The MACRA Final Rule: The Art of the Transition

by Sheppard Mullin Richter & Hampton LLP
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On Friday, October 14, 2016, CMS released the much-anticipated final rule (the “Final Rule”) implementing the Quality Payment Program (QPP), mandated by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).  Pursuant to MACRA and the Final Rule, most clinicians will be required to participate in either a new Merit-based Incentive Payment System (MIPS) or an Advanced Alternative Payment Model (Advanced APM).  The Final Rule’s provisions are set to go into effect on January 1, 2017.  CMS will consider comments on the Final Rule submitted within 60 days of its publication (December 13, 2016).

The Final Rule spans over 2000 pages and lays out an ambitious program for transitioning clinicians into the QPP over the next several years.  CMS emphasized several goals in making changes to its proposed rule: (1) bolstering support for small and independent practices; (2) strengthening movement toward Advanced APMs; (3) allowing a flexible approach during the initial years of the program; and (4) unifying the different payment measurements under the QPP to support quality improvement.

The following is an abridged list of Final Rule highlights:

  • CMS set the low-volume threshold for the QPP at either: (i) $30,000 in Medicare Part B allowed charges, or (ii) 100 Medicare patients. Clinicians at or below the low-volume threshold will not be subject to the QPP at all.
  • As announced earlier this month, the Final Rule makes FY 2017 – the first measurement period for MIPS – a “transition period”, during which clinicians will have four options for avoiding negative payment adjustments under MIPS. These four options are as follows:
  • To maximize the probability of receiving a positive payment adjustment: Choose to report all required MIPS measures in each category for the entire performance period;
  • To avoid a negative payment adjustment and possibly receive a positive payment adjustment: Choose to report MIPS measures for less than the full performance period, but for at least 90 days, and report more than one quality measure, more than one clinical performance improvement activity, or more than the required measures in the advancing care information category;
  • To avoid a negative payment adjustment: Choose to report one quality measure, one clinical performance improvement activity, or the required measures in the advancing care information category; or
  • Participate in an Advanced APM and meet the standards to be a qualifying participant.

Clinicians who choose not to report any MIPS measures will receive a negative four percent payment adjustment.  However, as noted above, in order to make it easier for clinicians to avoid negative adjustments and achieve exceptional performance adjustments, the Final Rule has substantially lowered the applicable performance threshold for 2017.  In addition, the Final Rule weights the FY 2017 cost performance category at zero percent of the final score – the weight of the cost performance category will gradually increase beginning in 2018 up to the 30% level required by MACRA by 2021.

The Final Rule introduces some other changes to the MIPS performance categories that will extend beyond the transition year.  For instance:

  • CMS reduced the number of clinical improvement activities required to achieve full credit from six medium-weighted or three high-weighted activities to four medium-weighted or two high-weighted activities. For small and rural practices, this number is reduced even further to one high-weighted or two medium-weighted activities;
  • CMS will designate certain clinical improvement activities to also count toward the advancing care information bonus score; and
  • CMS reduced the total number of required measures in the advancing care information category from eleven to five. However, it remains true that reporting on more than five measures would allow clinicians to earn higher scores.

In addition to the above, the Final Rule suggests some steps that CMS might take in the future to encourage clinicians to enter Advanced APMs.

  • While CMS did not accede to Proposed Rule commenters who requested that MSSP Track 1 ACOs be classified as Advanced APMs, CMS did state that it is exploring the development of a “Medicare ACO Track 1+ Model” to begin in 2018. This model would be an option for both ACOs currently participating in Track 1 of the MSSP and new MSSP entrants, and would include more limited downside risk than currently included in Tracks 2 and 3 of the MSSP; and
  • CMS also noted that it anticipates reopening applications for some current APMs, including the Maryland All-Payer Model and the Comprehensive Care for Joint Replacement Model.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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