On October 14, 2016, CMS issued its Final Rule for the new physician payment system under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).  MACRA replaced the Medicare Sustainable Growth Rate (SGR) with a new physician payment method, the Quality Payment Program (QPP). Physicians may participate in the QPP through either the Merit-Based Incentive Payment System (MIPS) or an Advanced Alternative Payment Model (Advanced APM).  The Final Rule makes several changes to the earlier Proposed Rule.  The biggest change from the Proposed Rule is that, as previously announced in September, CMS will not require full MIPS participation in 2017. CMS also adjusted the low-volume threshold to exclude those clinicians with less than $30,000 in Medicare Part B revenue or fewer than 100 Medicare patients in a reporting year. 

MIPS

MIPS is a new program for certain Medicare clinicians that will make performance-based adjustments to payment based on quality, cost, and other measures.  MIPS also consolidates three existing programs: (1) the Physician Quality Reporting System (PQRS), (2) the Physician Value-based Payment Modifier (VM), and (3) the Medicare Electronic Health Record (EHR) Incentive Program for eligible professionals (EPs).

CMS will begin measuring performance in 2017 and will begin adjusting payments based on that data in 2019. The Final Rule spells out the three options to submit data to MIPS starting in 2017:

1. report to MIPS for a period of 90 days up to a full year;
2. report to MIPS for a minimum 90-day period and also report (a) more than one of the clinical quality measures or clinical practice improvement activities, or (b) more than the required advancing care information measures; or
3. report only one clinical quality measure and one clinical practice improvement activity measure, or report all of the required advancing care information measures.

Clinicians who report for a full year under option (1) will maximize the chance of a positive adjustment. Those who meet option (2) will avoid a negative MIPS adjustment and possibly receive a positive adjustment. Those who meet the minimum requirements of option (3) will avoid a negative MIPS adjustment only. A clinician who reports no measure or activity will receive the full negative adjustment of 4 percent.

Advanced APMs

As an alternative to MIPS, physicians who participate in an Advanced APM may qualify for a 5 percent bonus to Part B payment.  Alternative Payment Models (APMs) are payment approaches, developed in partnership with providers, that offer added incentives to deliver high-quality and cost-efficient care.  APMs can apply to a specific clinical condition, a care episode, or a population.

Certain APMs will meet criteria to be considered Advanced APMs.  The Final Rule confirms two types of Advanced APMs: Advanced APMs and Other Payer Advanced APMs.

To be an Advanced APM, an APM must meet all of the following criteria:

• The APM must require participants to use certified electronic health record (EHR) technology;
• The APM must provide for payment for covered professional services based on quality measures comparable to those in the quality performance category under MIPS; and
• The APM must either require that participating APM Entities bear risk for monetary losses of a more than nominal amount under the APM, or be a Medical Home Model expanded under section 1115A(c) of the Act.

To be an Other Payer Advanced APM, a payment arrangement with a payer must meet the following criteria:

• The payment arrangement must require participants to use certified EHR technology;
• The payment arrangement must provide for payment for covered professional services based on quality measures comparable to those in the quality performance category under MIPS; and
• The payment arrangement must require participants to either bear more than nominal financial risk if actual aggregate expenditures exceed expected aggregate expenditures; or be a Medicaid Medical Home Model that meets criteria comparable to Medical Home Models expanded under section 1115A(c) of the Act.

Advanced APMs provide a pathway for eligible clinicians, who would otherwise participate in MIPS, to become Qualifying APM Participants (QPs), and, therefore, earn incentive payments for their Advanced APM participation. QPs are excluded from MIPS and receive a 5 percent incentive payment for a year beginning in 2019 through 2024 if they have sufficient participation in an Advanced APM. CMS finalized methodologies to evaluate eligible clinicians using two options: (1) a Medicare Option based on certain Part B payments, beginning in payment year 2019; and (2) an All-Payer Combination Option that utilizes the Medicare Option as well as an eligible clinician’s participation in Other Payer Advanced APMs, beginning in the payment year 2021.

In addition, CMS states that if an individual eligible clinician who participates in multiple Advanced APM Entities does not reach QP status through a single APM, CMS will assess the eligible clinician individually to determine QP status based on combined participation in Advanced APMs.

The Final Rule will take effect on January 1, 2017. The Final Rule has not yet been published in the Federal Register, but a copy is available here. Please click here for an Executive Summary of the Final Rule prepared by CMS.