MACRA IS ON. The countdown to LET S TEAM UP. MACRA Act of 2015 white paper. Introduction. SGR Repeal. Section 101

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1 LET S TEAM UP. The countdown to MACRA IS ON. LF SS 2B 3B 1B P C CF RF MACRA Act of 2015 white paper Introduction On April , the Senate acted to pass the 2015 Medicare Access and CHIP Reauthorization Act which the House passed earlier in March. While the Act is primarily regarded as the Sustainable Growth Rate fix or repeal, it also contains a number of other significant provisions for reform of physician payment under the Medicare program, for promoting alternative payment models for physician participation and related to certified electronic health record technology or CEHRT. The following is a summary of key provisions of interest based on policy areas impacting physician payment, CEHRT and other items of high interest. Section 101 Section 101 of the Act contains most of the more compelling provisions regarding the SGR repeal and the enactment of the Merit Based Incentive Payment System (MIPS) which serves to consolidate several of the value based programs that were enacted under ARRA HITECH 2009 and the Affordable Care Act of SGR Repeal The Act repeals the SGR and replaces it with a moderate set of payment increases well out into the foreseeable future. The repeal of the SGR is to be effective retroactive to 1/1/15, and the schedule of physician fee schedule adjustment factors over the next number of years for Medicare Part B Fee For Service (FFS) set as follows for service dates that fall within: 1/1/15-6/30/15 0.0% 7/1/15-12/31/15 0.5% CY 2016 through CY % CY 2019 through CY % After CY 2025 The update will be comprised of two parts For services provided that do not fall under qualifying Alternative Payment Models (APMs) conversion factor 0.25% For services provided that do fall under qualifying APMs conversion factor 0.75%

2 MIPS and APM Participation MIPS MIPS serves to consolidate the payment adjustments that accrue under the following programs into one composite payment adjustment for Medicare. Meaningful use payment adjustment PQRS Incentive program Physician value based payment modifier Instead of separate payment adjustments under each of these programs, their requirements will be consolidated into MIPS. MIPS will go into effect for payment years starting with CY MIPS will have four dimensions with an overall composite score from for each participating physician. Non-participation in a given dimension will result in a 0 being assigned to performance score for the weight of that category. The categories and their weights as defined under the Act are as follows (NOTE: Given that there is potential for adjustment of the weights for certain categories, the weights defined by the statute do not necessarily add up to 100% as stated): Quality Domain weight of 30% with possible increase in actual score in 2019 and 2020 for the percentage of attainment to be increased by the relative improvement made year over year if the attainment is otherwise less than 30% by actual performance Reporting of quality measures similar to current reporting under PQRS with an emphasis on outcome based measures over time Resource Use Domain weight in 2019 and 2020 of 10% increasing to 15% after that Measurement of resource utilization for beneficiaries including the cost of drugs under Part D Clinical Practice Improvement Activities Domain weight of 15% Expanded practice access like same day appointments for urgent needs and afterhours access to clinicians Population management including monitoring of health conditions to provide timely health care intervention or participation in a qualified clinical data registry (same concept as defined for PQRS) Care coordination including timely communication of test results, timely exchange of clinical information and use of remote monitoring or tele health Beneficiary engagement including establishing care plans for individuals with complex care needs, beneficiary self -management assessment and training and shared decision making Patient safety and practice assessment including through use of clinical or surgical checklists and practice assessments for certification purposes Participation in alternative payment models including medical homes, ACOs or shared savings initiatives Meaningful Use Domain weight of 25% with possible adjustment downwards or upwards depending on the overall percentage of EPs reporting meaningful use Continuing to successfully attest to being a meaningful user Participants in MIPS in 2019 and 2020 are defined much the same way as they are for current PQRS and value based payment modifier participation in that it will apply to physicians, physician assistances, nurse practitioners, clinical nurse specialists, CRNAs and after that, for what other eligible professionals the Secretary determines to include. There are provisions for eligible professionals to be able to participate as a group practice similar to how they may be evaluated for PQRS participation. Defined as including

3 Payment adjustment will be determined based on the overall composite score of an EP, and that will be set based on the comparison of the composite score to performance standards set by the Secretary. As mentioned above, the composite score will be set on a scale of 0 to 100. Participants will be encouraged to report for each of the four dimensions in the following manner For reportable activities under the four dimensions, failure to report will result in the lowest potential score applicable to the given activity For use of CEHRT and qualified clinical data registries for report of quality measures, use of either will be taken to have satisfied the quality measure reporting requirement of MIPS For clinical practice improvement activities, o Participating in a practice certification as a patient centered medical home will result in the maximum score assigned for the clinical practice improvement dimension Participation in an APM will result in automatic assignment of half of the maximum potential score for the clinical practice improvement dimension Greater scoring may be assigned for a given dimension based on a provider making improvement year over year for quality Participants in MIPS will be evaluated based on performance standards set for median performance with distinct performance thresholds set for what is considered significant performance above median or below median. Payment adjustment will be based on the overall composite score. The amount of the payment adjustment as a percentage will be based on a sliding scale but maximum positive or negative adjustments are set as follows with budget neutrality supported for the effect of the payment adjustments for total positive or negative payment adjustment program wide: 2022 and beyond 9% NOTE: An additional bonus is possible for exceptional performance that is at least at the 25th percentile above the median performance threshold on an absolute scale or based on improvement from the prior year. The total amount of additional incentive program wide will be capped at $500m for the years APM For EPs participating in an APM, the Act also provides for an added incentive for that participation in the form of a 5% bonus over and above what the EP would be otherwise paid for services provided through the APM participation. The bonus would be calculated based on the total value of professional services provided in aggregate under the APM in the prior year by that EP. To be considered a qualified APM participant, the EP must provide and bill for a set percentage or more of their professional services in a given year through an APM. For the years , the percentage is set at 2019 and % 2021 and % 2023 and later 75% An eligible APM is considered to be a Shared savings program under section 1899 of the Social Security Act A demonstration program under section 1866C of the Social Security Act A demonstration program required under Federal law As a condition of participation in an APM, an EP must use certified EHR technology % % %

4 Classification Schema for Resource Utilization The Act also calls for the development by November 2018 of Care Episode Groups and Patient Condition Groups to measure resource usage attributable to clinical conditions whether or not inpatient hospitalization occurs, and to have the care episode groups and patient condition groups established for conditions that account for 50% of Part A and Part B expenditures to start. Section 102 Chronic Care Management Section 102 of the Act focuses on payment policy development for 2015 and beyond for chronic care management services. The focus is to be on making payment to only one applicable provider responsible for the overall care management of the patient. Section 105 Promoting Interoperability of EHRs Section 105 of the Act focuses on achieving widespread interoperability and reducing barriers to interoperability. Congress has declared this to be a national goal to attain by 12/31/18 through the use of CEHRT. Widespread interoperability is defined as Interoperability between certified EHR technology systems employed by meaningful EHR users under the Medicare and Medicaid EHR incentive programs and other clinicians and health care providers on a nationwide basis. Interoperability itself means the ability if two or more health information systems or components to exchange clinical information and other information and to use the information that has been exchanged using common standards as to provide access to longitudinal information for health care providers in order to facilitate coordinated care and improved patient outcomes. The Secretary is to establish metrics by July 1, 2016 to determine if and to what extend the objective has been achieved to attain widespread interoperability. If by these measures, the goal has not been achieved by 12/31/18, the Secretary is to report to congress by 12/31/19 on the barriers that remain and to recommend actions to achieve the objective. The recommendations may include implementing payment adjustments for not being meaningful users (apart from MIPS) and decertification criteria for EHRs. To prevent blocking the sharing of information under the Act (defined as knowingly and willfully taking action such as to disable functionality to limit or restrict the compatibility or interoperability of CEHRT by an EP or a eligible hospital, the Secretary is to require providers to attest that they have taken no such actions as to their use of CEHRT. Additionally, the Secretary is to take steps by one year after the effective date of the Act to Provide for a website to report aggregated results of surveys of successful EHR users on the functionality of CEHRT products to enable users to directly compare products Report on mechanisms that would assist providers to compare and select CEHRT Section 202 Extension of Therapy Cap Exceptions Process The Act extends the therapy cap exceptions process for therapy services under Medicare Part B by two and a half years to 12/31/17. Section 412 Delay of Reductions to Medicaid DSH Allotments Under the Affordable Care Act, Medicaid Disproportionate Share was to have been cut $24.4 billion between 2017 and The Act serves to delay reductions to start in 2018 for Medicaid DSH allotments to the following schedule $2 billion $3 billion $4 billion $5 billion $6 billion $7 billion 2024 and $8 billion

5 Section 507 Requiring Valid Prescriber National Provider Identifiers on Pharmacy Claims Section 507 mandates that for plan years 2016 and beyond, pharmacy claims under Medicare Part D include the valid NPI of the prescriber. The Secretary is to establish procedures to validate its authenticity. Section 511 Guidance on Application of Common Rule to Clinical Data Registries Section 511 of the act calls for the Secretary to issue clarification or modification to the Common Rule within one year of the enactment of the act as it applies to activities related to quality improvement and the use of qualified clinical data registries. Section 521 Extension of Two Midnight PAMA Rules on Certain Medical Review Activities The Act extends the constraint on RAC auditors from performing payment audit review for inpatient status as last extended by the Protecting Access to Medicare Act of 2014 (PAMA). The extension is to 9/30/15 for the remainder of FFY NO ICD 10 DELAY Also of note is the Act passed both Houses of Congress without any ICD 10 delay provision.