MACRA: Charting the Future of Physician Payment

August 27, 2015

CAPG: Who We Are

• CAPG represents over 190 physician groups in 39 states, Puerto Rico, and Washington, DC

• The model – financial and clinical accountability– Payment is capitated to the multi-specialty physician group

(usually per-member, per-month)– Physician group is clinically responsible for defined patient

population– Robust internal and external quality reporting programs

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Converging Forces on Advanced Risk Contracting

Advanced Alternative

Payment Models

SGR Replacement

HHS Value Goals & Learning Network

CMMI Initiatives

(Pioneer, Next Gen ACO)

Medicare Advantage Rate Notice

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MACRA: The Future of Physician Payments in Medicare• MACRA creates two paths:

– MIPS: “fee-for-service plus quality link” path– APM: accountable care organization or other risk-bearing

organization path

• Which path will be more attractive for physicians and physician groups?

• Between now and 2019 when incentives begin:– Assessing existing options– Building and testing new options– It’s all about the regs!

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Sustainable Growth Rate (SGR) Formula

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MACRA: How did we get here?

Congress acts to prevent

cuts

Congress cuts health

industry to pay for “doc

fix”

CMS Proposed

Cuts to Part B Fee Schedule

• Rinse and repeat -- 17 times!

• At a cost of more than $169 billion

MACRA: How did we get here?

• Huge majority in both chambers of Congress agree, enough is a enough!– House passes MACRA by a vote of 392-37– Senate passes MACRA by a vote of 92-8– President signed MACRA into law in April 2015

• New framework for physician payments charts the course for the future in Traditional Medicare

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MACRA: Where are we now? 8

• Immediately replaces the old cycle with a period of stable updates; then offers two paths

Jan. 2015-June 2015

July 2015-December 2015

2016-2019 2020-2025 2026 and beyond

0.0% 0.5% 0.5% 0% 0.75% APM

0.25% non-APM

APM Bonuses

2019-2024

MIPS Bonuses/PenaltiesTrack One:

Track Two:

MACRA: Where are we going? 9

Year Merit-Based Incentive Payment System (MIPS)*

Eligible Alternative Payment Models (APMs)

2019 +/- 4% +5%

2020 +/- 5% +5%

2021 +/- 7% +5%

2022 +/- 9%(and beyond)

+5%(to 2024)

*Additional potential bonus for exceptional performersMIPS bonus pool is budget neutral

Two Paths: MIPS or APMs

Before MACRA, Fragmented Approach to Measuring Value

Physician Quality Reporting System (PQRS) (previously PQRI)

Value-Based Payment Modifier (VBPM)

Meaningful Use/Electronic Health Records (EHR)

What is it? Quality reporting program in Medicare Part B established in 2007. 12 reporting options; select among 280 quality measures and over 20 measures groups

Budget neutralquality and resource measurement program in Medicare Part B. Applies to all physicians and groups in 2017

Incentives and penalties for physicians who are meaningful users of electronic health records technology.

Penalty 1.5% for 20152.0% for 2016-2018

1.0% for 20152.0% for 20164.0% for 2017-2018

1.0% for 20152.0% for 20163.0% for 20174.0% for 2018

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Experience in Existing Programs

PQRS

• 470,000 physicians face 1.5% penalty

• 48,000 practices qualify for bonus

• $214M total bonus pool

• $443/clinician; $4531/practice

VBPM

• 1,010 practices participate in year 1

• 14 groups get bonuses

• ~11M in bonuses and ~11M in penalties

MU

• CMS estimates that 256,000 providers subject to penalty (percentage of claims in 2015)

• Eligible practices can receive up to $44,000 over 5 years

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Path 1: Roll Up of Existing Part B Quality Reporting into MIPS

PQRS

Value Based

Payment Modifier

Meaningful Use

MIPS

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Existing Medicare

Part B Quality

Reporting Programs

Quality, 30%

Resource Use, 30%

CPI, 15%

EHR, 25%

MIPS

*Percentage weights transition over first two years; chart shows percentages for 2021 and beyond

Path 1: MIPS Composite Score on a Scale of 0-100

Exceptional Performers (bonus up to +10%)

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0 Performance threshold to be set by HHS 100

0% or Positive AdjustmentNegative Adjustment

2019 – capped at -4%2020 – capped at -5%2021 – capped at -7%2022 and beyond capped at -9%

2019 – capped at +4%2020 – capped at +5%2021 – capped at +7%2022 and beyond capped at +9%

Path 1: Summary Points

• MIPS replaces existing quality reporting programs in Medicare Part B

• MIPS bonus opportunity is potentially significant, especially for high performers

• Experience with existing quality programs and complexity of new programs may be roadblocks to achieving very high bonus potential

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Path 2: APMs that Qualify for 5% Bonus

Qualifying Model• Innovation Center

Model• Shared Savings

Program• Demo required by

federal law

Quality Measures• Quality measures

comparable to MIPS; and

• Uses certified EHR technology

Financial Model• Bears financial risk

for monetary losses in excess of a nominal amount; OR

• Certain primary care medical homes

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Path 2: APM Thresholds 16

Percentage of revenue that must be earned through APM to be considered an “Eligible APM”

2019-2020 2021-2022 2023 and beyond

25% Medicare Part B payments attributable to

APM entity

Option 1: 50% Medicare Part B Revenue

Option 1: 75% of Medicare Part B Revenue

Option 2: 50% of all-payer revenue including 25% of Medicare Part B Revenue

Option 2: 75% all-payer Revenue, including 25%

Medicare Part B Revenue

Path 2: What are Qualifying APMs?

• To hit the revenue threshold and meet risk-bearing requirements in Medicare Part B, do you have to be in an ACO?– Potential modifications required to make ACOs more attractive

between now and 2019

• What will the medical home model look like?

• Potential for developments of new alternative payment models between now and 2019

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Path 2: Developing New APMs 18

• MACRA seems to anticipate the need for new APM options

• Establishes a Physician Focused Payment Model Technical Advisory Committee – 11 Members that will be appointed within 180 days of MACRA

enactment– Process similar to MedPAC process

Path 2: New APMsTechnical Advisory Committee

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Notice and Comment

rulemaking to develop criteria for evaluation of

new models

Stakeholders submit models

for review

Technical advisory

committee will review and make recommendation

to Secretary of HHS

Secretary of HHS will respond

Path 2: Summary Points

• Potentially more certainty in the 5% APM track

• Unclear how CMS is going to define “beyond nominal financial risk”

• Bonus “cliff” in 2024

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Medicare Advantage APMs

• By July 1, 2016, HHS is required to report to Congress on the feasibility of integrating the APM concept in Medicare Advantage

• Study must “include the feasibility of including a value-based modifier and whether such modifier should be budget neutral”

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Medicare Advantage on a Trajectory Parallel to FFS but More Advanced

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Shared Savings Track 1, 2 and 3

Fee-for-service

Fee-for-service plus quality link

Medical home

Next Gen ACO (2017)

Traditional (FFS) Medicare

Fee-for-service

Fee-for-service plus quality link

Medical home

ACO

Capitation

Medicare Advantage

RISK

Concluding Thoughts

• New, converging pressures will make risk-based coordinated care models more attractive

• Substantial regulatory work remains to define and articulate the technical aspects of MACRA

• Time before incentives and penalties begin allows physicians to define and test new models; assess the opportunities in their market

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Questions?

Mara McDermottVice President of Federal AffairsCAPG(202) 212-6891mmcdermott@capg.org

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