Overview of Physician Payment System Reforms in the Medicare Access and CHIP Reauthorization Act of 2015 (H.R. 2)

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1 Overview of Physician Payment System Reforms in the Medicare Access and CHIP Reauthorization Act of 2015 (H.R. 2) June 18, 2015 Prepared for The Health Collaborative akingump.com 2015 Akin Gump Strauss Hauer & Feld LLP

2 Craig Brammer CEO, The Health Collaborative Previously with the Office of the National Coordinator for Health Information Technology in Washington, DC, leading technology innovation program Authored numerous studies on health policy, health IT, performance measurement and payment reform Masters degree in Organizational Behavior at the University of Cincinnati 1

3 Kelly Cleary Attorney at Akin Gump Strauss Hauer & Feld, LLP in Washington, DC Areas of expertise include Medicare and Medicaid payment systems, payment and delivery system reform, health care fraud and abuse, and privacy and security Conducted extensive advocacy on behalf of health industry clients related to the Medicare Access and CHIP Reauthorization Act 2

4 H.R. 2 marks the end of an era $150 billion Years that the SGR formula has threatened substantial cuts to physician pay Short-term legislative doc fixes Amount spent on short-term fixes 3

5 Debate over pay-fors ended with agreement to partially offset new spending $214 billion in new spending CHIP $70 billion in offsets Other Extenders Post- Acute cuts IPPS cuts SGR Repeal and Payment Reforms Part B & D Premiums Not offset 4

6 Overview of payment reforms in H.R Permanent repeal of SGR 0.5% PFS payment update ` 0.25% update 0.0% PFS payment update ` 0.75% update PQRS, VBPM, meaningful use adjustments Track 1: Merit-Based Payment Incentive Program (MIPS) Track 2: Qualifying Alternative Payment Models (APMS) 5% bonus for qualifying APM

7 H.R. 2 in context: By 2017, all physicians will be subject to valuebased payment in Medicare The value-based payment modifier, established under the Affordable Care Act, will increase in weight (4% in 2017) and expand to reach all physicians by 2017 Group size Percent of physicians Cumulative percentage

8 By 2018, CMS intends to link 90% of Medicare payment to value and 50% linked to Alternative Payment Models January 2015: HHS announces timeline for shifting Medicare payment from volume to value % Spending linked to value 90% Spending linked to value 30% Spending linked to APMs 50% Spending linked to APMs 7

9 In 2019, H.R. 2 puts in place two new payment systems that build off of the volume-to-value trend Track 1: Value-Based Payment in Fee-for- Service Assessment on measures of quality, resource use, clinical practice improvement, and EHR meaningful use Payment adjustment increases over time: 2019= +/-4% 2020= +/-5% 2021= +/-7% 2022 and beyond = +/-9% Excludes partial qualifying APMs and low-volume practices 0.25% update 2026 and beyond Track 2: Participation in Qualifying Alternative Payment Models 5% bonus between For professionals who receive a significant share of payments through an alternative payment entity that is risk-bearing or is a Medicare recognized medical home Must have quality component and use EHR Significant share determined by % of revenue in APMs Excluded from MIPS 0.75% update 2026 and beyond 8

10 Track 1 The Merit-Based Incentive Payment System (MIPS): Paying for Value in Fee-for-Service 9

11 MIPS streamlines existing FFS payment incentive programs. Meaningful use of EHR PQRS Value Modifier Merit-Based Incentive Payment System (MIPS) 10

12 Physicians are measured in 4 performance categories and assigned a single composite score of 0 through 100 EHR Meaningful Use 25% Quality 30% Clinical Practice Improvement 15% Resource Use 30% *Weightings for 2021 and beyond 11

13 Performance against a threshold will dictate the payment adjustment, which will increase over time 100 Composite score 0 Positive adjustments applied on a linear sliding scale, capped* at: 4% for % for % for % for 2022 and beyond Negative adjustments applied on a linear sliding scale, capped at: -4% for % for % for % for 2022 and beyond Performance threshold *Highest performers get extra adjustment of up to additional 10% through

14 25 Pulling it all together: Performance-based payment under old and new regimes MIPS High Performers MIPS (+) MIPS (-) EHR penalty PQRS VBPM (+) -10 VBPM (-)

15 Track 2 Incentivizing Movement into Advanced Alternative Payment Models 14

16 Qualifying APM participants will receive a 5% bonus from and will be exempt from the MIPS To qualify, an eligible professional must do two things: 1 2 Participate in an eligible alternative payment entity Earn a significant share of Part B revenue through that entity 15

17 1. Participation in an alternative payment entity Be in a recognized model CMMI Model MSSP ACO Model developed through other federal demonstration authorities where physicians Use certified EHR And Are paid for quality and the entity Bears financial risk for losses Or Is considered a medical home 16

18 2. Earning a significant share of revenue through the eligible alternative payment entity To qualify, a minimum percentage of payments must be attributable to Part B services furnished through the eligible alternative payment entity. Payment Thresholds and beyond 25% Medicare Part B payments Option 1: Medicare threshold 50% Medicare Part B payments Option 2: All-Payer threshold 50% all-payer, including 25% Medicare Part B payments Option 1: Medicare threshold 75% Medicare Part B payments Option 2: All-Payer threshold 75% all-payer, including 25% Medicare Part B payments 17

19 APMs meeting lower thresholds can choose to participate in MIPS or be exempt Can report under MIPS program and be subject to adjustment Can choose not to report and will be held harmless Revenue thresholds for Partial APM Participant and beyond 20% Medicare Part B revenue Option 1: Medicare threshold 40% Medicare Part B revenue Option 2: All-Payer threshold 40% all-payer, including 20% Medicare Part B revenue Option 1: Medicare threshold 50% Medicare Part B revenue Option 2: All-Payer threshold 50% all-payer, including 20% Medicare Part B revenue 18

20 New Technical Advisory Committee (TAC) will recommend new physician-focused APMs RFI on APM Criteria Notice and Comment rulemaking on APM criteria (2016) Stakeholder submission of models to TAC TAC review and recommendation on models CMS review and response? 19

21 Value-Based pay initiatives supported by more accessible data 20

22 Questions? Kelly Cleary Craig 21