June 30, 2017

A Cautious First Step From a Bold Administration: Proposed Rule on Clinician Quality-based Payments Incorporates Some, But Not All, MedPAC Recommendations

On June 30, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule covering the second and future years of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) Quality Payment Program. The program, which took effect in 2017, overhauled the way Medicare pays for clinicians’ services and ties clinicians’ compensation more closely to performance on quality measures. Clinicians choose one of two tracks:

  • Merit-Based Incentive Payment System (MIPS)
  • Advanced Alternative Payment Models (A-APMs)

In MIPS, CMS uses clinician-reported information about quality measures, along with cost data generated from claims, to calculate individual positive or negative payment adjustments. The A-APMs track incentivizes clinicians to participate in initiatives, including risk-based shared savings programs, that emphasize value-based care and care coordination. 

CMS’s proposal is the Trump administration’s first significant step in shaping Quality Payment Program policy, and the administration is intent upon reducing clinician burden, particularly for smaller entities. At the same time, CMS is not ready to fully align its policies with the recommendations advanced recently by the Medicare Payment Advisory Commission (MedPAC). This congressional advisory group identified ways in which the Quality Payment Program could be modified to improve care and outcomes for Medicare beneficiaries, encourage providers to make positive changes in their practices, and save money for the Medicare program. Some of the MedPAC suggestions about the MIPS program are reflected in the proposed rule, but overall, the proposed rule does not significantly incorporate the principles behind MedPAC’s recommendations. 

Reducing Burden on Clinicians

In its June 2017 Report to the Congress on Medicare and the Health Care Delivery System, MedPAC advocated for a dramatic clinician burden reduction, suggesting that population outcome measures calculated from claims — and not self-reported data — should be used to measure quality. While the Year 2 proposed rule acknowledges the burden of self-reporting (quantifying its cost at $859 million) and addresses it in some measures (it provides multiple means of submitting performance data and calls for the study of other data collection methods, and allows solo practitioners and small groups the opportunity to scale up as “virtual groups”), the MIPS program’s emphasis is still on self-reported, rather than population outcome, data. 

Measuring High and Low Performers

MedPAC’s report also questions the usefulness of the self-reported quality data used in the MIPS program. In MedPAC’s view, the quality measures from which the clinicians choose are not strongly tied to positive outcomes for patients, but are rather process measures (e.g., did the clinician follow a particular clinical protocol?). MedPAC concludes that building incentives around this type of measure (many of which may already be fully adopted in everyday practice, and which almost all clinicians score well in) is unlikely to benefit patients.

While CMS anticipates the quality measures will evolve over time away from process measures to measures of the greatest importance to patients and clinicians, it remains committed to the concept of gathering individual or facility-based data on a set of clinical quality measures. The quality performance category is proposed to remain at 60 percent of the final score through 2020. 

Encouraging Participation in A-APMs

One of CMS’s strategic objectives for the Quality Payment Program is to increase the availability and adoption of A-APMs. To this end, clinicians who become qualifying APM participants — by reaching a certain set percentage of their payments or patients coming from A-APMs — will earn a 5 percent annual bonus for their participation from 2019 to 2024. MedPAC’s view is that a payment cliff (under which, for example, a clinician with 24.9 percent of payments coming from A-APMs gets no bonus and a clinician with 25 percent of payments coming from A-APMs gets a 5 percent bonus on all payments, whether related to A-APMs or not) creates uncertainty that will diminish participation. To boost participation in A-APMs and to create more flexibility and predictability, MedPAC would like to see the threshold eliminated, and the 5 percent bonus apply only to revenue from the A-APMs. CMS is not eliminating the threshold at this time.

Finally, MedPAC expresses concern that some clinicians might stay in the MIPS program because of big potential payment adjustments related to a $500 million annual pool allocated for exceptional performance bonuses in MIPS. It suggests that the money be reallocated to another program or to the A-APM track. The Year 2 proposed rule leaves the $500 million pool for MIPS in place from 2019 through 2024. 

The variance between the proposed rule and MedPAC's recommendations does not necessarily indicate that the entities disagree. CMS may be unable to implement certain MedPAC recommendations due to legislative language or short-term operational constraints. If not in this regulation, the Quality Payment Program may still evolve toward MedPAC's recommendations over time.

Forecasting Into Year 2

If this proposal is finalized as proposed, we can expect even broader heterogeneity among clinicians who serve Medicare patients, due to the increase in clinicians excluded (estimated at 134,000). In particular, the increased low-volume threshold will diminish the number of small-practice clinicians significantly; almost half the additionally excluded clinicians are in small practices. Still, the Year 2 Program is confirmation that CMS will continue to support clinicians and organizations that are prepared to fully embrace risk-based payment models.

The proposed rule can be viewed in the Federal Register, and comments on it are due August 21. CMS will likely finalize the rule by the end of October.

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