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MACRA: The Final Ruling and What It Means for You

October 26, 2016

The Centers for Medicare and Medicaid Services (CMS) recently announced the long-awaited final regulations of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The healthcare industry has been speculating for several months whether CMS would a) issue an extension or reprieve similar to the ICD-10 deferral, b) continue to moderate the effect of MACRA through the “pick your pace” approach or c) make minor cosmetic changes to the proposed regulations, which would leave the impact undiluted.

As it turns out, the answer is all of the above. The final regulations defer some elements – such as the cost and resource-use portion of the Merit-based Incentive Payment System (MIPS), which won’t start until 2018 – and allow providers to pick their pace for adoption. But, the final regulations do preserve the overall push toward embracing value-based payment structures, which has been a central focus during the implementation of healthcare reform.

MACRA replaces the Medicare Sustainable Growth Rate formula, which mandated adjustments to provider payments based on spending growth, and establishes two new pathways to value-based reimbursement: MIPS and APM (Alternative Payment Model).

  • MIPS consolidates several Medicare Part B billing adjustment programs into one. Elements found in quality measurement (PQRS), cost and resource-use (Value Modifier) and Electronic Health Record adoption (Meaningful Use) are now resident in MIPS.
  • APMs are structures for risk-bearing entities and population payment models, allowing providers to earn more for accepting more risk.

Concerns were voiced from the industry about the administrative burden of these proposals and the timeline for implementation. In response, Medicare made several concessions to encourage participation, but about 80 percent of the final ruling is the same as the previously proposed rules.

The 2,000-plus pages of the MACRA final rule contain thousands of details and nuances. Yet it continues on the established trajectory – that Medicare will pay for services in which value is documented, and it will pay more for services that have documented high value. This premise could also be inverted: Medicare will pay less, or nothing at all, for services that have low value. “Value” is almost always defined as the triple aim objectives of improving the patient experience (quality of care and satisfaction with the service), improving the health of the population and reducing the per capita cost of healthcare.

The final rule has three fundamental implications for providers:

  1. Providers need to ensure that their practice’s infrastructure, including information systems, is capable of capturing and reporting the information required by MACRA. It’s acceptable to start slow, but you must start. This means implementing an electronic health record system – no paper charts – and focusing on patient satisfaction, data security and performance improvement. This may include upfront costs to upgrade infrastructure and capture relevant reimbursement information.
  2. There is a progressive emphasis on the reporting of data and evidence-based patient care; physicians and providers still can practice medicine how they want, but CMS will only reimburse for effective and efficient services. To do so, CMS requires documentation of quality markers as well as process improvement activities.
  3. Providers must get comfortable with risk-based population payment models since they are an integral part of MACRA.

If you are a solo practitioner, here is what you need to do to comply with the minimum regulations:

  • Confirm whether you are required to participate. You are exempt if you have less than $30,000 in Medicare Part B allowed charges or fewer than 100 Medicare patients per clinician each year. The first reporting period starts Jan. 1, 2017, and the stakes are too high to guess whether you will meet this low-volume threshold. You can check your prior year’s billings from your internal system, or you can check the CMS Part B database. Have your administrator or billing service track your numbers by quarter. If you start the third quarter (July 2017) at a run-rate that is within 20 percent of either threshold, or anticipate growth that would put you close to the threshold, take steps to be in compliance as noted below.
  • Find a single quality measure you can report for 90 days. On the CMS website, there are 74 claims-based measures, many of which are not intrusive or data intensive.
  • Find an improvement activity you can focus on for 90 days. There are a total of 93 eligible improvement activities on the CMS website, and some may already be part of your practice routine. Transitions between care settings are good places to look to identify potential areas of improvement. Participation in humanitarian operations (i.e. mission trips) may also qualify.
  • Make sure your Meaningful Use system or process of documentation is adequate. The Advancing Care Information transition measures appear to roll forward the current Meaningful Use measures. For more information, visit the Advancing Care Information page on the CMS website.

If you are a medium- or large-sized independent group, here are actions you can take to ensure your compliance:

  • Determine your approach. The law gives physicians the option of two approaches that have the same goal – managing the outcomes and quality of care received by their patients. Providers can either own the data submission via the MIPS approach or can participate in an APM and rely on the contracting entity to manage the data. (Note that a standard Track 1 Medicare ACO does not qualify as an APM, and the proportion of your patients that must be in an APM steadily increases.) These two approaches are not mutually exclusive – you can do both. If at all possible, invest in the MIPS approach. You will be better served in the long run by controlling the data-reporting process. You will also be protected from accidentally not meeting the higher APM thresholds in future years.
  • Develop a performance improvement plan that includes at least four eligible improvement activities.
  • Consider pursuing a Patient-Centered Medical Home or the specialist equivalent.

If you are employed by a hospital and/or part of a health system physician network, here are some actions you can take to ensure you are compliant with MIPS regulations:

  • Confirm that quality measures are being submitted on your behalf. It is very likely that network administration is addressing the mechanics of reporting and data submission; regardless, physicians should be aware of documentation submitted for MIPS compliance.
  • Ask the managed care contracting department of your institution to provide your group with education related to APMs, specifically any with which your group has been enrolled.
  • If you are paid on productivity, be informed regarding compensation adjustments that reflect value-based performance. Whether or not these adjustments are permitted under your existing contract is one issue, but at some point, the health system will push their financial risk to the providers as a performance risk to ensure that compensation is aligned with reimbursement.

Whatever your situation, KSM is here to help. We are actively consulting with clients on the impact of the new regulations and would be happy to answer any questions.

David Blish Director, Healthcare Consulting

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