STATLINE: October 14, 2016

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Special Report: October 14, 2016

CMS Finalizes MACRA Medicare Payment Reforms, Provides Flexibility Requested by CAP

Following concerns from the CAP and other organizations, the Medicare program will provide additional flexibility to physicians as it transitions to a new reimbursement system starting in 2017.

On October 14, the Centers for Medicare & Medicaid Services (CMS) issued its final rulemaking implementing provisions of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). MACRA repealed the broken Medicare sustainable growth rate (SGR) formula and reformed Medicare’s reimbursement system with new payment pathways for physicians. Measurement for the new quality payment programs will begin in 2017 and affect Medicare reimbursement in 2019. The Medicare payment adjustments to physicians in the program range from +/- 4% starting in 2019 to +/- 9% in 2022 and beyond. MIPS is projected to have a $1.5 billion impact on pathology reimbursement between 2019–2024.

Prior to the proposed rule's release in April, the CMS sought input from physicians on how to implement MACRA. The CAP engaged with the agency on implementation of the Merit-Based Incentive Payment System (MIPS), alternative payment models (APMs), and other provisions of interest to pathologists. In addition, the CAP advocated for several changes to these pathways in comments to the CMS on June 27.

Key elements in the final MACRA regulation include:

Additional flexibility with four MIPS participation options for physicians. For instance, pathologists may avoid Medicare penalties by reporting one quality measure.
For MIPS, the CMS approved the CAP's eight quality reporting measures.
As the CAP sought changes to the definition of non-patient-facing physicians, the CMS will now define this category as those with 100 or fewer patient facing encounters. The CMS will notify pathologists about whether they meet this definition before the beginning of the MIPS performance period.
Pathologists, including pathologists practicing at independent laboratories, are considered eligible for MIPS and are required to participate in the program.
Reduced risk criteria for alternative payment models (APMs).

2017 Is a Transition Year for MIPS

The CAP advocated for considerable accommodations and alternatives as the CMS established the MACRA reforms to set Medicare reimbursement policy. Starting in 2019, physicians can earn Medicare bonuses of up to 4% in MIPS. At the same time, the maximum penalty for poor performance in MIPS could reduce Medicare pay by 4% in 2019.

In the final rule, the CMS set four MIPS tracks for physicians:

Don't Participate: If you don't send in any 2017 data, then you receive a negative 4% payment adjustment.
Test MIPS: If you submit a minimum amount of 2017 data to Medicare (for example, one quality measure or one improvement activity), you can avoid a downward payment adjustment.
Partial Year Reporting: If you submit quality data to Medicare for 90 days in 2017 you may earn a neutral or small positive payment adjustment.
Full Year Reporting: If you submit a full year of 2017 data to Medicare, you may earn a moderate positive payment adjustment.

MIPS Reporting

The MIPS program combines current quality programs—Physician Quality Reporting System (PQRS), Electronic Health Record Meaningful Use (EHR MU), the Value-Based Modifier (VBM), as well as a new performance category termed "Clinical Practice Improvement Activities"—into one system. MIPS consists of four weighted categories: Quality, Advancing Care Information, Clinical Practice Improvement Activities, and Cost.

Following the transition period set by the CMS, physicians will be scored on how well they perform in these categories. A MIPS eligible clinician would receive no payment adjustment if the performance score is at the performance threshold, a negative adjustment if the score is below the performance threshold, and a positive adjustment if the score is above the performance threshold.

The CMS finalized all eight quality measures developed by the CAP for MIPS. In addition, three of the CAP’s measures regarding lung cancer biopsy/cytology, lung cancer resection, and melanoma are designated as outcomes measures. In the quality category, the CMS requires reporting on a minimum of six measures or all that apply to an eligible clinician.

Non-Patient-Facing Physicians and Reweighting Categories

In the proposed rule, the CMS sought to define non-patient-facing clinicians as those who bill less than 25 patient-facing encounters during the performance year. The CAP recommended that pathologists, as designated in the CMS' provider enrollment system, be automatically identified as non-patient-facing eligible clinicians at the beginning of each year.

In the final rule, the definition of non-patient-facing physicians was changed to those who bill less than 100 patient-facing encounters. If a group of eligible physicians has 75% of clinicians meeting the non-patient-facing definition, then all physicians in the group will meet the definition. Examples of patient-facing encounter include evaluation and management services and cross-cutting measures set by the CMS. Non-patient-facing physicians also will know if they fit this definition ahead of a performance period.

How the CMS sets this definition will affect pathologists and their scoring under MIPS. The CMS finalized a proposal to automatically reweight the Advancing Care Information category to zero for a MIPS eligible clinician who meets the non-patient-facing definition.

Alternative Payment Models (APMs)

As in the proposed rule, if clinicians receive 25% of Medicare covered professional services or see 20% of Medicare patients through an advanced APM in 2017 then they earn a 5% Medicare incentive payment in 2019.

The CMS finalized the same five types of APMs for 2017 as in the proposed rule, but indicates it may update its APM listing before January 1, 2017. It is also considering testing a new Medicare ACO Track 1+ model and exploring adding two other models that would be new, advanced APMs in 2018. While the models that qualify as advanced APMs has not expanded from the initial five, the CMS has eased the financial risk criteria from the proposed rule in an effort to have a broader range of future models. The CMS estimates about 25% of eligible clinicians will be part of advanced APMs in 2018.

As far as physician-focused payment models, the final rule seems to have raised the bar as these models must go through the CMS APM development process, be open to public announcement, and request for applications before implementation.

Additional Resources from the CMS: