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The MACRA Final Rule: In Search of the “Goldilocks” Model

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The Medicare Access and CHIP Reauthorization Act (“MACRA”) Final Rule published late last year implements CMS’ new payment approach for physicians and other Medicare Part B eligible clinicians under the Merit-Based Incentive Payment System (“MIPS”) and looks to steer clinicians towards more “at risk” advanced alternative payment models (“Advanced APMs”).  In light of some Congressional concerns on MIPS’ potential negative impact on small physician groups, the Final Rule softened some of the initial timeframes for MIPS implementation.  In addition, the Final Rule proposed a new “ACO Track 1+” model that would qualify as Advanced APM, which some providers hope will turn out to be that ACO in the “goldilocks zone” – not too much, not too little, but just the right balance of shared savings and risk.  Last week, CMS issued some new guidance regarding the ACO Track 1+ model and promised to provide additional details in the coming months.

CMS helps (or hopes) to ease into MIPS

As we noted in our prior blog post on the MACRA Proposed Rule, MIPS represents the consolidation of three CMS reporting programs: Physician Quality Reporting System, the Value-Based Modifier Program, and Meaningful Use of EHRs. MIPS will now score physician on four performance categories: Quality, Resource Use, Practice Improvement Activities, and Advancing Care Information (f/k/a meaningful use). Eligible clinician’s first reporting year under MIPS will be 2019, although the performance measurement period began Jan. 1, 2017.  The MIPS bonus or penalty will start at 4% and moves successively up to 9% by 2022.

In response to numerous comments to the MACRA Proposed Rule about the condensed timetable for measurement, CMS Acting Administrator Andy Slavitt previously outlined, and the Final Rule memorialized, four “pick your pace” MIPS participation options for the 2017 transitional year:

  1. Fully report under all MIPS performance categories for at least 90 continuous days and be eligible to receive positive MIPS adjustment; or
  2. Report on more than one quality measure, or more than one improvement activity, or more than the required measures in the advancing care information category for at least 90 continuous days and be eligible (depending on score) for either no adjustment or a positive payment adjustment ; or
  3. Report on one quality measure, or one improvement activity, or report the required advancing care information category (no continuous 90 day requirement), and be able to avoid a negative MIPS adjustment, but not be entitled to any performance bonus; or
  4. No reporting and clinicians will receive automatic 4% payment reduction.

In addition, the Final Rule broadened the exception for low-volume physicians to excuse those that bill Medicare for less than $30,000 per year or who provide care for less than or equal to 100 Medicare beneficiaries.  CMS also plans to offer educational and technical MIPS assistance of up to $20 million over 5 years to physicians working in small practices, rural areas or geographic health professional shortage areas.

A Potential “Goldilocks” Advanced APM

Under the Final Rule, Advanced APMs initially include advanced ACOs (such as the Medicare Shared Savings Program (“MSSP”) Tracks 2 & 3 and the Next Gen ACO model), Patient Centered Medical Homes, the new Comprehensive Primary Care Plus (CPC+), and some other bundled payment programs (such as the Oncology Care Model).  The Advanced APM program will award qualifying physicians a fixed, annual bonus of 5% of their reimbursement from 2019 to 2024, with the opportunity to earn more if they meet savings targets.  A benefit to qualifying under an Advanced APM rather than the MIPS is that clinicians do not need to report any data under MIPS measures.

CMS also announced in the Final Rule a new ACO Track 1+ model for 2018, which will qualify as an Advanced APM and has some favorable benefits of the MSSP Track 3 (such as prospective beneficiary assignment) although with more limited downside risk than the Track 2 and 3 models.  Track 1+ will have a 50% maximum shared savings rate. In comparison, Track 2 has a 60% and Track 3 has a 75% maximum shared savings rate. Track 1+ has a fixed 30% loss sharing rate.  In comparison, Track 2 has a fixed loss sharing rate between 40% and 60%, and Track 3 has a fixed loss sharing rate between 40% and 75%.

According to CMS’ recent January 2017 guidance regarding the ACO Track 1+ model, the maximum downside risk will vary based on the ACO’s composition, with lower levels of risks potentially available to qualifying physician-only ACOs and/or those ACOs that include small rural hospitals.  For example, the ACO’s loss sharing limit will be equal to 4% of the ACO’s historical benchmark under Track 1+ for those ACOs with participating hospitals in the inpatient prospective payment system, cancer centers or rural hospitals with more than 100 beds; ACOs with participants owned or operated by a rural hospital with 100 or fewer beds and such hospital is not involved in the ACO; or ACOs with participating rural hospitals with 100 or fewer beds that are owned or operated by a health system.  If the ACO doesn’t fall within one of these three benchmark-based categories, then its loss sharing limit in 2018 would be 8% of Medicare fee-for-service revenue.

Some providers hope this Track 1+ model will turn out to be that fabled “Goldilocks” ACO for physician groups – an Advanced APM that has just the “right” amount of potential shared savings and downside risk.  In our discussion with physician groups, however, some groups remain concerned about the size of potential losses they could suffer under the ACO Track 1+ model.

For clinicians that participate in alternative payment models that don’t qualify as Advanced APMS (such as MSSP Track 1), CMS provided some relief in the Final Rule by agreeing to score those physicians’ performance using the APM scoring standard instead of the applicable MIPS standards.

Notwithstanding the potential healthcare reform that may occur under the new Trump Administration, it is important to remember that MACRA was passed on a bi-partisan basis in 2015.  Accordingly, it seems likely that the MIPS and the Advanced APMs are here to stay, at least in some form or another.