities performance category. All APM Participants QPs in Advanced APMs Only providers in Advanced APMs will be deemed qualifying APM participants (“QPs”): Report APM quality measures Use of Certified EHR Meet Advanced APM criteria (risk-bearing or medical home model) Must meet APM thresholds for payment and patient volumes Have to be a qualifying physician in an eligible APM to get 5% bonus. Eligible APMs are the most advanced APMs that meet the following criteria according to the MACRA law: Base payment on quality measures comparable to those in MIPS Require use of certified EHR technology Either (1) bear more than nominal financial risk for monetary losses OR (2) be a medical home model expanded under CMMI authority Have to meet thresholds to qualify: More than 25% of Medicare payments in APM in 2019, 2020 More than 50% of Medicare payments in APM in 2021, 2022 More than 75% of Medicare payments in APM in 2023 Option for combined all payer APM thresholds: Beginning in 2021, this threshold % may be reached through a combination of Medicare and other non-Medicare payer arrangements, such as private payers and Medicaid.

How does QP status affect RHCs & FQHCs in APMs? Excerpt of Pgs 1734-1737: CMS proposed that beneficiaries in RHCs and FQHCs that participate in ACOs, and that are reimbursed under the RHC AIR or FQHC PPS be counted towards the QP determination calculations under the patient count method but not under the payment amount method. Beneficiary will be included in the numerator of the Threshold Score for the patient count method if the beneficiary receives…professional services furnished by eligible clinicians in an Advanced APM Entity at RHCs and FQHCs.

Physician Compare Coming Soon – Your MACRA performance score!

Impact of MACRA on Medicare Providers Financial & Strategy Implications Reputational Status MACRA moves Medicare payment from one size fits all to a meritocracy Market share will shift from low performers to high performers over time Delay means disaster; exponential leaps in value will be needed to catch up with those that perform better as thresholds increase over time Publicly available scores on quality and value that compare organizations/professionals will affect: Health plan negotiations Talent recruitment Consumer choice

How can clinicians and staff prepare? "People's lives can be absolutely transformed by being nudged along a slightly altered route.“ - Dr. Ben Fletcher

Case Study: Is your organization ready for new payment models? Under the new payment models, you can’t get paid more unless you are here. Your practice is here. What do you do?

Some clinicians think MACRA means… Stop seeing sick, non-compliant patients Start accepting only patients who are healthy But successful VBP/APM leaders understand the 5-50 Rule. 5% of patients are responsible for 50% of costs.

Immediate Actions to Consider Engage leadership & key clinicians Medical home recognition a critical first step Dominate your quality data Analyze QRUR and other payer feedback Review compensation models

Focus on Common Elements on the Payment Innovation Journey Culture of Continuous Quality Improvement & Team Based Care Patient Attribution & Empanelment Performance Measurement, Data Analysis and Identification of Gaps in Care Identification of Higher Risk, High Cost Patients & Targeted Care Management Care Coordination across the Medical Neighborhood Patient Engagement & Experience of Care

Thank you! Questions?