Thomas Gustafson, Ph.D. Senior Policy Advisor March 2016 Post-SGR: Basics of MACRA Webinar for the Missouri Hospital Association Thomas Gustafson, Ph.D. Senior Policy Advisor March 2016 Privileged & Confidential/Attorney-Client Privileged

Starting in 2019, Two New Pathways New Pathway for 2019 + Alternate Pathway for 2019 + Merit-Based Incentive Program (MIPS) Physician Quality Reporting System (PQRS)* Value Based Modifier (VBM)* Meaningful Use of E.H.R.* Alternative Payment Model (APM) *3 Current Programs Sunset in 2018

MACRA Intended to Change Incentives Toward Value Merit Based Incentive Payment Model (MIPS) Scoring system based on quality measures and utilization measures Bonus or Penalty can be as much as 4% in 2018, increasing to 9% in 2022 Alternative Payment Model (APM) 5% bonus each year (through 2024) if physicians derive a specified minimum amount of income from services furnished in APM entities Different updates beginning in 2026: MIPS = 0.25%, APM = 0.75% Accelerates creation of episodes of care

MACRA Incentive Timeline 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Fee Schedule Update 0.5% 0% 0.75% APM 0.25% Non-APM MIPS 4% 5% 7% APMs MIPS adjustment + or - 9% PQRS, VM, EHR Bonus Payment

Merit-based incentive payment system (MIPS)

Merit-Based Incentive Payment System (MIPS) As a general rule, all physicians are eligible for MIPS. MIPS has four performance categories: quality, resource use, EHR meaningful use, and clinical practice improvement activities. Physicians who do not report MIPS measures will receive low performance scores and negative payment updates. Scores will be reported on CMS’ “Physician Compare” website

Performance-Based Financial Risk Increases from +/-4% to +/-9% Jan 1, 2019 – Dec 31, 2024 Phase-In of New System Risk Corridors of +/- 4 to 9% Budget Neutral (Sum = 0) Jan 1 – Jun 30 0% Update Jul 1, 2015 – Dec 31, 2018 0.5% Update

Components of MIPS Scoring CMS May Adjust Weights of Each Category Based on Consultation with Specialties

MIPS Composite Scoring System Individual Performance in 4 Domains Individual Composite Score Compared With Performance Threshold Mean / Median Composite Score from Prior Year For All Physicians Single Composite Score 0 to 100

MIPS Provider Eligibility In years 1 and 2 Physicians Physician assistants Nurse practitioners Clinical nurse specialists Nurse anesthetists In years 3 and beyond, add: Occupational therapists Speech-language pathologists Audiologists Nurse midwives Clinical social workers Clinical psychologists Dieticians/nutrition professionals

Alternative payment models

What are “Eligible” APMs? Specified categories in the law: CMS Innovation Center programs/demonstrations, including new “Physician Focused Payment Models” Medicare Shared Savings Program (ACOs) Health Care Quality Demonstration Patient-Centered Medical Home Eligible APMs must bear “more than nominal financial risk” (except for Patient Centered Medical Homes); use quality measures and EHRs

MDs Will Have Significant Incentives to Join APMs MACRA includes a $500 million annual bonus pool, 2019 – 2024 Highest performers in MIPS (~top 12.5%) can receive a bonus of up to 10% from the pool All “qualifying APM participants” will receive a bonus of 5% of total Medicare Part B payments in the prior year (with no performance requirement) Bonus will be paid directly to the physician, even if the Medicare Part B payments were made to another entity The bonus will be paid “in a lump sum, on an annual basis, as soon as practicable”

Long-Term Advantage of APMs (2025 – 2045) Annual Medicare Income 2045 $526K / $581K 2035 $513K / $539K APM MIPS 2025 $500K Year

May Be Difficult for Specialists to Participate in APMs Only certain projects eligible (i.e., ACOs, CMS Innovation Center programs) Must use certified EHR technology and quality measures “comparable” to MIPS Bear more than nominal financial risk OR be a “medical home Phase II expansion model” Eligible APM In 2019, must receive at least 25% of Medicare payments through an APM; increases over time Qualifies for bonus equal to 5% of Part B Medicare allowed charges in prior year Qualifying APM Participant

APM Bonus Requires Minimum Share of Revenue 25% 50% 75% Medicare Revenue from APMs Medicare Revenue from APMs OR (Medicare + Other Payers) Revenue from APMs 2019-20 2021-22 2023+

Where will physicians land?

Qualifying APM participant? CMS decides whether an MD is a “Qualifying APM Participant” and receives a bonus payment Qualifying APM participant? 1 RECEIVE 5% BONUS CMS will determine whether an MD is “MIPS-eligible,” a “qualifying APM participant,” or a “partially qualifying APM participant” Physicians will not necessarily be able to “choose,” especially if they have few eligible APMs because of their specialties or where they practice

What happens if the MD doesn’t earn the APM bonus What happens if the MD doesn’t earn the APM bonus? She’s eligible for MIPS! MIPS Eligible? 2 No APM Bonus? Almost Met Threshold for Qualifying APM (Partially Qualifying APM Participant) “Hold Harmless” if You Did Not Report MIPS Measures Didn’t Come Close to Threshold No Relief from MIPS Penalty

What happens if the MD doesn’t report MIPS measures? Not Sure? Do Both? 3 A physician who almost meets the qualifying APM participant definition and does not report MIPS measures is a “partially qualifying APM participant” who is held harmless -- does not receive either a 5% APM bonus or a MIPS downward adjustment Any other physician is “MIPS-eligible” (thus will receive downward MIPS adjustment if he or she fails to report MIPS measures)

Improving the mips measures

New Category for Incentives: Clinical Practice Improvement Activities Defined as “Activity that relevant eligible professional organizations identify as improving clinical practice or care delivery and the Secretary determines likely to result in improved outcomes The Secretary must solicit recommendations from stakeholders to identify such activities  Physicians in patient-centered medical homes or comparable specialty practices receive the highest CPIA scores Those in APMs receive a minimum score of 50% of that amount

Clinical Practice Improvement Activities One of the core competencies of the American Board of Medical Specialties (ABMS) Maintenance of Certification (MOC) Programs, defined as follows: Practice-based Learning and Improvement: Show an ability to investigate and evaluate patient care practices, appraise and assimilate scientific evidence, and improve the practice of medicine. Part I: Professionalism and Professional Standing Behave in a professional manner Act in the patients’ best interest Hold a valid, unrestricted medical license Part II: Lifelong Learning and Self-Assessment Participate in high quality, unbiased educational and self-assessment activities determined by each Member Board Part III: Assessment of Knowledge, Judgment, and Skills Pass a written examination and other evaluations Part IV: Improvement in Medical Practice Engage in ongoing assessment and improvement activities to improve patient outcomes Demonstrate use of evidence and best practices compared to peers and national benchmarks

CMS to Collaborate with Physicians to Improve Resource Use Measurement The Affordable Care Act required CMS to develop a publicly available episode grouper by Jan 1, 2012 – but slow progress to date due to concerns about methodology “It may be difficult to define clinically meaningful and statistically reliable quality measures for some specialties…” (MedPAC) Also difficult to measure for small practices: AMA letter to CMS in 2012 “more than 40 percent of groups of 25 physicians or more did not have enough data to calculate reliable cost and quality measures… [and] physician groups with the highest risk patients were… four times more likely to have poor cost scores...” MACRA requires CMS to post on its website, within 180 days of enactment, a list of the episode groups that have been developed to date Specialty societies have 120 days to comment on this information

New Codes for Describing Physicians’ Relationships with Patients as Primary or Supportive CMS must develop patient relationship categories and codes that define the relationship and responsibility of a physician with a patient at the time of service The new law includes 4 examples of a physician-patient relationship: Primary responsibility for general and ongoing care over extended period of time Continuing basis during an acute episode of care but in a supportive rather than lead role Furnishes care on an occasional basis usually at the request of another physician Only as ordered by another physician CMS must post a draft list of relationship codes, seek comments on it, and update it annually

What others will be doing

Specialty Society Steps to Prepare for New System Understand how affected by MACRA based on how they practice and their current experience with quality programs (PQRS, VM and MU) Consider development of quality measures and explore qualified clinical data registry Identify clinical practice improvement activities that describe the specialty and advocate to CMS for their adoption Defined as “Activity that relevant eligible professional organizations identify as improving clinical practice or care delivery and the Secretary determines likely to result in improved outcomes Engage with CMS on the definitions of new codes for resource use, including “care episode groups,” “patient condition groups” and codes that define physician-patient relationships

Physician Practice MACRA To-Do List Get educated, or get help. Explore your local APM options; consider joining an APM Be a Meaningful User. Report PQRS Measures. Review your QRUR. Look yourself up on Physician Compare. Stay tuned for more info on clinical practice improvement.

Key Take-Aways No more SGR roller-coaster for MD payments Reforms emphasize “value” over volume Future MD payments will vary significantly to reflect organization and performance Current incentive programs will be expanded Looks like “business as usual” for now But lots of activity below the surface CMS regulations this year 2017 will be the performance year for 2019 MIPS payment changes “Smart money” will be positioning for the future

Questions? Thanks for listening Tom Gustafson Arnold & Porter LLP Washington, DC 202-942-6570 Tom.Gustafson@aporter.com