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Paul Zimmerman

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Medicare Rolls Out Proposed Rule Altering Physician Payment Model

The Centers for Medicare & Medicaid Services (CMS) recently released a proposed rule discussing how it intends to implement the Medicare physician payment reforms enacted as part of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Congress voted to essentially scrap the existing Medicare physician payment formula, and transition to a new system focused on quality, value and accountability. The new model is ostensibly intended to close performance gaps in clinical care, safety, care coordination, patient and caregiver experience, population health and prevention, and affordable care. Hospitals, physicians and other providers, now have until June 27, 2016 to comment on the proposed rule. 

Currently, Medicare measures the value and quality of care provided by doctors and other clinicians through a patchwork of programs. Some clinicians are part of Alternative Payment Models such as the Accountable Care Organizations, the Comprehensive Primary Care Initiative, and the Medicare Shared Savings Program—and most participate in programs such as the Physician Quality Reporting System, the Value Modifier Program, and the Medicare Electronic Health Record (EHR) Incentive Program. With MACRA, Congress has endeavored to streamline these various programs into a single framework to help clinicians transition from payments based on volume to payments based on value.

The new model includes two paths: 1) The Merit-based Incentive Payment System (MIPS); and, 2) the Alternative Payment Models (APMs).

MIPS is a program that streamlines parts of the Physician Quality Reporting System, the Value-based Payment Modifier and the Medicare Electronic Health Record (EHR) Incentive Program into one single framework called the Quality Payment Program which measures physicians using four criteria:  1) Quality (accounting for 50% of the score); 2) Cost; 3) Technology Use; and, 4) Clinical Improvement.

The APMs program, on the other hand, includes the Medicare Shared Savings Program (MSSP) ACOs, all CMS Innovation Center initiatives except Health Care Innovation awards, and certain demonstration programs. MACRA promotes the creation of APMs and provides incentives for physicians to participate in them. MACRA explicitly encourages the development of “Physician-Focused Payment Models,” and the law provides considerable flexibility in defining APMs so that they can support the wide range of health problems physicians treat. APMs are designed to provide physicians the freedom to care for patients in a way they believe will deliver the best outcomes and will pay them for achieving results and improving care. Ultimately, APMs offer a means for Medicare to reimburse providers based on the health of the patient and quality of care rather than the number of services provided.

As a consequence of several new tools created by the Affordable Care Act, increasing numbers of Medicare clinicians are participating in APMs, and the MACRA legislation created additional rewards for clinicians who take this further step towards care transformation. Medicare clinicians who participate to a sufficient extent in APMs would be exempt from MIPS reporting requirements and qualify for a 5 percent bonus on Medicare part B services, and receive higher annual increases in their reimbursements. These models include the new Comprehensive Primary Care Plus (CPC+) model, the Next Generation ACO model, and other Alternative Payment Models under which clinicians accept both risk and reward for providing coordinated, high-quality care. Only certain APMs will be categorized as “eligible APM” under the new MACRA proposal. CMS anticipates that the number of clinicians who qualify as participating in APMs will grow as the program grows.

Patrick Conway, Acting Principal Deputy Administrator and Chief Medical Officer at CMS, noted in the agency’s press release which accompanied the roll out of the rule, that "by proposing a flexible, rather than a one-size-fits-all program, we are attempting to reflect how doctors and other clinicians deliver care and give them the opportunity to participate in a way that is best for them, their practice and their patients." The rule proposes to use 2017 as the performance period for the 2019 payment adjustment. Thus, the first performance period would start in 2017 for payments adjusted in 2019.

In the coming weeks, there promises to be much feedback and debate on the subject of MACRA and its new physician payment system. In fact, some health care providers have already balked at CMS's narrow definition of alternative payment models, which could have a chilling effect on providers' ability to experiment with new patient-centered, value-driven payment models. M&R will stay abreast of this issue, and provide updates as appropriate.

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.