MACRA made simple. (Really.)

Topics: Providers, Hospitals, Politics and Policy, Federal Government, Regulatory, Payments and Reimbursement, Finance, Medicare

By: José Vasquez

If you've followed the twists and turns in Medicare's latest changes to provider payments, you know that news coverage tends to devolve into alphabet soup: "CMS last year released a final rule for MACRA's QPP in 2018, with details on the MIPS and Advanced APM tracks."

And just to make things more complicated, President Trump earlier this month signed into law the Bipartisan Budget Act of 2018, which changed MACRA even more.

To clear up the confusion, let's revisit the fundamentals of MACRA: How did it come to be? Who does it apply to? What does it aim to accomplish? How will it affect the health care industry going forward? American Health Line takes a deeper look.

MACRA: The origin story

The Medicare Access and CHIP Reauthorization Act (MACRA) was born from a bipartisan effort to overhaul the way Medicare pays so-called "eligible clinicians" who bill under Medicare Part B.

MACRA, which passed Congress in 2015 with strong bipartisan support, permanently repealed the sustainable growth rate (SGR) formula—a  rule that Congress created in the 1990s to try to rein in Medicare's spending growth, that lawmakers regularly stopped from taking effect over concerns that it would significantly cut doctors' Medicare payments. To replace the SGR, Congress passed MACRA and created the Quality Payment Program, or QPP. The goal was twofold: to enact a more realistic vision for Medicare's future payments, and to accelerate the shift away from the traditional fee-for-service model and toward value-based payments.

How does QPP work?

So how does Medicare pay for eligible clinicians' work under QPP? In short, it provides two tracks for adjusting eligible clinicians' payments under the physician fee schedule based on the quality and value of care provided. The two payment tracks are:

  • The Merit-based Incentive Payment System (MIPS) track, for providers who are reimbursed largely through fee-for-service; and
  • The Advanced Alternative Payment Model (Advanced APM) track, for providers who take on a significant portfolio of Advanced APMs, which include risk-based accountable care organization models.

QPP officially kicked off in 2017—but CMS called that first program year a "transition" year, giving providers more flexibility on when they must begin collecting performance data. CMS will continue to apply certain transition year policies through 2021 to help providers ease into the program.

Who is eligible to participate in QPP?

QPP generally applies to all providers who bill Medicare Part B, but each payment track has its own eligibility requirements.

Five types of clinicians are eligible to participate in MIPS for the 2017 and 2018 performance years: certified registered nurse anesthetists, clinical nurse specialists, nurse practitioners, physicians, and physician assistants. This list may expand in the future years, pending future rulemaking. To be eligible in 2018, physicians and practitioners must treat at least 200 Medicare beneficiaries and submit at least $90,000 in Medicare Part B claims. Eligible clinicians in their first year as a Medicare Part B provider are not required to participate in MIPS.

The Advanced APM track is open to additional provider types beyond those eligible for MIPS, including certified nurse-midwives, clinical social workers, clinical psychologists, registered dietitians or nutrition professionals, physical or occupational therapists, qualified speech-language pathologists, and qualified audiologists. But to qualify for the Advanced APM track in 2018, providers must have 20% of their Medicare patients or 25% of their Medicare payments billed through an Advanced APM (as determined by CMS).

The chart below shows how the eligibility threshold for Advanced APMs is expected to change in future program years:


For 2018—QPP's second program year—CMS has estimated 621,700 health care professionals will be subject to MIPS and that between 185,000 and 250,000 health care professionals will be eligible for the Advanced APM track.

The MIPS and Advanced APM tracks, explained

The MIPS Track

Physicians' pay in the MIPS track largely follows a traditional fee-for-service structure—but CMS adjusts eligible professionals' pay based on how they "score" in four categories of metrics: advancing care information, cost, improvement activities, and quality. (MIPS consolidated parts of three previous federal programs: meaningful use, the Physician Quality Reporting System, and the Physician Value-based Payment Modifier.)

Based on providers' performance on those metrics, CMS scores participants and assigns them a positive, neutral, or negative payment adjustment. For instance, eligible professionals who participated in MIPS in 2017 will be eligible for penalties or bonuses of up to 4% beginning in 2019; providers face a two year lag between their performance and payment adjustment. That percentage will increase up to 5% in 2020, and rise incrementally until it reaches 9% in payment year 2022. The MIPS payment adjustment applies to only Medicare Part B covered professional services.

The chart below displays the weight of each category in MIPS scoring:

It's important to note that the Bipartisan Budget Act of 2018 gave CMS more flexibility in how it weights cost for performance years 2019 through 2021. CMS under the final rule was set to increase the cost category to 30% for 2019 and beyond. But instead, CMS under the budget law can weigh the cost category at a minimum of 10% and a maximum of 30% for performance years 2019 through 2021. Beginning in 2022, the 30% threshold would become permanent, absent additional legislation. 

Though health care professionals in the MIPS track are not required to participate in alternative payment models, a special rule applies to those who do so: They're exempt from the cost category and receive favorable scoring under the improvement activities category, as well as any potential incentive payments from the APMs themselves. And for providers who treat a "sufficient" amount of business through an advanced APM, which can be measured by either percentage of patients or payments, CMS created an alternate track: Advanced APM.   

The Advanced APM Track

Participants in the Advanced APM track are exempt from MIPS payment adjustment, and, instead, receive a 5% lump sum bonus on Medicare Part B payment for 2019 through 2024, as well as any potential incentives from their chosen Advanced APM programs.

But what qualifies a participant for the Advanced APM track? According to CMS, an Advanced APM must:

  • Base payment on quality measures comparable to those in MIPS;
  • Require use of certified EHRs;  and
  • Require participants to bear more than nominal financial risk for monetary losses or be considered a medical home model overseen by CMMI.

For 2018, Advanced APMs are the:

  • Comprehensive Care for Joint Replacement Payment Model;
  • Comprehensive End-Stage Renal Disease Care Model;
  • Comprehensive Primary Care Plus (CPC+) Model;
  • Medicare Shared Savings Program Tracks 1+, 2, and 3;
  • Next Generation ACO Model;
  • Oncology Care Model; and
  • Vermont All-Payer ACO Model.

The list of qualifying Advanced APMs is slated to expand in 2019. Looking ahead, CMS plans to include all-payer models—such as those for Medicare Advantage, Medicaid, or private payer APMs—and the new Bundled Payments for Care Improvement (BPCI) Advanced model.

What the payment tracks mean for providers

So, now that we know the technical ins and outs of QPP, what does this all mean for providers?

Rob Lazerow, managing director of the Advisory Board's Health Care Advisory Board, explained that the two payment tracks both advance CMS' ongoing effort to move away from fee-for-service and toward value-based care.

As such, Lazerow said, providers will have to start thinking more deeply about how they approach risk in Medicare.  Lazerow noted that MACRA from the start has encouraged providers to move away from upside-only risk models—which initially dominated the Medicare ACO landscape, and which paid providers a bonus if they hit certain performance goals but didn't penalize them for failing to do so—and toward models that include downside risk.

From 2016 to 2017 alone, the number of Medicare ACOs participating in downside risk models more than doubled, and in 2018, that number jumped 83%, from 87 in 2017 to 159 in 2018. Hunter Sinclair, a vice president at Advisory Board, wrote that the Advanced APM bonus likely played a key role in decision-making.

But 26 of those providers are taking on downside risk without prior experience—a move that Sinclair notes raises some concerns. "If you look at the 2016 results, there were only two organizations without prior Medicare ACO experience that took on downside risk—and both lost millions of dollars," Sinclair wrote.

How QPP could change down the road

CMS has signaled that several changes might be on the horizon for MIPS and the Advanced APM Track in 2019 and beyond. For instance, CMS in 2019 may factor episode-based measures, or the cost of items and services provided to a beneficiary during an episode of care, into MIPS' cost category. According to CMS, those measures are based on three types of episode groups and are calculated using fee-for-service claims data from Medicare Parts A and B. The agency also is considering a demonstration program for providers to qualify for the Advanced APM track solely through Medicare Advantage (MA). Experts say it's also likely that CMS could propose new physician-focused payment models that qualify as Advanced APMs in coming years.

In short, QPP's journey is just beginning, and providers can expect to see the scope and scale of QPP expand over the coming years to encourage providers to shoulder a greater share of the financial risk of caring for patients and place a greater emphasis on providers' performance on cost-related measures.