MACRA, MIPS and the Myth of Physician Choice in the New Medicare Payment System

January 9, 2016 Chris Dawe

Medicare is about to support a significant shift in how participating doctors will be paid.

The Center for Medicare and Medicaid Services (CMS) recently released proposed regulations on the Quality Payment Program, which lays out two different tracks for Medicare fee-for-service physician reimbursement. The new program replaces the so-called “doc fix” that required a cumbersome, yearly Congressional update to the physician fee schedule.

The Medicare and Chip Reauthorization Act (MACRA) confirms a clear, bipartisan message to physicians: prepare to dive head-first into performance-based reimbursement. Providers have two choices facing them immediately: enter into an alternative payment model (APM) and receive a guaranteed financial bonus but take on risk, or compete head-to-head against other physicians on difficult metrics such as interoperability and resource use. In either case, success will require investing in and effectively deploying high-performing care management capabilities. Physicians who resist moving into a qualifying APM, however, are unlikely to generate sufficient value-based revenue to offset the costs of transforming their practices to meet the new CMS requirements.

How do the new physician payment options work?

The two new MACRA reimbursement tracks are:

1) The Merit-Based Incentive Payment System (MIPS), a zero-sum, consolidated pay-for-performance structure. MIPS has four performance categories that will roll up to a composite score that is used to rank physician performance. CMS incorporated the current programs (Meaningful Use, Value-Based Payment Modifier and Physician Quality Reporting System), and is making the reporting requirements easier on physicians this time around. Because it is a budget-neutral pool, there is potential for large bonuses – but also big penalties.

2) The Advanced Alternative Payment Model (APM) track, which requires practices to move a meaningful portion of patients into a risk-based alternative payment model. The qualifying risk-based alternative payment models are Medicare Shared Savings Program (MSSP) Tracks 2 and 3 and Next Generation ACOs. CMS will also count the new Comprehensive Primary Care Plus and mandatory bundled payment demonstrations as advanced APMs, but participation in these programs will be limited. For the first performance year of 2017, physicians will need to have 25 percent  of their Medicare panel in qualifying APMs. Those participating in qualifying APMs that don’t meet the volume threshold will still need to participate in MIPS, but will receive certain advantages in MIPS performance measurement. Practices will also have a higher opportunity for shared savings with the ACO network through most of the qualifying payment models.

Where can practices get an “edge” in MIPS?

It will be difficult to outperform competitors in the MIPS pool. In order to do so, practices will need to knock it out of the park on Resource Use and Advancing Care Information, which will be no easy feat:

Figure 1 (MIPS Performance Categories Over Time):

Quality: Clinicians are able to choose six metrics from an extensive metrics list to report. As a result, clinicians can self-select their high-performing metrics, making it easier to perform well initially in this area.

Advancing Care Information: This is the push from “checking boxes” in the EMR to meaningful interoperability. Small and independent physician practices will need the infrastructure that drives information exchange beyond their four walls – a big leap for some.

Clinical Practice Improvement Activities: The activities included in this measure will again be a check that most practices will easily pass – things like care coordination, patient engagement and patient safety programs. There is no set number of required metrics, and physicians can also select which one(s) they want to report on.

Resource Use: This score is based on actual Medicare claims, and will increase in weight (and subsequent importance) over time.  

With Quality and Clinical Practice essentially zeroed out, the real score differences will happen in IT and cost. First, practices will need to be meaningful users of technology – not just reporting, but using EMRs to impact patient care. Physicians with advanced capabilities, even beyond interoperability, will have a strong advantage. Second, since resource use will be measured directly from Medicare claims, practices will need to focus on leveraging to maximize value from efficiencies.

What can I do to set up for success?

Even if practices are able to significantly excel in MIPS, there’s no guaranteed large upside; while physicians will effectively be managing across the care continuum, payment bonuses will only be based off of Part B spend (which accounts for just 20 percent of total Medicare fee-for-service expenditures). And the competition will get stiffer over time as more providers focus on improving their scores.

While both programs offer benefits and drawbacks, there are distinct advantages for high-performing physicians that enter into APM arrangements. If a practice participates in a qualifying APM in 2017 (the first performance year), it is more likely to perform well compared to other MIPS competitors because it must meet the higher quality bar of the ACO.  But more importantly, it will be set up to move into the Advanced APM track with a better opportunity to capture value. Once in an Advanced APM, not only will providers receive a 5 percent Part B bonus just for participating, they will also have the opportunity for higher shared savings. They must also, however, be prepared to take on additional risk for not performing well in the ACO. The choice of payment tracks must be made by individual physicians or practices, and not everyone will be prepared initially to enter into an APM.

Amid all of the updates from CMS, one thing is abundantly clear: CMS is moving swiftly to its goal of 85 percent of all Medicare payments tied to quality by 2018. Those who are able to prepare for and embrace this platform for change now will be better positioned for success in the future.

About the Author

Chris Dawe

Chris Dawe is Evolent's Senior Vice President, Medicare Partnerships. He works to align public policy initiatives with our efforts to differentiate provider-led health plan solutions and works with Evolent’s clients in a leadership and subject matter expert capacity. Chris has served as Policy Advisor for Health Care at the National Economic Council at the White House; the Director of Delivery System Reform at the Department of Health and Human Services; and as a Professional Staff Member for the Senate Finance Committee. Chris played a pivotal role in the design and implementation of health care reform including the development of multiple provisions of the ACA (the Medicare Shared Savings (ACO) Program and the CMS Innovation Center). Chris also developed the Meaningful Use provisions of the Health Information Technology for Economic and Clinical Health Act of 2009. Before coming to Washington, Chris worked in the business planning group at Partners Healthcare in Boston.

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