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In October, 2016, The Centers for Medicare and Medicaid Services finalized the implementation rule for the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The new rule replaces the old Medicare Sustainable Growth Rate formula with the Quality Payment Program (QPP), which offers a Merit-based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive, as well as Criteria for Physician-Focused Payment Models.

The key now is for physicians and hospitals to educate themselves about MACRA, choose which value-based payment model is appropriate for their operations, and prepare their technology, infrastructure, physician support systems, and clinical practices to adapt to the new system.

This isn’t something that they can delay. Implementation is about to begin, with 2017 as a transition year offering four “pick your pace” options, which Andy Slavitt, CMS acting administrator, outlined in a recently published blog.

Physicians will be expected to submit at least some data in 2017 to avoid negative payment adjustments, and the more data they submit, the more likely they are to get positive payment adjustments. CMS estimates more than 90 percent of participants will receive a positive or neutral MIPS payment adjustment in this transition year.

MIPS or Advanced APM

The QPP has two interrelated payment pathways, MIPS and Advanced APMs, each of which is designed to drive increased patient engagement while giving Medicare providers greater flexibility in delivering quality, value-based care. The option that providers choose will depend in part on the patients they serve, and their readiness to comply with data submission requirements.

MIPS: The MIPS pathway is for clinicians who bill Medicare more than $30,000 a year, provide care to more than 100 Medicare patients a year, and are not considered a new provider. MACRA will pay eligible clinicians for quality and value under MIPS.

MIPS is designed to integrate four performance categories into one performance metric: 

  • The Quality category replaces the Physician Quality Reporting System, and measures quality of care through evidence-based clinical quality measures that emphasize outcome-based measures.
  • The Advancing Care Information category replaces the Medicare EHR Incentive Program for eligible professionals, and measures whether technology is used meaningfully and focuses on secure exchange of health information and use of certified EHR technology. 
  • A new category, Clinical Practice Improvement Activities, referred to as Improvement Activities, measures quality by accounting for activities that improve clinical practice or care delivery likely to result in improved outcomes. 
  • The Cost category, replaces the Physician Value-based Payment Modifier program.  It measures cost for the performance period.

The payment structure for MIPS is based on capturing clinical activities among these performance categories, which are then weighted, assessed, and summed into one final performance score. MIPS also establish incentives for participation in Advanced APMs.

Advanced APMs: An APM provides added incentives to clinicians to provide high-quality and cost-efficient care, and can apply to a specific clinical condition, a care episode, or a population. Under the QPP, Advanced APMs are a subset of APMs and let practices earn more for taking on some risk related to patients’ outcomes.

Three types of APM’s are defined in the rule: MIPS APMs (non-risk bearing); Advanced APMs (risk-bearing); Other Payer Advanced APMs (risk-bearing beginning in 2021). All three must meet the base definition of APMs, in addition to independent criteria. Participating physicians and hospitals can earn a five percent incentive payment from 2019-2024 and be exempt from MIPS reporting requirements and payment adjustments if they have sufficient participation in an Advanced APM.

It is important to note that earning an incentive payment in one year will not guarantee receiving the incentive payment in future years.

Regardless of which payment pathway physicians and healthcare systems choose, they need to be thinking now about the technology, infrastructure, staff training and governance to adhere to MACRA, and building an implementation plan that will enable them to meet the incremental expectations for 2017, and full compliance in the years to come.