HHS Issues Proposed Rule for MACRA Quality Payment Program

In furtherance of its goal to pay providers for the value of the services rather than the volume, the Department of Health and Human Services (HHS) and Centers for Medicare & Medicaid Services (CMS) have proposed rules intended to implement the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). MACRA replaces the Medicare sustainable growth rate (SGR) methodology for updating the physician fee schedule using two tracks: the Merit-Based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (Advanced APMs).

CMS’s goal is that by the end of 2018, 50 percent of Medicare payments through APMs and 90 percent of fee-for-service payments will be tied to quality or value. MACRA applies only to certain physicians and other clinicians who provide services under Medicare Part B. CMS has stated that it intends to address modification of existing hospital payment models in the future through a similar approach. 

MIPS establishes payment adjustments based on annual performance period reporting for four “performance categories”: (1) quality, (2) resource use, (3) clinical practice improvement activities (CPIAs), and (4) advancing care information (CEHRT use) which will be aggregated into a MIPS composite performance score (CPS) that is compared against a MIPS performance threshold to determine payment adjustments. MIPS “eligible clinicians” will include Medicare physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and groups that include such clinicians and will be expanded.

Reporting under MIPS will be more flexible and is intended to reflect the clinician’s practice. CMS has stated that, given the rule’s required budget neutrality, a small number of clinicians may receive up to 12 percent upward adjustments and an even smaller number of  high performing clinicians will receive a 10 percent bonus. CMS has budgeted $500,000 for the 10 percent bonus recipients. CMS expects the larger majority to experience no change or up to a -4 percent downward adjustment.

Advanced APMs will report solely on Medicare Part B services, and in 2021, have the option of combined reporting of Medicare services with services rendered for payment by commercial and Medicaid payors (All-Payor Combination Option). Payment under the Advanced APM Payment Plan is not conditioned on the clinician’s performance (as with MIPS) but on relative participation in the Advanced APM based on the amount billed to Medicare Part B for services rendered or the number of patients treated for covered services at the Advanced APM. Clinicians who meet this threshold are “Qualified Participants” (QPs).

QPs will receive five percent lump sum bonuses and a .75 percent fee increase annually (as compared to a lower annual increase for other providers) and have no downward adjustments. In addition, QPs have significantly fewer reporting requirements as compared to MIPS eligible clinicians.  Qualification as an Advanced APM requires: (1) use of CEHRT by 50 percent of eligible clinicians in 2017 and 75 percent thereafter; (2) payment for covered services is based on quality measures comparable to MIPS performance category; and (3) either qualification as an expanded Medical Home Model or proof that participants bear more than a nominal risk for monetary losses. The APM participation agreement should require both CEHRT use and establish the basis for participant risk for loss.

CMS’s rationale for this incentive structure and decreased reporting requirements is that QPs assume more than nominal financial risk for losses, are accountable for performance based on quality metrics and are required to use CEHRT. CMS’s goal is to push more clinicians toward providing care through an APM structure designed to improve clinical care activities. However, CMS anticipates that initially relatively few entities will qualify as Advanced APMs. Based on the current regulatory design of the approximately 25 APMs, CMS has identified only six APMs as designed to meet the Advanced APM criterion. CMS is seeking commentary to determine how it may best include more APMS in the Advanced APM incentive plan. CMS has identified the following APMs as designed to meet Advanced APM criterion: MSSP Tracks 2 and 3, Next Generation ACO, Comprehensive Primary Care +, Comprehensive ESRD Care (LDO arrangement), and Oncology Care Model (2-sided risk). CMS will update this list annually prior to the QP reporting period. While there are clear advantages for providers participating in or considering participation in an APM structure, the design and participant agreements must reflect the specific risk criteria set out by CMS. 


Brandy Mann and Beth Pitman practice healthcare law with Waller.


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