1. MACRA Proposed Rule: What You Need to Know

2. Why Does This Matter? Physicians: Impact on payment, performance measurement requirements Hospitals: May bear cost of implementation and compliance with new payment and performance measurement system by employed physicians Continued shift in hospital-physician relationships Incentives to participate in alternative payment arrangements increasing interest in risk-bearing arrangements

3. MACRA Proposed Rule Released on Apr. 27 Proposes policies implementing new Physician Quality Payment Program mandated by MACRA Affects payment in CY 2019 –Performance period of CY 2017 Final rule expected by Nov. 1, 2016

4. Physician Quality Payment Program MU VM PQRS MIPSAPM Starting in 2019….

5. Payment Under MACRA 0.0% annual update APM: Bonus of 5% of PFS payments annually 2020 2026 MIPS 0.25% annually, PLUS penalties/bonus up to ± 9% APM 0.75% annually; no bonus payments MIPS OR APM 202120222024 2025 20232019 ±4% ±5% ±7%±9%

6. Merit-based Incentive Payment System CategoryCY 2019CY 2020CY 2021 and beyond Quality50%45 %30% Resource Use10%15 %30% Clinical Practice Improvement Activities 15 % Advancing Care Information (i.e., Meaningful Use) 25 % Proposed weights reflect MACRA requirements Scores of “zero” for measures/categories where data not reported MIPS = Default Payment System

7. MIPS: Eligibility Applicable to physicians, PAs, NPs, CNSs and CRNAs beginning in 2019 –Others can be added in 2021 Can participate as individual clinicians or groups Exemptions for: –Certain participants in alternative payment models –Physicians in first year of Medicare –Clinicians below CMS-defined low volume threshold Proposed as Medicare charges under $10K AND fewer than 100 Medicare patients during performance period

8. MIPS: Applicability to Rural Providers Critical Access Hospitals (CAHs) –MIPS would apply to CAHs billing under Method II whose clinicians have reassigned their billing rights to the CAH Payment adjustment apply to professional services Federally Qualified Health Centers / Rural Health Clinics –MIPS does not apply to FQHC/RHCs, or to clinicians billing under the payment systems for FQHCs / RHCs –However, MIPS would apply to clinicians that bill services under the fee schedule (even if they practice in an RHC/FQHC) (e.g., moonlighting, private practice)

9. MIPS: Data Reporting Mechanisms Must select one mechanism per category For CY 2019, report CY 2017 data Data generally due to CMS by Mar. 31, 2018 Data completeness thresholds

10. MIPS: Quality Measure Requirements For most reporting mechanisms, clinicians and groups would report at least 6 measures. Of the 6: –Must report 1 cross-cutting measure –1 outcome measure (or another high priority measure if outcome is unavailable) Can choose any 6 from list of available measures –Specialty measure sets also available For groups of 10 or more clinicians, CMS also would calculate claims-based “population measures” –Reflect avoidable admissions and readmissions

11. MIPS – Resource Use Measures CMS would continue using 2 all-condition resource use measures used in value-modifier program –Total costs per capita –Medicare spending per beneficiary for physicians CMS also proposes to use clinical condition and procedure episode cost measures from a list of 40+ measures Cost score = average score of all the measures that can be attributed to clinician / group –Various attribution methodologies

12. MIPS – Clinical Practice Improvement Activities (CPIAs) Category intended to recognize physicians for participation in care coordination, patient safety and patient engagement activities CMS proposes a list of over 90 CPIAs from which clinicians can choose Each CPIA assigned a weight towards score Participation in certified PCMH receives highest score, participation in MIPS APM receives half the highest score To receive full credit, generally need to participate in more than one CPIA

13. ACI Performance Category Base Score: a score for participation and reporting Performance Score: a score for performance at varying levels above the base Maximum of 80 points toward the total composite score based upon three objectives and 8 measures –Patient Electronic Access –Coordination of Care Through Patient Engagement –Health Information Exchange 2 Maximum of 50 points toward the total composite score with two proposals –Primary Proposal: based on 6 objectives and 11 of 15 measures derived from Stage 3 –Alternate Proposal: based on 8 measures and 16 of 20 measures –Modified Primary and Alternate Proposal: based on 10 objectives and 16 measures derived from Modified Stage 2

14. MIPS Alternative Payment Models CMS proposes to adopt alternative scoring approach for participants in “MIPS APMs” Defined as APM with: –Participation agreement with CMS –One or more MIPS-eligible clinicians –Payment incentives based on quality and cost Criteria mutually exclusive with those for Advanced APM Track MIPS Category Weight for MSSP and Next Gen ACO Weight for other MIPS APMs Quality50%0% Resource Use 0% CPIA20%25% ACI30%75%

15. Translating the MIPS Composite into Incentives and Penalties Performance Threshold (Determined annually) Positive adjustment on sliding scale Negative adjustment on sliding scale Exceptional performance threshold (2019 – 2024 only) 25 percent of performance threshold Maximum Negative Adjustment Exceptional performance bonus (up to 1 percent) MIPS Composite Score 0 100

16. Alternative Payment Model Incentives MACRA provides incentives for physicians who meet designated thresholds of APM participation –Lump-sum bonus payment of 5% of Part B payments for professional services –Exemption from MIPS reporting requirements and payment adjustments –Higher base rates beginning in 2026 Incentives in 2019 based on 2017 APM participation Only Medicare APMs count in 2017-2018; all-payer option begins in 2019

17. Qualified Professional Determination Qualified professional = meets the criteria to qualify for APM incentives based on participation in advanced APMs CMS proposes following general process: –Determine whether the APM meets the advanced APM criteria –Identify the APM entity –Determine whether eligible clinicians in APM entity collectively meet threshold for APM participation

18. Qualified Professional Determination Qualified professional = meets the criteria to qualify for APM incentives based on participation in advanced APMs CMS proposes following general process: –Determine whether the APM meets the advanced APM criteria –Identify the APM entity –Determine whether eligible clinicians in APM entity collectively meet threshold for APM participation

19. Medicare APMs Medicare APMs are defined as: A model tested by the CMMI, other than a health care innovation award An ACO under the Medicare Shared Savings Program Certain other demonstrations under federal law

20. Criteria for Advanced APMs MACRA requires advanced APM to meet certain criteria: Require use of certified EHR technology Condition some amount of payment on quality measures comparable to those in the MIPS quality category Participating entities must bear risk for monetary losses of more than a nominal amount, OR be a medical home in a model expanded by CMMI

21. APM Financial Risk Standard Generally applicable standard = downside risk (APM entity owes CMS if spending > projections) Relaxed standard for medical homes = no downside risk required; would not apply if organization that “owns” medical home has > 50 clinicians

22. How Much Risk is Enough? Standard for “nominal risk”: Minimum loss ratio ≥ 4% Potential marginal losses (e.g. shared losses) ≥ 30% Potential loss ≥ 4% Fully capitated arrangements qualify

23. Limited Medicare Models Available MSSP Track 1 MSSP Track 2 MSSP Track 3 Next Generation ACO Comprehensive ESRD Care Oncology Care Model (two-sided track)* Bundled Payments for Care Initiative Comprehensive Care for Joint Replacement Comprehensive Primary Care Plus (as medical home)* * Not yet implemented

24. Qualified Professional Determination Qualified professional = meets the criteria to qualify for APM incentives based on participation in advanced APMs CMS proposes following general process: –Determine whether the APM meets the advanced APM criteria –Identify the APM entity –Determine whether eligible clinicians in APM entity collectively meet threshold for APM participation

25. APM Entity APM entity = entity that participates in an APM through a direct agreement with CMS or a non-Medicare payer –Primarily responsible for cost and quality of care APM entity group = the group of clinicians participating in an APM entity –CMS to identify through combination of APM identifier, APM entity identifier, TIN and NPI

26. Qualified Professional Determination Qualified professional = meets the criteria to qualify for APM incentives based on participation in advanced APMs CMS proposes following general process: –Determine whether the APM meets the advanced APM criteria –Identify the APM entity –Determine whether eligible clinicians in APM entity collectively meet threshold for APM participation

27. Calculation of Advanced APM Participation CMS would consider payment amounts and patient counts when calculating advanced APM participation, use most advantageous Determinations would be made at group level by aggregating payments/patients Beginning in 2019 (for 2021PY), CMS would calculate Medicare advanced APM participation first; if QP status not reached, would consider all payer APMs

28. APM Participation Thresholds 2019-20202021-20222023 and beyond Medicare Option QP25%50%75% Partial QP20%40%50% All-payer Option QPN/A25%50%25%75% Partial QPN/A20%40%20%50% MedicareTotalMedicareTotal QP Payment Amount Thresholds 2019-20202021-20222023 and beyond Medicare Option QP20%35%50% Partial QP10%25%35% All-payer Option QPN/A20%35%20%50% Partial QPN/A10%25%10%35% MedicareTotalMedicareTotal QP Patient Count Thresholds

29. Other Payer APMs Other payer APMs = Medicare Advantage, Medicaid, private payer arrangements Advanced APM criteria parallel to those for Medicare advanced APMs CMS would require clinicians to submit information to verify eligibility of arrangements

30. APM Incentive Payment Lump-sum payment = 5% of Part B professional service payments across all TINs Based on calendar year prior to payment year Would exclude adjustments for MIPS, VM, MU and PQRS, plus financial risk payments Payment would be made to APM entity TIN

31. Implications for Hospitals and Health Systems Physicians will not receive credit for participation in most hospital-driven APMs Interested physicians will seek two-sided risk models Potential erosion of the glide path that allows hospitals to experiment before moving into risk bearing arrangements

32. Initial Impressions Fewer required MIPS measures Steps to align public/private measures Moving away from all-or-none scoring in Advancing Care Information Generally flexible approach to CPIAs Right Direction No MIPS hospital measure reporting option yet (but CMS considering it) Need more alignment and focus of measures across continuum Is Advancing Care Information category flexible enough? Narrow definition of financial risk for APMs Misalignment of hospital Meaningful Use with Advancing Care Information No socioeconomic adjustment ConcernedWork in Progress

33. MACRA Proposed Rule: What You Need to Know 8/2016