Life Science Compliance Update

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February 18, 2016

Understanding Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APM’s)

Last year Congress and President Obama approved a bipartisan bill for United States healthcare reform, the bill known as the "doc fix" bill, or "MACRA," which stands for Medicare Access and CHIP Reauthorization Act of 2015. MACRA repealed the Medicare Part B Sustainable Growth Rate (SGR) reimbursement formula and replaces it with a new pay-for-performance program – the Merit-Based Incentive Payment System (MIPS).

For the years 2015-2019 physicians will receive a 5% annual medicare base reimbursement rate increase. After that time from 2020 - 2025 the medicare reimbursement rate is frozen, though through participation in two different programs there is upside potential for physicians who participate in value programs such as MIPS and Alternative Payment Models (APM's)


The MIPS program is expected to annually measure Medicare Part B providers in four performance categories and derive a "MIPS score," which can have an effect on a provider's Medicare reimbursement in a payment year. The performance categories include: Meaningful Use (MU) (25 points), Value-Based Modifier (VBM) quality based upon Physician Quality Reporting System (PQRS) measures (up to 30 points), VBM cost or resource use performance (30 points), and a "clinical practice improvement" category (15 points).


MIPS scores and individual category scores are expected to become available on the Physician Compare website, and include the range of all scores for eligible professionals across the country.

Important Dates

The MACRA requires that the Secretary of Health and Human Services "develop and post on the CMS website, a "draft plan for the development of quality measures" by January 1, 2016, for application under certain applicable provisions related to MIPS and to certain Medicare alternative payment models (APMs). As such, CMS created the Draft CMS Quality Measure Development Plan (MDP). CMS is currently soliciting comments on the Draft MDP from the public through March 1, 2016.

Sometime early in the summer of 2016 CMS will issue a draft rule for MACRA and a final rule before 2017.

Important Event

MACRA Draft Rule 


Summer 2016

MACRA Final Rule 

4th Qtr. 2016

MIPS Reporting Year for 2019


MIPS Feedback – Confidential Quarterly Reporting

July 1, 2017

Information about items and services furnished to the EP's patients by other providers and suppliers for which payment is made under Medicare

July 1, 2018

Payment Adjustment – 1st Year


APM Election deadline for 2019


Who is Eligible for MIPS?

MIPS ratings is slated to begin in January 2017, and eligible professionals for 2017 and 2018 include: physicians, physician assistants, nurse practitioners, clinical nurse specialists, and nurse anesthetists.

In 2019, more professionals become eligible for MIPS, including physical or occupational therapists, speech language pathologists, audiologists, nurse midwives, clinical social workers, clinical psychologists, and dieticians or nutrition professionals.

Additionally, some providers are exempt from MIPS, including:

  • Providers who do not meet the "low volume threshold,"
  • Medicare Shared Savings Program Accountable Care Organization providers and other participants in alternative payment models, and
  • First year Medicare providers.

The aforementioned "low volume threshold" can be one of three things:

  • The minimum number of individuals enrolled under Medicare who are treated by the eligible professional for the performance period;
  • The minimum number of items and services furnished to individuals enrolled under Medicare by the EP for the performance period or;
  • The minimum amount of allowed charges billed by the EP under Medicare for the performance period.

Group Entities

A group of eligible professionals for each year will be considered eligible as a "group entity" for MIPS as defined in the MIPS final rule. Some current components of MIPS already support the concept of group measurement, such as Physician Quality Reporting System (PQRS). The MIPS final rule will explain and define how individual Meaningful Use (MU) performance is used to determine group MIPS performance.

MIPS Exclusions

MIPS has several exclusions to be aware of. They include:

  • A qualifying APM participant;
  • A partial qualifying APM participant (an EP who has not met the minimum payment percentages for a qualifying APM participant that year, but has met a reduced threshold;
  • A low-volume threshold measurement that has not been satisfied (a minimum payment percentage).

MIPS Payment Adjustments


Financial Information

The MIPS adjustment factor is redone every year, for each individual provider. The percentage is calculated by comparing the composite performance score to the performance threshold, and can be either positive, negative, or zero.

How The Financials Change Year to Year

In 2019, the maximum amount a provider's base rate of Medicare Part B payment can be adjusted is either a positive 4% or a negative 4%. In 2020, the rate increases to a positive 5% or a negative 5%. In 2021, the rate becomes a positive 7% or a negative 7%, and in 2022 (and onward), the maximum adjustment rate is either positive or negative 9%. Positive adjustments will be awarded proportionally, up to a maximum of 3 times the annual cap for negative payment adjustments for the top 25 percentile (ie, 12% in 2019, 15% in 2020, 21% in 2021, and 27% in 2022 and in subsequent years).


There are currently multiple different individual quality and value programs for Medicare physicians and practitioners. MACRA streamlined three of them into MIPS: the Physician Quality Reporting Program (PQRS), the Value-Based Payment Modifier (VBM), and the Medicare HER Incentive Program. MIPS consolidated all three programs, and came up with one single sliding grading scale, see below.  MIPS Sliding Scale

Meaningful Use (MU)

Meaningful Use is a way of using certified electronic health record (EHR) technology to improve the quality, safety, and efficiency of healthcare and reduce health disparities. MU is also expected to better engage patients and their families in the healthcare they receive and improve care coordination, while maintaining the privacy and security of patient health information.

Physician Quality Reporting System (PQRS)

The PQRS is a quality reporting program that encourages individual eligible professionals and group practices to report information on the quality of their provided care to Medicare. PQRS gives participants the opportunity to assess the level and quality of care they provide to their patients, in an effort to ensure that patients get the right care at the right time.

Such reporting helps participants quantify and understand how often they are meeting a particular quality metric. Beginning in 2015, the program applies a negative payment adjustment to providers who did not satisfactorily report data on quality measures.

Quality Measures

The Measures Codes webpage on CMS' website (located here), provides great insight on the PQRS quality measures, including detailed specifications and related release notes for the individual PQRS quality measures and measure groups. The website also includes a selection of seventeen specialty measure sets for 2016, including: Cardiology, Dermatology, Mental Health, and Radiology.

According to CMS, at a bare minimum, the following factors should be considered when selecting which measures to report:

  • Clinical conditions treated;
  • Types of care provided (preventive, chronic acute);
  • What kind of setting the care is delivered in;
  • Quality improvement goals for the following year; and
  • Other quality reporting programs that are currently in use, or currently being considered.

Value-Based Modifier (VBM)

The Value-Based Modifier allows a differential payment to be made to a physician or group of physicians under the Medicare Physician Fee Schedule (PFS) based upon the quality of care provided in comparison to the cost of care during a performance period. In the future, the VBM will be used to adjust Medicare PFS payments to non-physician eligible professionals, in addition to physicians. The VBM is an adjustment that is made on a per-claim basis to Medicare payments for items and services.

Beginning January 2015, the VBM was applied to any physician payments that were made for physicians in groups with 100 or more eligible professionals, provided that at least one physician submitted a Medicare claim during 2013 under the Taxpayer Identification Number (TIN) used to identify the group.

Starting in January 2016, the VBM will be applied to physician payments made under the Medicare PFS for physicians in TINs with ten or more eligible professionals, as long as at least one physician submitted a Medicare claim during 2014 under the TIN.

Lastly, beginning January 1, 2017, the VBM will be applied to physician payments under the Medicare PFS for all physicians, including solo practitioners. Calendar year 2015 is the performance period for the VBM that will be applied in 2017.

Clinical Practice Improvement Activities

The term "Clinical Practice Improvement Activity" is defined as an activity that relevant eligible professional organizations and other stakeholders identify as one that improves clinical practice or care delivery and that the Secretary determines is likely to result in improved outcomes. The CPIA will assess healthcare professionals on their effort to engage in continuing education and working to improve their practices and facilitate future participation in APMs.


The menu of recognized activities will be established in collaboration with professionals, and is expected to be applicable to all specialties and accessible for small and rural area practices. Currently, the eligible professional's activity log must include the following subcategories of activities:

  • Expanded practice access (includes activities such as: same day appointments for urgent needs, allowing patients with emergencies to walk-in during certain established hours, use of satellite offices to bring services to patients, and serving on call in an emergency department);
  • Population management;
  • Care coordination (includes activities such as timely communicating test results, provide patients with printed copies of test results, and the ability of a practice to receive - and act upon - faxes or emails from referring doctors);
  • Beneficiary engagement (includes activities such as providing patients with medical history forms to fill out prior to a first appointment, training patients to properly use medicines and medical devices, and nutritional counseling);
  • Patient safety and practice assessment; such as MOC Part 2 self-assessment and
  • Participation in an APM. Note special treatment will be assigned to participants in APM's that don't meet the full APM criteria in MACRA.
  • Other criteria as determined by the Secretary of HHS

Alternative Payment Models

Alternative Payment Models (APMs) give CMS new ways to pay healthcare providers for the care they provide to Medicare beneficiaries. In order to be a qualifying APM participant, you must be a physician or practitioner who has a certain percent of your patients or payments through an eligible APM, as explained below.

Some benefits of APM include: from 2019-2024, pay some participating healthcare providers a lump-sum incentive payment; increase transparency of physician-focused payment models; and starting in 2026, offer select participating healthcare providers higher annual payments. Additionally, you are not subject to MIPS.

Physicians will be recieve a 5% bonus payment for participation in qualified APMs.

Some examples of APS include: Accountable Care Organizations (ACOs), Patient Centered Medical Homes, and bundled payment models.

In order to be a qualifying APM participant, providers must meet increasing thresholds for the percentage of their revenue that they receive through eligible APMs.

  • 2019-2020, 25% of Medicare revenue must be received through eligible APMs.
  • 2021-2022, that means that 50% of Medicare revenue or 50% of all-payer revenue along with 25% of Medicare revenue must be received through eligible APMs.
  • 2023 and beyond, that means that 75% of Medicare revenue or 75% of all-payer revenue along with 25% of Medicare revenue must be received through eligible APMs.

Additionally, in order to be an eligible APM, an APM must require use of certified EHR technology and either

(1) bear more than nominal financial risk for monetary losses or

(2) be a medical home model expanded under CMMI authority.

Most current APM's including ACO's and PCMH's do not qualify as bearing more than nominal financial risk

Dates for Rule Making

MACRA was passed on a huge bipartisan basis (92-8) in April 2015, known as the "doc fix" bill. In October 2015, CMS released RFI seeking comments, and in November 2015, the RFI public comments were submitted to CMS. Currently, it is estimated that in July 2016, the proposed 2017 MIPS rule will be presented to the public, with the final 2017 MIPS rule slated to be published in November 2016.

As mentioned above, January 2017 is expected to be the start of the MIPS first performance year.

Next Steps

We anticipate that over the next couple years, more guidance and information on the MIPS program will be released, and we expect to be there every step of the way, helping to guide industry leaders in interpreting the regulations.

However, even though MIPS does not officially begin until the 2017 performance year, there are steps physicians and other eligible professionals can begin to take now, including working on improving how their current MU, PQRS, and VBM programs perform and are managed. Once MIPS officially begins, MIPS scores are based off of those programs, and having the programs running efficiently and effectively will be a great benefit in the long run.

Additionally, it might be helpful to consolidate current organizational and administrative efforts among the three programs to ensure efficiency and meet more program requirements with the same effort.


MACRA enshrines the concept of value vs. volume and a seismic shift from fee for service to value based payments. There will be tremendous need for education for today's clinicians to further understand MACRA and all its ramifications. Big questions need to be answered such as what the rule will look like, what does it mean to bear more than nominal financial risk, what will be included in value, will MIPS Meaningful Use, PQRS and Value Based Modifiers be similar to the current system .

Fortunately, there will be opportunities to let your voice be heard on this very important program.

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