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High Stakes Payment Reform Comes with High Hopes

Analysis  |  By Christopher Cheney  
   May 09, 2016

The most ambitious attempt in a generation to redesign the way physicians are paid for providing services to Medicare beneficiaries is a work in progress.

Physicians are far from the only healthcare providers facing high stakes in the proposed rule for Medicare's Merit-Based Incentive Payment System (MIPS) and associated regulations for alternative payment models (APMs).

MIPS and APMs are the heart and soul of the Medicare Access & CHIP Reauthorization Act (MACRA) of 2015 that Congress enacted last year to replace the widely reviled Sustainable Growth Rate (SGR) formula for physician reimbursement.

Officials at the American Hospital Association say the proposed rule for MACRA released on April 27 is just as important for health systems and hospitals as it is for physicians who receive reimbursement payments from Medicare.

"We have been watching this particular rule with a great deal of interest," says Akin Demehin, senior associate director for policy at AHA.

"It really comes down to the fact that hospitals currently employ somewhere in the neighborhood of 240,000 to 250,000 physicians, and we have contractual relationships with another 290,000 to 295,000. So hospitals and their physicians are partners in delivering care in their communities. This rule matters a great deal to hospitals as well as physicians."

Related: 3 Ways to Prep Physicians for MACRA's Unknowns

MACRA rules are going to play a key role in helping to guide all healthcare providers away from business models structured for fee-for-service medical care to value-based business models, says Melissa Jackson, who also serves as a senior associate director for policy at AHA.

"As we see the field shift away from volume-based care into more care that rewards high value, the incentives are for hospitals and physicians to work more closely together," she says.

"We're seeing shifts in the relationship—where even when physicians are not employed, hospitals and physicians are forming tighter affiliations. So, particularly with the incentives that are embedded in the new physician payment system under MACRA, and the emphasis on the alternative payments models and value-based payment, that helps align incentives across hospitals and physicians."

"Although this is physician payment, there's a growing sense among our members that 'us is them,' that this really impacts hospitals," adds Jackson.

Related: Physicians Stymied by MACRA's Unknowns

The 962-page proposed rule for MACRA provides details for implementation of MIPS and APMs. Highlights of the proposed rule include:

  • The first performance period for the new payment system is slated to start in 2017, with payment adjustments beginning in 2019. "This time frame is needed to allow data and claims to be submitted and data analysis to occur," the proposed rule says.

  • The categories of clinicians who would be eligible for Medicare reimbursement through MIPS are physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists.

  • Scoring of APMs would be based on four MIPS performance standards: quality, resource use, clinical performance improvement activities, and "advancing care information." CMS says the primary goal of the advancing care information standard is to replace the existing Meaningful Use program with a new approach that "increases flexibility, reduces burden, and improves patient outcomes."

  • Clinicians would only qualify for APM payment incentives if they participate in an "Advanced APM," which would have three main characteristics: the APM would be required to use CMS-certified electronic health record technology, payment would have to be based on quality measures similar to those used in the MIPS quality performance category, and the APM would have exposure to downside risk.

  • Clinicians participating in an Advanced APM would be exempt from MIPS, which has a separate payment incentive system.

  • The proposed rule sets criteria for Advanced APMs, but it only names a handful of existing CMS APM models that would qualify for Advanced APM status, including Track 2 and Track 3 of the Medicare Shared Savings Program (MSSP), Next Generation ACO, and Comprehensive Primary Care Plus (CPC+).

AHA Sees Devil in Proposed MACRA Rule's APM Details

Demehin says the proposed rule is a step forward in the effort to replace SGR with a value-based payment system for Medicare reimbursement of clinicians.

"We were strong supporters of the MACRA legislation and were happy to see the repeal of the SGR. We do think this new law and these new programs hold tremendous promise to support the field in its movement toward delivering value-based care and innovative payment models."

The AHA, however, is concerned that the proposed rule has defined Advanced APMs too narrowly, says Jackson. "We were really hoping CMS would be more expansive in how it defined financial risk. Certainly, we were disappointed that CMS stuck to a definition that requires a provider to take on downside risk. That automatically excluded all the Track 1 ACOs in the MSSP, and it excluded a number of other interesting models."

"If you look at the models that are left," she says, "there are very few physicians who will qualify… We know from our members that those who participate in these payment models invest a significant amount of time and resources upfront, and we had hoped that CMS would acknowledge that when they defined risk."

This year, there are more than 900,000 actively practicing doctors in the United States, according to the Kaiser Family Foundation. CMS estimates the number of eligible clinicians who will receive payment incentives through Advanced APMs will range from 30,600 to 90,000. As noted above, eligible clinicians include several categories of care providers in addition to doctors such as clinical nurse specialists.

Harold Miller, president and CEO of the Pittsburgh-based Center for Healthcare Quality & Payment Reform, says he is cautiously optimistic that CMS will identify more Advanced APMs in the final rule for MACRA later this year. "The criteria for an Advanced APM will hopefully be clearer in the final rule and allow for more APMs to qualify," he says.

Under the proposed rule, MIPS APMs such as Track 1 of MSSP occupy a middle ground between MIPS and Advanced APMs, Miller says. MIPS APMs give clinicians a path to be exempt from MIPS, but they still hold physicians accountable to meeting quality standards.

MIPS APMs will probably not come with a payment incentive under MACRA, he says. "Everybody is going to be subject to quality improvement and trying to control costs."  

'This is the Direction we are Going'

With MACRA moving forward, the time has come for healthcare providers to embrace value-based payment models, says Bill Kramer, MBA, executive director for national health policy at the San Francisco-based Pacific Business Group on Health. "We've been disappointed at the slow adoption of bundled payments and other alternative payment models," he says.

Value-based payment is expanding in the healthcare industry, and it is here to stay, Kramer says. "Providers have known about this for a long time. The signals are now clear—from both public and private payers—that this is the direction we are going."

Miller is also eager to see value-based payment expand in the healthcare industry, but he says CMS should avoid taking a "piecemeal" approach to payment reform.

"MACRA is designed to reduce the number of people going to hospitals and to cut the money being spent in hospitals. CPC+ is specifically directed at reducing the number of hospital visits… There is a danger of pitting the hospitals against the physicians."

June 27 is the deadline to submit formal comments to CMS on the proposed rule for MACRA.

Christopher Cheney is the CMO editor at HealthLeaders.

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