On October 14, 2016, CMS issued the “Merit-based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models” final rule with comment period.

MIPS and Advanced APMs are the two ways for health care providers to participate in the CMS Quality Payment Program that rewards value and outcomes, as required by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). MACRA amended Title XVIII of the Social Security Act (Medicare and Medicaid) to repeal the Medicare Sustainable Growth Rate.

As in the proposed rule, this final rule contains the following key elements: (i) a framework for the new Merit-based Incentive Payment System (MIPS), (ii) a methodology for making incentive payments for participation in alternative payment models (APMs), including definition of Qualifying APM Participants (QPs) in Advanced APMs, and (iii) proposed criteria for use by the Physician-Focused Payment Model Technical Advisory Committee (PTAC) in making recommendations on physician-focused payment models (PFPMs).

According to CMS, the significant changes in this final rule from the proposed rule based on public comments consist of (i) bolstering support for small and independent practices, including $100 million in technical assistance, (ii) potential new opportunities for movement in Advanced APMs participation, such as the Medicare ACO Track 1+, (iii) a flexible, pick-your ­own-pace approach to the initial years of the program, and (iv) connecting the statutory domains into one unified program that supports clinician-driven quality improvement.

Comments on the final rule will be due 60 days after date of filing for public inspection in the Federal Register, not yet provided.

Advanced Alternative Payment Models Framework

As an alternative to MIPS, APMs that fulfill enumerated criteria will be considered QPs and thus eligible to participate in the Advanced APMs and earn incentive payments.

The final rule establishes two types of Advanced APMs: (1) Advanced APMs and (2) Other Payer Advanced APMs.  CMS anticipates the following models will be, under category 1 above, Advanced APMs for the 2017 performance year: (1) Comprehensive End Stage Renal Disease Care Model (Two-Sided Risk Arrangements); (2) Comprehensive Primary Care Plus (CPC+); (3) Medicare Shared Savings Program Track 2; (4) Medicare Shared Savings Program Track 3; and (5) Next Generation ACO Model.  CMS will publish a final list of Advanced APMs before January 1, 2017, and also has proposed additional models to be added for the 2018 performance year (such as Medicare ACO Track 1+).  Other Payer Advanced APMs are APMs that will make payment arrangements with a non-Medicare payer that meet the criteria set forth below.

Both Advanced APMs and Other Payer Advanced APMs must:

  • Require participants to use CEHRT. At least 50 percent of eligible clinicians in each participating APM Entity group, or each hospital if hospitals are the APM Entities, must use CEHRT to document and communicate clinical care.  For the Shared Savings Program this requirement is slightly different and involves issuing penalties or rewards, as applicable, to an APM Entity based on the number of eligible clinicians using CEHRT in the APM Entity.
  • Pay for covered professional services based on quality measures. At least one of the quality measures used must be evidenced-based, reliable, and valid.  Another quality measure must be outcome-based, provided there is an applicable outcome measure on the MIPS quality measure list.
  • Bear risk for monetary losses of a more than nominal amount. To accomplish this, the APM Entity must include provisions in its Participation Agreement with CMS that enable CMS to withhold payment, reduce payment rates, or require the APM Entity to make payments to CMS.  A formula for calculating the nominal amount is set forth in the final rule.

The financial risk standard for Medical Home Models (or Medicaid Medical Home Models, in the case of Other Payer Advanced APMs) is somewhat different.  Medical Home Models are APM Entities comprised largely of primary care or multispecialty practices and must be owned and operated by organizations with 50 or fewer eligible clinicians.  A Medical Home Model must, in its Participation Agreement with CMS, enable CMS to withhold payment, reduce payment rates, require the APM Entity to make payments to CMS, or cause the APM Entity to lose the right to all or part of an otherwise guaranteed payment(s).

Merit-based Incentive Payment System

MIPS consolidates elements of three existing programs for purposes of promoting patient-centered, quality care – the Physician Quality Reporting System (PQRS), Value-Based Payment Modifier (VM), and the Medicare Electronic Health Records (EHR) Incentive Program.  Notably, the final rule implements a transition year and learning and development period intended to lower the barriers to MIPS participation at the outset.

Highlights from the final rule as it relates to MIPS, including substantive changes from the proposed rule, include the following.

  • Implementing the Transition Period. CMS establishes 2017 as the performance period for the 2019 MIPS payment year.  CMS further explains that 2017 will be a transition year.  During this transition year, the performance threshold will be lowered to three points; for eligible clinicians, this means that so long as an eligible clinician reports on at least one quality measure during the performance period, the clinician can avoid a negative payment adjustment.  During the transition period, CMS will automatically award three points for any quality measure that is reported, regardless of whether the data submitted meets applicable benchmarks.  Notably, eligible clinicians who achieve an overall score of 70 or higher will be eligible for an exceptional performance adjustment, which will be funded from a pool of $500 million.
  • Permitting the Establishment of Virtual Groups for Combined Reporting. During the 2017 transition year, CMS acknowledges that many solo or small practices (e., groups of no more than 10 clinicians) will be excluded from participation in MIPS due to the low-volume threshold, which the final rule sets at less than or equal to $30,000 in Medicare Part B allowed charges or less than or equal to 100 Medicare patients.  However, for purposes of MIPS reporting, solo or small practices may join “virtual groups” and combine their MIPS reporting.  CMS will not implement virtual groups during the 2017 transition year.
  • Enabling Clinicians Choice for Full Participation in MIPS. During the 2017 transition year, clinicians will have four options for reporting to MIPS.  Clinicians can (1) report to MIPS for a full 90-day period, or for a full year, to receive a positive adjustment, with exceptional performers eligible for a positive adjustment during the first six years of the program; (2) report for a minimum period of 90 days and report more than one quality measure, more than one improvement activity, or more than the five required measures in the advancing care information category to avoid a negative adjustment; (3) report for a period less than 90 days if the eligible clinician or group reports one measure in the quality category, one measure in the improvement activities category, or the five required measures in the advancing care information category; and (4) participate in Advanced Alternative Payment Models (APMs).
  • Modifying Performance Category Benchmarks during the Transition Year.
    • Quality. CMS will select quality measures annually through a call for quality measures process and will finalize a list in the Federal Register by November 1 of each year.  For full participation in MIPS during the 2017 transition year, eligible clinicians will report at least six measures and one outcome measure, if available.  During the 2017 transition year, the quality performance category will represent 60% of the eligible clinician’s Composite Performance Score, as compared to the proposed 50%.
    • Improvement Activities. Improvement activities include those activities that support broad aims within healthcare delivery, including care coordination, beneficiary engagement, population management, and health equity.  CMS has assigned relative weights to the improvement categories – e, high and medium.  By final rule, CMS reduces the number of activities required to receive full credit for MIPS participation during the 2017 transition year from six medium-weighted or three high-weighted to four medium-weighted or two high-weighted.  For small, solo or rural practices, CMS will only require that these practices report on two medium-weighted activities or one high-weighted activity.  During the 2017 transition year, the improvement activities performance category will represent 15% of the eligible clinician’s Composite Performance Score, which is consistent with the proposed rule.
    • Advancing Care Information. The measures and objectives in the advancing care information category emphasize the secure exchange of health information and the use of certified electronic health record technology (CEHRT) to support patient engagement and improved healthcare quality.  CMS reduces the total number of required measures from eleven (as set forth in the proposed rule) to five.  These five categories, all of which focus on transmitting, receiving and accessing information electronically using CEHRT, include (1) e-Prescribing, (2) Send a Summary of Care, (3) Request/Accept Summary, (4) Security Risk Analysis, and (5) Provide Patient Access.  Beyond the five required measures, all other measures are optional but will earn the eligible clinician or group a higher score if reported.  Eligible clinicians and groups will receive a bonus score for reporting improvement activities that utilize CEHRT and for reporting to public health or clinical data registries.  During the 2017 transition year, the advancing care information performance category will represent 25% of the eligible clinician’s Composite Performance Score, which is consistent with the proposed rule.
    • Cost. During the 2017 transition year, the cost performance category will represent 0% of the eligible clinician’s Composite Performance Score, as compared to the proposed 10%.  While cost measures will not be used to determine an eligible clinician’s final score, CMS will calculate performance on certain cost measures and provide this information as performance feedback to eligible clinicians.
  • Reweighted Performance Category Scores. CMS understands that a large number of MIPS eligible clinicians will be able to participate in all performance categories (e., quality, improvement activities, advancing care, and cost).  However, CMS has identified instances in which MIPS eligible clinicians would not receive an advancing care information performance category score or a cost performance category score.  For the 2017 transition year, CMS will be flexible and reweight scores under two circumstances: (1) where no advancing care information performance category score is received (i.e., the Composite Performance Score will be comprised of 85% quality and 15% improvement activities); and (2) if no quality performance category score is received (i.e., the Composite Performance Score will be comprised of 50% improvement activities and 50% advancing care information).

The QP Determination Process

Each calendar year, CMS will determine which eligible clinicians participating in an Advanced APM Entity during three QP Performance Periods (March 31, June 30, and August 31) will achieve QP or Partial QP status for the upcoming payment year. Group QP determinations will apply to all individual eligible clinicians who are identified as part of the Advanced APM Entity during any of the QP Performance Periods. Eligible clinicians achieving QP status will be excluded from MIPS and receive a 5 percent incentive payment for achieving such status in years 2019 through 2024. Eligible clinicians achieving Partial QP status can elect whether to be subject to a MIPS payment adjustment. QP status will apply to an eligible clinician’s NPI and across all of the TINs to which such clinician has reassigned the right to receive Medicare payment.

The threshold level of participation required for an eligible clinician to become a QP or Partial QP for a year will be based on either the Medicare Option or the All-Payer Combination Option. For payment years 2019 and 2020, only the Medicare Option will be used to determine QP status. The Medicare Option is based on either the number of claims for Medicare Part B covered professional services (the payment count method) or the number of Medicare beneficiaries provided covered professional services under Part B (the patient count method). The All-Payer Combination Option takes into account an eligible clinicians participation under the Medicare Option as well as the clinician’s participation in Other Payer Advanced APMs, which includes State Medicaid programs, commercial payers, and Medicare Advantage Plans.

The statutory threshold for eligible clinicians to qualify as a QP under the Medicare Option payment count method starts at 25% in 2019 and 2020, increases to 50% in 2021 and 2022, and increases again to 75% in 2023. The statutory threshold for eligible clinicians to qualify as a QP under the Medicare Option patient count method starts at 20% in 2019 and 2020, increases to 35% in 2021 and 2022, and increases again to 50% in 2023.

CMS will notify eligible clinicians of their QP status in advance of the end of the MIPS performance period.

Amount, Timing and Disbursement of APM Incentive Payment

CMS estimates that approximately 70,000 to 120,000 clinicians will become QPs in 2017 and approximately 125,000 to 250,000 clinicians will become QPs in 2018 through participation in Advanced APMs. CMS projects these clinicians will receive between $333 million and $571 million in APM Incentive Payments for CY 2019.

CMS further estimates, that assuming 90 percent of eligible clinicians of all practice sizes participate in the program, the MIPS payment adjustments will be approximately equally distributed between negative MIPS payment adjustments ($199 million) and positive MIPS payment adjustments ($199 million) to MIPS eligible clinicians. CMS states that positive MIPS payment adjustments will also include an additional $500 million for exceptional performance payments to MIPS eligible clinicians whose performance meets or exceeds a threshold final score of 70.

Proposed Physician-Focused Payment Models and PTAC

Physician-Focused Payment Model Technical Advisory Committee (PTAC) was created by MACRA as an independent federal advisory committee, which comprises 11-members. PTAC’s mandate is to review stakeholders’ proposed physician-focused payment models (PFPMs) and comment whether the proposed PFPMs meet the criteria established by the Secretary.  PTAC’s comments will be reviewed by the CMS Innovation Center and the Secretary.