MACRA Proposed Rule: What it means for Medicare Advantage

May 13, 2016 / By Gretchen Mills

On April 27, 2016, the Department of Health and Human Services issued a Notice of Proposed Rulemaking to implement key provisions of the Medicare Access and CHIP Reauthorization Act of 2015. This bipartisan legislation replaced the flawed Sustainable Growth Rate formula with an updated approach to paying clinicians based on the value and quality of care they provide.  

The proposed rule offers two paths within what CMS has named the Medicare “Quality Payment Program:”

1. The Merit-based Incentive Payment System (MIPS)path, and
2. The Advanced Alternative Payment Models(Advanced APMs) path.

The MIPS path will apply to Medicare Part B Eligible Clinicians, physicians and other types of clinicians, who will be subject to financial incentives and penalties based on reported quality and CMS calculated cost measures. The good news is that the new, simplified program components replace predecessor Medicare quality programs that required clinicians to report many process measures. These predecessor programs are the Medicare Physician Value Modifier (VM), Physician Quality Reporting System (PQRS), and Electronic Health Record Meaningful Use (MU) programs.  The MIPS path program components that CMS will measure are grouped as Quality, Clinical Practice Improvement Activities, Advancing Care Information and Cost. CMS will calculate cost outcomes using claims data for more than 40 episode-specific measures to account for differences among specialties.

The proposed rule states that clinicians participating to a sufficient extent based on revenue, risk sharing level and patient volume in Advanced APMs will be exempt from MIPS payment adjustments and would qualify for a five percent Medicare Part B incentive payment. There are some models that will automatically qualify under the proposed rule as Advanced APMs including:

    • Comprehensive ESRD Care Model(Large Dialysis Organization arrangement),
    • Comprehensive Primary Care Plus (CPC+),
    • Medicare Shared Savings Program (MSSP) – ACO Tracks 2 or 3 which have two-sided risk,
    • Next Generation ACO Model – which has two-sided risk, and
    • Oncology Care Model Two Sided Risk Arrangement (available in 2018).

Note that all of the models listed above involve two-sided risk sharing by participating providers and that the largest MSSP ACO model, Track 1 with only upside risk, is excluded.  The proposed rule establishes the Physician-Focused Payment Technical Advisory Committee to review and assess additional physician-focused payment models suggested by stakeholders.  Starting after the initial two years beginning in Performance Year 2019, clinicians could qualify for incentive payments based in part on participation in Advanced  APMs developed by non-Medicare payers, such as private insurers contracted under the Medicare Advantage program.  Clinicians would qualify by meeting revenue and patient participation thresholds in two-sided risk sharing arrangements with the private payer.

Since the Advanced APM path offers higher upside financial reward than the MIPS path, it will likely be the preferred path for a majority of clinicians.  CMS recognizes that initially most clinicians will need to follow the MIPS path due to limited exposure and involvement in the Advanced APMs.  I do expect that there will be intense interest in more CMS guidance on the requirements for Eligible Clinicians and Medicare Advantage Plans to document to CMS that they meet all the threshold criteria to qualify for the Advanced APM path.  A likely outcome is that the financial carrot being offered will accelerate physicians’ willingness to enter into two-sided risk-sharing arrangements with Medicare Advantage plans.

Gretchen Mills is manager of market strategy for populations and payment solutions at 3M Health Information Systems.