1. “MACRA”: The nexus of physician quality and payment
Presentation to the HFMA Metro NY Chapter
“MACRA”: The nexus of physician quality and payment
Elisabeth Wynn, SVP, Health Economics & Finance
February 1, 2017

2. Overview
An Evolution in Medicare Payment Incentives

3. Medicare and CHIP Reauthorization
What is MACRA?
Medicare and CHIP Reauthorization
Act of 2015
Replaces SGR* for updating Medicare physician rates
Paid fee-for- service
Physicians faced annual 20%+ reductions in payment, leading Congress to intervene
New bi-partisan policy direction for physician payment
Payments based on quality and value
Builds on current Medicare physician quality programs
Advances Federal value-based payment (VBP) goals
*SGR = Sustainable Growth Rate.

4. Existing Medicare Quality Programs
Inpatient (IPPS) Programs
Other Programs
Medicare IPPS PFR Programs
Inpatient Quality Reporting Program (IQR)
Electronic Clinical Quality Measures (eCQM)
Non-IPPS Medicare PFR Programs
Other Facility Quality Reporting Programs:
Hospital Outpatient Department, Skilled Nursing Facility (SNF), Home Health, IP Rehabilitation Facilities, IP Psychiatric Facilities, PPS-Exempt Cancer Hospital
Physician Quality Reporting System (PQRS)
Pay-for-Reporting (PFR)
Medicare IPPS PFP Programs
Hospital Readmissions Reduction Program (HRRP)
Value-based Purchasing (VBP) Program
Hospital-acquired Condition (HAC) Reduction Program
Hospital Meaningful Use (MU) Incentive Program
Non-IPPS Medicare PFP Programs
Physician MU
Physician Value Modifier
End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP)
Skilled Nursing Facility VBP Demonstration
Plans for VBP in other sectors
Pay-for-Performance (PFP)

5. Advances Federal VBP Goals, Focus on Value over Volume
VBP Arrangements
Quality incentives
Pay-for-performance
Alternative payment models
Shared savings (“ACO”)
Capitation
All Payments
VBP Arrangements
Alternative Payment Models
85%
90%
30%
50%

6. Goal of VBP: Coordinate Care Across Silos, Reduce Fragmentation and Cost
Managed Care Plans
Hospital
Clinic/Physician
Nursing Home
Home Health
Other
Fee-for-service (FFS)
Integrated Delivery System
VBP
Quality-Based Payment Programs
Bundled Payments
Accountable Care Organizations (ACOs)
Pay-for-performance
Shared Savings
Shared Risk
Capitation

7. MACRA Provides Options for Physicians
Physicians choose one of two tracks :
Merit-based Incentive Payment System (MIPS)
Quality track
Alternative Payment Model (APM)
Shared risk/capitation track
Advanced VBP models

8. Physician Updates Under MACRA
2017
2018
2019
2020
2021
2025
2026+
Fee Schedule Updates
0.5% 0%
0.25%*
0.75%**
Physician Quality Reporting System (PQRS)
-2%
Merit-based Incentive Payment System (MIPS)*
Meaningful Use (MU) Penalty
-3%
±4%
±5%
±7%
±9%
Value Modifier
±2% / ±4%
Qualifying APM Participants** 5%
Excluded from MIPS
Note: MIPS participants can also earn bonus of up to 10% from a $500 million exceptional performance pool in

9. Track 1: MIPS

10. Clinicians Subject to MIPS
2019
Doctors
Physician Assistants
Nurse Practitioners
Clinical Nurse Specialists
Certified Registered Nurse Anesthetists
2021 (Likely)
Certified Nurse Midwife
Clinical Social Worker
Clinical Psychologist
Registered Dietician
Nutrition Professional
Audiologists
Physical Therapist
Occupational Therapist
Qualified Speech-Language Therapist

11. Clinicians Exempt from MIPS
New Medicare-enrolled physicians
Enrolled during the performance year
Not previously billing under a different TIN
Low-volume clinicians
$30,000 or less in Medicare charges OR
Care to 100 or fewer Medicare beneficiaries
Qualifying/Partial-qualifying APM participants
Rural health center/FQHC

12. MIPS Overview Report measures across 4 domains
Reporting two years prior to the payment year (i.e., 2017 reporting for 2019 payments)
Flexibility on measure selection, but must report a minimum number of measures
Choice of reporting mechanism
May report as individual clinician or as a group (by Tax Identification Number)
Performance across domains determines payment adjustment
Based on relative performance
Separate benchmarks for each reporting mechanism
Benchmarks determined in advance

13. Track 1: MIPS Program Measures Weighting
2019
2020
2021
Quality
Physician Quality Reporting System (PQRS) measures
Resource Use
Value Modifier measures
Improvement Activities
Expanded access, population management, care coordination, beneficiary engagement, patient safety, and alternative payment models
Meaningful Use of EHR
EHR incentive payment measures

14. Track 1: MIPS Begins in 2019, Based on Performance in 2017
MIPS Domains
1. Quality (60%)
Replaces Physician Quality Reporting System (PQRS)
Report on 6 measures, plus one claims-based measure for large groups
Bonus points for “high priority” measures
3. Advancing Care Information (25%)
Replaces Meaningful Use
Measures that reflect use of EHRs, information exchange
2. Cost (0%)
Replaces Value Modifier (VM) program
Medicare spending per beneficiary for episodes of care (claims based)
4. Improvement Activity(15%)
New focus
Activities focused on care coordination, beneficiary engagement, and patient safety

15. Quality Performance Category
Scoring
Each successfully reported measure is evaluated by decile performance
Baseline is two years prior to the reporting year
Separate benchmarks by reporting mechanism
Transition year policy
Topped out measure policy begins for 2018 reporting
Bonus points (up to 10% of score)
High priority measures
2 points for each outcome and patient experience measure
1 point for each high priority measure
1 point for each electronically submitted measure

16. Cost Category Measures Medicare spending per beneficiary
Total per capital cost
10 episode-based spending measures

17. Total score (155 possible, earn 100 pts. for full credit)
ACI Category
Total score (155 possible, earn 100 pts. for full credit)
Base score (50 pts.)
Security risk analysis
eRx
Patient access
Send summary of care
Request/accept summary of care
Performance score (up to 90 pts.)
Patient education
View, download, transmit
Secure messaging
Patient-generated health data
Clinical information reconciliation
Immunization registry reporting
Bonus points (up to 15 pts.)
Optional registry reporting (5 pts.)
Improvement activities using CEHRT (10 points)

18. Improvement Activity Category
Scoring
Conduct enough activities to earn 40 points
Small practice, rural, HPSA, non-patient facing must earn 20 points
Options
Select from activities list
High-weighted = 20 points
Medium-weighted = 10 points
Patient-centered medical home (PCMH) recognition
Receive 40 points
Only clinicians practicing in the PCMH
APM participation
Receive at least 20 points (option for CMS to award additional points in the future)
For 2017, all current models receive full credit

19. Sample Measures by Performance Category
MIPS Domain
Sample Measures
Quality
Diabetes: Hemoglobin A1c (HbA1c) Poor Control (>9%) -- Percentage of patients years of age with diabetes who had hemoglobin A1c > 9.0% during the measurement period.
Heart Failure (HF): ACE Inhibitor or ARB Therapy for LVSD -- Percentage of patients with a diagnosis of HF with a current or prior left for ventricular ejection fraction < 40% who were prescribed ACE inhibitor or ARB therapy
Care Plan: Percentage of patients aged 65 years and older who have an advance care plan or surrogate decision maker documented in the medical record
Advancing Care Information
Exchange Information with Other Physicians or Clinicians
Exchange Information with Patients
Clinical Information Reconciliation
Cost
Total Medicare cost (payment) per capita
Total Medicare cost (payment) by episode (e.g., breast cancer, cataract procedures)
Improvement Activity
Patient-Centered Medical Home (PCMH) Certification
Population Management: Participation in a systematic anticoagulation program (coagulation clinic, patient self-reporting program, patient self-management program) for 60 percent of practice patients in year 1 and 75 percent of practice patients in year 2
Expanded Practice Access: As a result of Quality Innovation Network-Quality Improvement Organization technical assistance, performance of additional activities that improve access to services (e.g., investment of on-site diabetes educator)

20. 2017 Transition Period: “Pick Your Pace”
Fail to report
-4% penalty
Submit something
0% adjustment
- 1 quality measure that does not meet completeness - 1 low-weighted improvement activity
Submit partial data
+0-4% adjustment
- Submit “partial data” or full reporting with poor performance
Submit full data
% adjustment
- Fully participate with high performance
(90-day to full CY data)

21. Data Availability Assess historical performance 2015 quality reports
2016 available in Fall 2017
Data to be provided annually going forward
MIPS adjustment for 2019
By December 1, 2018
Data validation and audits
Public reporting on Physician Compare

22. Track 2: APM

23. Track 2: Advanced APMs Overview
Incentives to participate in Advanced APM Track
Exempt from MIPS!
Receive 5% bonus payment (Medicare Part B revenue)
Opportunity to receive bonus payments from APM arrangement
Minimum payment and/or patient thresholds:
Eligibility criteria
Financial risk, quality measures comparable to MIPS, and use certified EHRs
Payment Year
2019
2020
2021*
2022*
2023*
2024+*
% of payments
25%
50%
75%
% of patients
20%
35%
* May be non-Medicare/all-payer models, but must maintain Medicare minimums in all years.

24. Qualifying Medicare APM Models
2017
Comprehensive ESRD Care Model
Comprehensive Primary Care Plus (CPC+)
Medicare Shared Savings Program (MSSP) Tracks 2 & 3
Next Generation ACO Model (Next Gen)
Oncology Care Model (OCM) two-sided model
2018
Comprehensive Care for Joint Replacement (CJR) Track 1
Episode-Based Payment Models Track 1
MSSP Track 1+
Other?

25. Advanced APM vs. MIPS APM
Qualifications
Advanced APM
MIPS APM
Certified EHR technology ▲
Pays based on MIPS comparable quality measures
Bears more than nominal financial risk
Includes at least one MIPS eligible clinician
Models
Advanced APM
MIPS APM
Shared Savings Program
Tracks 2,3
Tracks 1, 2, 3
Next Gen ACO
Yes
Comprehensive ESRD Care
Two-sided risk
LDO arrangement; non-LDO w/ 1 or 2 sided risk
CPC+
Oncology Care
One-sided and two-sided
CJR/Episode-Based Payment Model
CEHRT track No

26. MIPS APM Scoring Standard

27. What does this mean for physicians? For health Systems?

28. Survey of Physician Readiness for MACRA
Industry is woefully unprepared
50% of non-pediatric physicians have never heard of MACRA
32% only recognize the name
Awareness by employment status:
21% of self-employed physicians are aware
9% of employed physicians
* Deloitte Consulting 2016 Survey of Physicians

29. Aggregate Impact (Negative) Aggregate Impact (Positive)
Transition Policy Should Mitigate Financial Impact on Small Practices in 2019 ($ in Millions)
Practice Size
Eligible Clinicians
Aggregate Impact (Negative)
Aggregate Impact (Positive)
Net Impact
1-9
147,739
-$99
$244
$145
10-24
63,829
-$37
$80
$42
25-99
132,406
-$47
$101
$54
100+
332,748
-$16
$274
$258
Total
676,722
-$199
$699
$500
* Source: CMS MACRA Final Rule, assumes 90% participation in each category.

30. Challenges for Physicians to be Successful: Significant Infrastructure Required
Successfully report
Analyze performance
Connect with other providers in the community
Episode spending measures
Have an electronic health record
Invest in clinical practice improvement activities
Options:
Dropout of the Medicare program
Don’t actively participate, take payment penalty
Partner with other small practices to work with a vendor
Build reporting infrastructure internally
Affiliate with a hospital or large practice (quality or APM track)
Hospital employment

31. Considerations for Hospitals
Employed/affiliated physicians
Assess financial risk of each track to determine strategy
Can switch tracks in future years
Unaffiliated physicians
Opportunities for the health system to partner with physicians
If you don’t, someone else will
Incentives for large group practices to participate in APMs
Impact/risk for the hospital?

32. Decisions for 2017—or Both? Submit for MIPS
4% at risk in 2019 based on 2017
Reporting method and measures
MU achievement/progress
Clinical practice improvement
Focus on resource use measures
Apply for APM
5% bonus in 2019 based on 2018 participation
Provider networks and contracts
Informatics/technology
Governance and operations
Payer partnerships

33. Additional resources https://www.cms.gov/ Search for “MACRA”