On October 14, 2016, the Centers for Medicare and Medicaid Services (CMS) released the final rule (Final Rule) implementing sweeping changes to the Medicare physician payment system mandated by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

As described in our prior Healthcare Alert covering the proposed MACRA rule (Proposed Rule), MACRA repealed the Medicare sustainable growth rate and established a two-track payment system designed to implement the goals of moving substantial proportions of Medicare payments away from pure fee-for-service (FFS) reimbursement and towards payments that encourage quality patient care and efficient resource utilization.

In response to significant concerns raised by physicians and other industry stakeholders, CMS’s Final Rule increases the number of physicians who may be exempt from the default track, the Merit-Based Incentive Payment System (MIPS). The Final Rule also relaxes criteria concerning which payment models will qualify as Advanced Alternative Payment Models (APMs) for purposes of the second track. While the Proposed Rule had been widely criticized for its complexity and its potentially adverse effects on smaller physician practices, the Final Rule offers more palatable options for clinicians participating in the MIPS.

This alert summarizes key points from the Final Rule. A copy of the Final Rule, which is scheduled for publication in the Federal Register on November 4, is available here .

Merit-Based Incentive Payment System

A default pathway for eligible clinicians who are not participating in an APM, the MIPS consolidates three currently existing CMS physician quality programs: the Physician Quality Report System; the Physician Value-Based Payment Modifier; and the Medicare Electronic Health Record (EHR) Incentive Program. Reporting in four categories will determine a clinician’s or a group’s performance during the performance period and will impact FFS payment in the payment year. The MIPS performance categories include (1) quality, (2) clinical practice improvement activities, (3) advancing care information performance, and (4) cost performance.

The Final Rule includes multiple definitions, including those for eligible clinicians, groups and eligible clinicians excluded from MIPS. MIPS eligible clinicians include physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists, as well as groups including such practitioners that bill under Medicare Part B and who are not excluded from the MIPS. Excluded as MIPS eligible clinicians are those who during a performance period (1) have Medicare Part B allowable charges totaling less than or equal to $30,000 or (2) provide medical services for fewer than 100 Medicare enrolled beneficiaries. Qualifying APM Participants and Partial Qualifying APM Participants (who do not report MIPS applicable measures and activities for any given performance period in a year) are also excluded from the MIPS track and newly Medicare-enrolled clinicians are exempt from participating during their initial year of enrollment.

Transition Period and “Pick Your Own Pace” System

Recognizing voiced concerns and the limited resources and multiple burdens of small and rural group practices, the Final Rule offers MIPS eligible clinicians a transition pathway into the Quality Payment Program -- the “Pick Your Own Pace” system.

During CY 2017 (the transition year and performance period for CY 2019, the payment year), MIPS eligible clinicians may select one of four (4) options to determine whether their Medicare FFS payments will be negatively adjusted in CY 2019, have no adjustment or be positively adjusted.

Options

Options vary based on how many measures MIPS eligible clinicians have the capability and willingness to report and the length of time (consecutive days) the measures are reported.

Submitting Data and Scoring

MIPS eligible clinicians may submit data as an individual or as a group through a variety of vehicles, including a qualified registry, EHR submission mechanism, Qualified Clinical Data Registry or other methods listed in 42 C.F.R. § 414.1325. The three (3) performance category scores (no data is submitted for cost) will be reported as one score, weighted as follows: Quality - 50%, Advancing Care Information - 20% and Improvement Activities - 30%. During CY 2017, the transition year, the performance threshold will be set at three (3) points.

Available Assistance

CMS plans to make available $100 million for education and technical assistance for eligible clinicians in rural areas, small practices and practices located in health professional shortage areas. Receiving priority will be clinicians practicing in rural areas (identified by rural zip codes); in medically underserved areas; those eligible clinicians with low MIPS final scores; and those eligible clinicians transitioning to APMs.

Advanced Alternative Payment Model (APM) Track

The Final Rule relaxes some of the proposed requirements for certain healthcare delivery systems to qualify as Advanced APMs under MACRA. The rule also eases the threshold requirements for clinicians to earn incentives for participating in such models. While the MIPS track relies heavily on performance measures to determine eligible clinician payment, the Advanced APM track rewards eligible clinicians for participating in models that emphasize value of care rather than volume of care. CMS aims to release its list of identified Advanced APMs—such as next generation ACOs, comprehensive ESRD care initiatives, and Medicare shared savings programs—by January 1, 2017.

Under the Advanced APM track, if an eligible clinician or eligible clinician group is designated as a Qualified Provider (QP) for participating in Advanced APMs, that QP is exempt from the MIPS process, including its reporting requirements and its potential payment reductions. Instead, QPs will be eligible for a lump sum incentive payment of five percent of the prior year’s Medicare Part B payments for each year they retain QP status from CY 2019 through CY 2024. Beginning in CY 2026, QPs will be reimbursed on a higher physician fee schedule than non-QPs.

Eligible clinicians may become QPs through either the payment-count method or the patient-count method. Under the payment-count method, an eligible clinician becomes a QP if he or she receives a certain percentage of Medicare Part B payments from services rendered at an Advanced APM. Under the patient-count method, an eligible clinician becomes a QP if he or she furnishes a certain percentage of his or her patients through an Advanced APM. The Final Rule allows individual clinicians who participate in multiple Advanced APMs to aggregate their participation to reach the QP threshold.

The Final Rule also adopts CMS’s proposed Partial Qualifying APM Participant (Partial QP) designation for eligible clinicians that participate in Advanced APMs, but not to the degree required for full QP status. Partial QPs may choose between reporting to and participating in MIPS (in hopes of a somewhat-increased payment) or being wholly excluded from MIPS reporting requirements (and potential payment reductions). Where a Partial QP is a group, the Partial QP’s election as to whether to participate in the MIPS will apply to all individual clinicians in the group.

CMS will use two methods to determine whether an eligible clinician is a QP under the law. In the first two years of the program (CY 2019 and CY 2020), CMS will employ the “Medicare Option” to determine whether eligible clinicians may become QPs. Under the Medicare Option, eligible clinicians may become QPs only through participation in an Advanced APM. To be an Advanced APM, an entity receiving Medicare payments must: (1) require its participating professionals to use certified EHR technology; (2) pay its participating professionals on the basis of quality measures comparable to those under the MIPS; and (3) require participating entities to bear more than a “nominal amount of risk” of monetary losses or be a Medical Home Model. The Final Rule simplifies CMS’s proposed calculation method for and lessens the threshold amounts of financial risk an APM must assume to qualify as an Advanced APM.

Beginning in CY 2021, CMS will employ the “All-Payer Combination Option” to determine whether eligible clinicians may become QPs. As its name suggests, the All-Payer Combination Option will consider eligible clinicians’ participation in both Advanced APMs and Other-Payer APMs, which must meet similar requirements as the Advanced APMs, but which include APMs featuring payment arrangements with non-Medicare payers such as commercial plans and state Medicaid programs. Thus, beginning in CY 2021, the universe of APM participation an eligible clinician may count toward his or her threshold to be designated a QP broadens significantly.

CMS expects that changes in the Final Rule relaxing the requirements for Advanced APMs will increase the number of providers participating in such models—and therefore eligible to be QPs—to roughly 70,000 to 120,000 in CY 2017 and 125,000 to 250,000 in CY 2018.

Recommendations:

• Select Your Track: All eligible clinicians and groups should select their track and, if the track is the MIPS, their transitional period option as soon as possible, based upon their practice capabilities. CMS has left little time for reflection.

• Take Advantage of Quality Payment Program Website and Educational Offerings: CMS’s link at https://qpp.cms.gov/ includes “help line” phone numbers and links for questions and for updates to subscriptions. The site also has links to multiple educational webinars. Eligible clinicians practicing in rural areas, particularly in MUAs and HPSAs, should also take advantage of the educational and technical assistance for which CMS has allocated funds.

• Cost Performance Category: Although the fourth Quality Payment Program category – cost performance – will not be scored in the MIPS transition year, CMS will collect cost data during CY 2017 and will provide feedback on clinician costs. Do not miss this opportunity to understand better your costs before the weight of this category is increased in future years.