May 2, 2016

We have known since Congress passed the Medicare Access and CHIP Reauthorization Act (MACRA), just over a year ago, that big changes in the way that CMS pays physicians are coming. MACRA has already repealed the detested Sustainable Growth Rate formula. On Wednesday, April 27, CMS released the proposed regulations (Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models) that begin to define the new unified framework called the Quality Payment Program going forward.

The 962-page proposed rule is just that: proposed. CMS will be receiving public comments through June 27 and will then consider them for several months before publishing the final rule later this year. We hope that the final will be released sooner rather than later, because anesthesiologists and other physicians will need to know what they must do before January 1, 2017. Medicare payment in 2019 will be based on performance in calendar year 2017.

The proposed rule is also long and complex, so we will introduce CMS’ plan for one of the two major physician payment pathways—the MIPS—in today’s e-alert. Subsequent e-alerts will provide more details on both the MIPS and the other major pathway, the APM Incentive.

The MIPS is a modification of the fee-for-service system. It is a means of calculating payment adjustments for physicians’ and other “eligible clinicians’” services that links payments to quality and value. In 2019, the maximum bonus will be four percent, and the maximum penalty will be minus four percent. The MIPS consolidates key components of the current fragmented, duplicative, burdensome and often senseless pay-for-performance programs into one single, streamlined program based on performance in the four categories below. Eligible clinicians will be scored by the government on a 0-100 point scale based on these four categories. The various categories account for specific proportions of the overall score.

Quality – replaces current Physician Quality Reporting System (PQRS) program

• Accounts for 50 percent of total score in year 1 (the weights will shift over the years so that by 2022 quality will account for only 30 percent)
• Clinicians would choose to report six measures from among a range of options that accommodate differences among specialties and practices. (We will not know what the available measures are, or whether they are the same as those anesthesiologists and pain physicians are reporting this year, until the final rule is published.)

Cost – replaces current Value-Based Modifier (VBM) program 

• Accounts for 10 percent of total score in year 1 
• The score would be based on Medicare claims, meaning no reporting requirements for clinicians. This category would use 40 episode-specific measures to account for differences among specialties.

Advancing Care Information – replaces EHR Incentive-Meaningful Use (MU) program

• Accounts for 25 percent of total score in year 1
• Clinicians would choose to report customizable measures that reflect how they use technology in their day-to-day practice, with a particular emphasis on interoperability, information exchange and security. Unlike the current MU program, this category would not require all-or-nothing EHR measurement or redundant quality reporting.

Clinical Practice Improvement Activities (CPIA) – new

• Accounts for 15 percent of total score in year 1
• This category would reward clinical practice improvements, such as activities focused on care coordination, beneficiary engagement, and patient safety. Clinicians may select activities that match their practices’ goals from a list of more than 90 options such as: 
• Expanded practice access
• Population management (e.g., qualified clinical data registry participation)
• Care coordination (e.g., via remote monitoring or telehealth)
• Patient engagement (e.g., care plans, shared decision-making)
• Patient safety and practice assessments (e.g., checklists, MOC)
• Participation in APMs - Earns at least half (7.5 percent) of CPIA score (see below)

Source: CMS Press Release, Administration Takes First Step to Implement Legislation Modernizing How Medicare Pays Physicians for Quality, May 27, 2016

The following table shows the MIPS maximum bonuses and penalties that eligible clinicians face over the initial years of the program. There are no changes in the MIPS payments in 2017 and 2018, when the PQRS, VM and MU incentives will still be in effect. The first year in which payments to clinicians will reflect the MIPS scoring will be 2019, and the percentages will continue to grow through 2022. Thereafter the +9 to -9 percent adjustments will continue from year to year unless and until Congress passes new legislation. The right hand column is not about the MIPS at all. Rather, it shows the year-to-year Medicare fee schedule payment changes that replace the SGR system.

The incentive payment system is intended to be budget neutral, which means there will be winners and losers when it comes time to dole out payments, Hunger Games-style. CMS is forecasting that there could be $833 million in negative payment adjustments and $1.3 billion in positive payment adjustments, which includes $500 million in “exceptional performance” payments for the highest-scoring physicians.

Eligible clinicians who participate to a sufficient extent in Advanced Alternative Payment Models would be exempt from MIPS reporting requirements and, in 2019 through 2024, would qualify for financial bonuses of five percent of their prior year Medicare payments.

Most physicians, however, with a few exceptions, would very likely report through MIPS and not APMs in the first years of the program. CMS estimates that in 2019, 781,342 clinicians would be eligible to participate in MIPS and 30,658 to 90,000 would be exempt from MIPS because of successful participation in an APM. The only viable APM option for the vast majority of physicians would be full-blown accountable care organizations (ACOs) or Patient-Centered Medical Homes. CMS defined eligible APMs narrowly, excluding such programs as the Bundled Payment for Care Improvement Initiative.

We will cover APMs in greater detail in Part II of our series of e-alerts on the MACRA proposed regulations.

Some elements of the probable impact of the proposed regulations on anesthesiologists are quickly apparent:

1. “The changes have the potential to upend the way medicine is practiced today, accelerating the move toward hospital employment and making the small group practice a thing of the past. At the very least, the rule, once finalized, will inspire closer collaboration between doctors and hospitals, since physicians will have more incentives than ever to steer patients away from high-cost medical centers.” (Kutscher B. Physicians Face Stark Choices under New Medicare Pay Proposal. Modern Healthcare, May 2, 2016.) CMS estimates that nearly 70 percent of groups with two to nine eligible clinicians would face an adjustment penalty in 2019; the figure rises to 87 percent for solo practitioners and drops only to 59.4 percent for groups of 10-24 clinicians. “The rule makes it clear that physicians will increasingly be the ones held accountable for keeping hospital expenditures in check.” That burden requires a sizable practice.
2. Many private payer contracts contain language that defines payment rates as percentages of Medicare. Many such contracts do not have sufficient flexibility in them to accommodate MIPS-based Medicare payment. Accordingly, it would make sense to review private payer contracts to determine their compatibility with MACRA and any necessary modifications.
3. CMS is enthusiastic about qualified clinical data registries (QCDRs) and foresees that they will play an increasingly important role as MACRA implementation proceeds. CMS stated in the preamble to the proposed rule (p. 87):

To encourage the use of QCDRs, we have created opportunities for QCDRs to report new and innovative quality measures. In addition, several CPIAs emphasize QCDR participation. Finally, we allow for QCDRs to report data on all MIPS performance categories that require data submission and hope this will become a viable option for MIPS eligible clinicians. We believe these flexible options will allow MIPS eligible clinicians to more easily meet the submission criteria for MIPS, which in turn will positively affect their [composite performance score].

We conclude with a reminder that we are dealing with a proposed rule—the first of many regulations that will operationalize MACRA over the coming years. Nothing is final yet, and there are sure to be many thoughtful and important comments from the public, including organizations such as the ASA, the AMA and MGMA. CMS itself characterized the proposal as a “first step.” We will work to help you understand all the changes in forthcoming e-alerts.