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PREPARING FOR MACRA:PLAN AHEAD TO

AVOID THE PITFALLS

The Medicare Access and CHIP Reauthorization Act, commonly known as MACRA, was signed into law in April of 2015 with bipartisan support. This legislation both reflects and propels changes already underway in the healthcare industry, repealing the Sustainable Growth Rate (SGR) formula and establishing a new federal program called the Quality Payment Program (QPP) to replace it.

The Quality Payment Program went into effect on January 1, 2017, signaling the end of the old “fee-for-service” model and the beginning of a mandated industry-wide shift toward value-based care. The QPP provides a choice of three paths for Medicare reimbursement: Merit-based Incentive Payment Systems (MIPS); the Advanced Alternative Payment Model (AAPM); or the Partial Qualifying APM.

OVERVIEW

*This whitepaper provides an interpretation of information publicly available on the CMS website

Advanced Alternative Payment Model (AAPM): An alternative payment model path under MACRA that excludes physicians from MIPS.

Advancing Care Information (ACI): One of four scoring categories under MIPS; replaces Meaningful Use.

APM Entity: A physicians organization as defined by the providers.

Clinical Practice Improvement Activities (CPIA): One of four scoring categories under MIPS.

Composite Performance Score (CPS): The composite score the four scoring categories under MIPS; the CPS is scored out of 100 possible points.

MACRA: The Medicare Access and CHIP Reauthorization Act of 2015 — the legislation that established the Quality Payment Program.

Merit-based Incentive Payment Systems (MIPS): One of three payment paths available through the Quality Payment Program; an estimated90% of clinicians will use MIPS in 2017.

Partial Qualifying APM: An alternative payment model path under MACRA that has a lower threshold than AAPM and gives physicians the option to participate in the MIPS path.

Performance Year (PY): In the implied performance model under MIPS, data for a given performance year is reported after one year and receives a payment adjustment after two years. For example, data on PY 2017 must be reported in 2018; payment adjustments for PY 2017 will be received in 2019. This process continues through 2022.

Quality Payment Program (QPP): A federal program established under the MACRA legislation; the QPP replaces the Sustainable Growth Rate formula and incentivizes value-based care.

Sustainable Growth Rate (SGR): A formula that was repealed by MACRA and replaced with the Quality Payment Program. The SGR’s “fee-for-service” model is being replaced with the QPP’s value-based care approach.

GLOSSARYOF

TERMS

OUT WITH

THE OLD

In replacing the Sustainable Growth Rate formula with the Quality Payment Program, MACRA seeks to ensure Medicare’s sustainability by moving away from a reimbursement model that relies on the quantity of treatments provided by physicians, thus cutting overall Medicare costs over time.

The SGR’s fee-for-service reimbursement model did not do enough to stimulate population health initiatives on the part of healthcare providers, who were incentivized by number of patient trips and procedures, not by quality of care or overall patient health.

IN WITH

THE NEW

With the explosion of electronic health record (EHR) technologies in the past decade, it has become increasingly apparent that healthcare providers can leverage EHR to not only improve their financial performance, but to do so in a way that will positively impact overall population health. The Centers for Medicare & Medicaid Services (CMS) has laid out six strategic objectives for the Quality Payment Program1:

1 Strategic Objectives for the Quality Payment Program, Centers for Medicare & Medicaid Services.

1

2

3

4

5

6

Improve patient outcomes and engagement through patient-centered policy development

Enhance clinician experience by incentivizing the use of tools that make accurate data available, modernize payment systems, and provide big picture insights that will help clinicians make informed decisions that add value to their practice

Increase the availability and adoption of a diverse range of Advanced APMs to reduce overall healthcare costs and improve quality of care

Promote education, outreach, and support for patients and communities

Improve information-sharing to ensure clinicians are empowered to make decisions based on accurate, timely, and actionable EHR data from multiple sources

Ensure “operational excellence” in program implementation and ongoing development

THE KEY

PLAYERS

Though MACRA’s new reporting procedures most directly impact physicians, the healthcare organizations with which physicians work also have a great deal of work ahead of them. The financial decision-makers at these hospitals must work closely with their physician groups to determine which of the three paths — MIPS, AAPM, or Partial Qualifying APM — will yield the most return for their specific organization.

Once the financial decisions have been made about which path is most suitable and which measures should be reported on, the organization must develop and implement a strategy for gathering that data in an accurate, timely, and cost-efficient manner.

WHEN TO ACT:

THE TIMELINE

Because the Quality Payment Program has already gone into effect, hospitals and physician groups must be prepared to collect performance data. They can choose to sit out 2017, but doing so will result in an automatic negative payment adjustment of 4% in 2019.

Organizations that wish to participate in 2017 have until October 2 to make the difficult decision of which path to choose. They must, however, be able to submit their performance data by March 31, 2018. The first payment adjustments will go into effect on January 1, 2019.1

Healthcare organizations that have not yet mapped out a strategy must take immediate action to address the major financial and IT concerns that impact how they will operate under MACRA.

1 The Quality Payment Program Overview Fact Sheet, Centers for Medicare & Medicaid Services.

MERIT-BASED

INCENTIVE

PAYMENT

SYSTEMS (MIPS)

It’s estimated that about 90% of clinicians will participate in traditional Medicare through the MIPS track, which carries a greater possibility for both reward and penalty than the AAPM and Partial Qualifying APM paths (to be discussed later). Payment adjustments received through MIPS vary depending on performance year reporting data; these payment adjustments can be positive, negative, or neutral.

MIPS combines three previous programs — the Physician Quality Reporting System (PQRS), the Medicare EHR Incentive Program (also known as Meaningful Use), and Value-Based Payment Modifier — into one program that evaluates providers in four performance categories1. Scores for an organization’s performance in each category will be combined into a Composite Performance Score (CPS) with 100 potential points.

THE FOUR MIPS SCORING CATEGORIES

1

2

3

4

QUALITYThe Quality category replaces the Physician Quality Reporting System (PQRS) and is weighted at 60% of the CPS in performance year (PY) 2017. Its CPS weight decreases to 50% in PY 2018 and 30% in PY 2019 and beyond.

CLINICAL PRACTICE IMPROVEMENT ACTIVITIESClinical Practice Improvement Activities (CPIA) is a new MIPS category that did not exist previously. It is weighted at 15% of the CPS in PY 2017 and beyond.

The Advancing Care Information category replaces the Meaningful Use/Medicare EHR Incentive Program and is weighted at 25% of the CPS in PY 2017 and beyond.

ADVANCING CARE INFORMATION

The Cost/Resource Use category replaces the Value-Based Modifier and will not be counted for PY 2017. It will be weighted at 10% of the CPS in PY 2018 and 30% in PY 2019 and beyond.

COST/RESOURCE USE

1 The Quality Payment Program Overview Fact Sheet, Centers for Medicare & Medicaid Services.

MIPS payment adjustments occur two years after the performance year. As such, payment adjustments will begin in 2019 for PY 2017.

While Advanced APMs have a fixed bonus incentive of 5% through 2024, MIPS payment adjustments are variable. Depending on how well a group’s Composite Performance Score ranks against scores nationwide, physicians can see no adjustment at all, a positive adjustment, or a negative adjustment up to a determined percentage each year.

–4% –5% –7% –9%

2019 2020 2021 2022

+4% +5% +7% +9%

MIPS PAYMENT ADJUSTMENT SCHEDULE

Because each organization’s CPS is compared against national scores to determine payment adjustments, it will be increasingly important to prioritize ongoing benchmarking practices going forward.

Consistent and accurate benchmarking will help organizations choose reporting measures that will play to their strengths and help them earn higher composite scores.

Data can be submitted to CMS via four methods: claims, the CMS web interface, registry, or EHR. In some categories, the method of submission can impact reporting requirements.

QUALITY

CLINICAL

PRACTICE

IMPROVEMENT

ACTIVITIES

(CPIA)

All groups must report at least 6 of the quality measures listed by CMS for a minimum of 90 days. One of these measures must be outcome-based or be identified by CMS as high priority, and one must be specialty-based. APM entities that choose to submit their reporting data through the CMS web interface have a higher reporting burden and must report at least 15 quality measures for a full year.

Because payment adjustments are determined by comparative performance, it’s important for each organization to choose reporting measures that reflect their strengths in the competitive marketplace. Quality is the most heavily weighted category in MIPS, and your score in this area will have a large impact on whether you receive a positive, neutral, or negative payment adjustment. Groups can choose to report on different measures as they see their strengths and weaknesses evolve over time.

CMS has provided a list of over 90 proposed clinical practice improvement activities from which healthcare organizations can choose. The nine subcategories into which these activities fall are1:

1. Expanded Practice Access2. Population Management3. Care Coordination4. Beneficiary Engagement5. Patient Safety and Practice Assessment6. Participation in an APM, including a medical home

model7. Achieving Health Equity8. Emergency Preparedness and Response9. Integrated Behavioral and Mental Health

Groups must report on at least one improvement activity from the CPIA list for 90 days to receive a partial score, but should plan to report on at least four activities to receive a higher score in this category.

Each activity beyond the first earns additional CPIA points. Each activity on the list is categorized as either “high” or “medium” weight, with high-weight activities earning up to 20 CPIA points and medium-weight activities earning up to 10 CPIA points. Sixty CPIA points results in a full score in this category, which is worth 15% of the MIPS CPS for PY 2017.

1 Merit-Based Incentive Payment System: Clinical Practice Improvement Activities Performance Category, Centers for Medicare & Medicaid Services.

ADVANCING

CARE

INFORMATION

(ACI)

The Advancing Care Information (ACI) category replaces the old Meaningful Use standards and measures how effectively providers are using EHR. The ACI score is composed of a base score (up to 50 points) and a performance score (up to 80 points). Though over 100 ACI points are potentially available, all scores of 100 points or above will receive full credit toward the MIPS CPS1.

The base score is determined by simple yes/no or numerator/denominator answers for the following six objectives:

1. Protect patient health information (yes/no)2. Electronic prescribing (numerator/

denominator)3. Patient electronic access (numerator/

denominator)4. Coordination of care through patient

engagement (numerator/denominator)5. Health information exchange (numerator/

denominator)6. Public health and clinical data registry

reporting (yes/no)Any reporting group that fails to report “yes” to the “protect patient health information” objective will receive a zero score in the entire Advancing Care Information category.

The performance score is determined by reporting on measures that fall into three categories: patient electronic access, coordination of care through patient engagement, and health information exchange.

Like the Quality category, ACI’s reporting options in this area are flexible. Therefore, groups should assess their EHR strengths and weaknesses and choose to report on those measures that will earn them a higher score in this category, which is worth 25% of the MIPS CPS for PY 2017.

1 Merit-Based Incentive Payment System: Advancing Care Information, Centers for Medicare & Medicaid Services.

A failure to report “yes” to the Protect Patient

Health Information objective results in an automatic zero score

in the entire Advancing Care Information

category.

COST /

RESOURCE

USE

The Cost/Resource Use category will not be scored until PY 2018, but organizations should still begin planning for it now. There are no reporting requirements in this category for clinicians, as the score will be calculated based on Medicare claims1.

The Cost/Resource Use score will be based on 1) total per capita costs for all attributed beneficiaries and 2) Medicare spending per beneficiary. Each of these two areas will be worth up to 10 points within the Cost/Resource Use category. This category also includes 41 other episode-based measures.

1 The Merit-based Incentive Payment System: Resource Use Performance Category, Centers for Medicare & Medicaid Services.

Accurate ICD–10–CM coding will play a significant role in the score clinicians receive in this category.

Because Medicare expenditures are risk-adjusted, codes must present an accurate description of a patient’s health state, including comorbities and linked diagnoses.

ADVANCED

ALTERNATIVE

PAYMENT

MODEL

To participate in the Advanced Alternative Payment Model (AAPM) path, clinicians must meet three qualifications1. Their APM entity must:

1. Use certified EHR technology2. Tie clinician payment to certain quality measures

outlined by CMS3. Qualify as a Medical Home Model OR either:

a) Meet a revenue-based standard of financial risk that averages at least 8% of revenues at-risk for participating APMs b) Meet a benchmark-based standard of financial risk in which the maximum possible loss must be at least 3% of the spending target

1 Your Questions about the MACRA Final Rule — Answered, Advisory Board, 2017.

Under the AAPM path, clinicians will receive an annual 5% lump-sum bonus between 2019 and 2024, with a 0.75% increase to their Medicare physician fee schedule beginning in 2026. While the AAPM track does not carry the penalty risks present in the MIPS track, APM entities must have a risk-based payment model for clinicians to qualify for AAPM.

APM entities must meet one of two thresholds each year for their physicians to be considered qualified participants — the Payment Amount threshold or the Patient Count threshold2. Using the Payment Amount threshold, APM entities must receive a minimum percentage of Medicare Part B payments through the APM each performance year, with the percentage rising through 2022.

Using the Patient Count Method, APM entities must see a minimum percentage of Medicare patients through the APM each performance year, with the percentage rising through 2022.

2017–18

25% 50% 75% 75%

2019–20 2021 2022 & Later

%

Payment Amount Threshold

%

2017–18

20% 35% 50% 50%

2019–20 2021 2022 & Later

Patient Count Threshold

PERFORMANCEYEAR

PERFORMANCEYEAR

2 The Quality Payment Program Overview Fact Sheet, Centers for Medicare & Medicaid Services.

PARTIAL

QUALIFYING

APM

Clinicians are considered Partial Qualifying APM participants if their APM entities participate in an Advanced APM, but meet a slightly lower threshold outlined by CMS.

PERFORMANCEYEAR 2017–18

20% 40% 50% 50%

2019–20 2021 2022 & Later

%

Payment Amount Threshold

%

2017–18

10% 25% 35% 35%

2019–20 2021 2022 & Later

Patient Count Threshold

Clinicians participating in the Partial Qualifying APM track will not receive AAPM’s 5% incentive payment, but they can opt into the MIPS path if they can meet its reporting requirements.

PERFORMANCEYEAR

IT STRATEGY:

STAYING

COMPLIANT

WITH DATA

REQUIREMENTS

The administrative task of data gathering for reports will be the largest ongoing obstacle to hurdle under MACRA. Once an organization has chosen between the MIPS, AAPM, and Partial Qualifying APM paths, it will know what measures it must be able to report on. At that point, the CIO must immediately initiate an application portfolio current state evaluation to determine whether significant IT changes need to be implemented to ensure compliance going forward.

In an ideal world, the organization will have already implemented all the software applications needed to gather the required data, and those apps will be interoperable in a way that allows all data to be reported together. Realistically, though, that is almost an impossibility.

Organizations should reach out to their vendors as soon as possible to gather information about whether or not their application reports can be integrated. Because MACRA requires so much reporting data on such a broad range of measures, many healthcare organizations will need to implement enterprise data warehouses in order to aggregate data and streamline their reporting processes.

CHOOSE

WISELY

Although it’s predicted that about 90% of physicians will operate under MIPS in 2017, there are unfortunately no easy answers to the question of which path is best suited for a particular hospital.

The tracks are highly variable in terms of reimbursement rates and reporting requirements, and any of the three options will result in new reporting requirements that call for an investment in IT systems and procedures to ensure physicians are able to maintain compliance.

The decision will be driven by a range of characteristics, including the market, demographic, and physician practice makeup of each organization.

OPERATIONAL

READINESS

To begin the process of strategizing IT needs, evaluate your organizational readiness in the following performance areas:

1 Ability for Health IT Vendors to submit data in a CMS approved format

2 Assess the necessary IT infrastructure to support MACRA

3 Reporting capabilities across multiple data sources

4 Clinical data capture at the point of care

5 Event notifications

6 Real time patient-centric Quality measurements across a population

7 Aggregation and accurate linking of claims and clinical data

8 Risk scoring of population

9 Total cost of care from claims, clinical data, and services data

10 Multi-year financial modeling of potential impacts and alternatives

11 Careful, audit-ready documentation

THE TAKEAWAYThere’s a reason MACRA passed with bipartisan support in 2015. The shift from the Sustainable Growth Rate formula’s “fee-for-service” payment model to MACRA’s value-based payment model should ultimately help to preserve Medicare funds in the long term while incentivizing ongoing initiatives that could make a positive impact on population health in the U.S. The projected outcomes, however, do not change the difficulty of the task at hand. Organizations that fail to prepare for MACRA may be faced with the financial stress of a negative payment adjustment in an already harsh economic climate.

Though many of the Quality Payment Program’s reporting metrics have been carried over from previous programs, the reporting mechanisms have changed significantly. MACRA compliance calls for a high level, strategic reevaluation of IT systems and processes.Hospitals and APM entities that have fallen behind the MACRA schedule must take immediate action to assess their organizational needs and develop a strategy that will drive both financial and quality of care growth under one of MACRA’s three payment paths.

CONTACTDoug FenstermakerManaging Partner and EVP, Healthcaredfenstermaker@warbirdcp.com(815) 345-1111

Warbird Consulting Partners, LLCwww.warbirdconsulting.com(404) 252-9078600 Galleria Pkwy SE, Suite 1400Atlanta, GA 30339

ABOUT WARBIRDWarbird Consulting Partners is a professional services firm that focuses exclusively on scalable, value-driven financial improvement and management solutions for healthcare organizations, businesses, and government agencies. Headquartered in Atlanta, GA with employees all across the U.S., Warbird is uniquely qualified to help clients improve performance, comply with complex regulations, reduce costs, recover from distress, leverage technology, and stimulate growth. We team with our clients to establish strong project management and deliver sustainable and measurable results on every engagement.