Life Science Compliance Update

December 28, 2017

In Depth Review of CMS MACRA QPP Regulations


As we continue our coverage of the MACRA Quality Payment Program (QPP) rule, the following article provides a more in-depth look at the regulations promulgated by CMS. We drafted an initial summary when the rule was released in early November.

Biggest surprise: cost category of MIPS

In its proposed rule in July 2017, CMS proposed completely removing the cost domain from MIPS for 2018, despite the underlying statute requiring that cost account for 30% of the overall MIPS score by 2019. However, in the final rule, CMS shocked many when it reversed its position and finalized a cost domain weight of 10 percent for the 2018 performance year.

As described in Health Affairs, by incorporating cost measures for 2018, CMS has created several new “facts on the ground” for health care providers:

  • The cost domain will be the major differentiating factor among clinicians in MIPS over time, and CMS’s inclusion of cost in the 2018 performance period signals that the administration supports using cost as a measure of value and to determine MIPS payment adjustments.
  • Clinicians have little power to influence the total cost of care for their patients when acting alone. Only teams including support staff like care coordinators, dietitians, pharmacists, social workers, and others working together across care settings—with appropriate financial incentives—will reduce costs and improve quality. The cost domain confuses clinicians and provides a wildcard for most practices with less than 200 doctors who have no experience managing cost metrics (see visualization below).
  • Despite significant confusion and hope that a new administration would delay or undercut payment reform and MACRA, it is moving ahead quickly, and payments to physicians will be adjusted based on MIPS performance.

Virtual groups

Any individual MIPS eligible clinician or a group of 10 or fewer clinicians can form a Virtual Group with at least one other such individual eligible clinician or group. Each participating individual clinician must meet the low volume threshold definition of MIPS Eligible clinician. That is, have greater than $90,000 in Medicare Part B allowed charges and care for more than 200 Medicare Part B patients. Each participating group also has to meet the low volume threshold requirements at the group level. A group may have clinicians that do not meet the low volume threshold requirements at individual level. However, there must be at least one MIPS eligible clinician in the group.

A Virtual Group election process requires a formal written agreements among individual clinicians and groups electing to form a Virtual Group and will select a representative. This person would make the election on behalf of the members of a Virtual Group regarding the formation of a Virtual Group for the applicable performance period, by the election deadline. Virtual Groups have until December 31, 2017 to make the election for 2018 performance year.

Some other important aspects to Virtual Groups:

  • A Virtual Group is created for at least one performance period. Participants are NOT allowed to change the selection during the performance period.
  • An individual or a group may only participate in one Virtual Group during a performance period. This is determined at the TIN level.
  • There is no limit to number of participants in a Virtual Group
  • Virtual Group is recognized as an official collective entity for reporting purposes but is not a distinct legal entity for billing purposes. As a result, Virtual Group will not need to establish a new TIN nor reassign their billing rights to a new or a different TIN.

Furthermore, most of the reporting requirements applicable to groups would also generally be applicable to Virtual Groups, unless otherwise specified. Virtual groups will aggregate data for each NPI under each TIN within the virtual group by adding together the numerators and denominators to report the measure ratio for a measure at the Virtual Group level. Most of the quality measures reporting requirements such as requiring 6 measures including one outcome measure or high priority would apply to Virtual Group. All Cause Hospital Readmission Measure would be included if the Virtual Group has more than 15 clinicians and meets the case volume of 200 cases.

Data completeness requirements for Virtual Groups would apply cumulatively across all TINs in a Virtual Group. If the Virtual Group has one TIN that falls below the 60 percent data completeness threshold for measure, they may still report on that measure as long as the Virtual Group cumulatively exceeds such threshold. Virtual Groups submitting quality measures data using the CMS Web Interface or a CMS approved survey vendor to report the CAHPS for MIPS survey must meet the data submission requirements on the sample of the Medicare Part B patients CMS provides.

ACI data for Virtual Groups will be aggregated by combining data from Certified EHR Technology from all participants. If the groups (not including solo practitioners) that are part of a Virtual Group have CEHRT that is capable of supporting group level reporting, the Virtual Group would submit the aggregated data across the TINs produced by the CEHRT. If a group (TIN) that is part of a Virtual Group does not have CEHRT that is capable of supporting group level reporting, such group would aggregate the data by adding together the numerators and denominators for each MIPS eligible clinician within the group for whom the group has data captured in CEHRT. If an individual MIPS eligible clinician meets the criteria to exclude a measure, their data can be excluded from the calculation of that particular measure only.

The Virtual Group MIPS Score will be calculated by combining the scores of all the performance categories using the score calculation rules applicable for MIPS groups. Each eligible clinician in a Virtual Group will receive this Virtual Group score that will be reflective of the combined performance of the Virtual Group.

Also, the Virtual Group MIPS Score would be applied to all TIN/NPIs billing under a TIN included in the Virtual Group during the performance period. The payment adjustments would be applied at the TIN/NPI level based on the Virtual Group Score. The clinicians who are a part of a Virtual Group, but are also Qualified Participants (QP status) in an Advanced APM, will have their performance counted as a part of the Virtual Group, but will not receive payment adjustment based on the Virtual Group MIPS score. These clinicians’ payment adjustment will be covered under the Advanced APM entity. 

Part B drugs

In the final rule, CMS determined that Eligible Clinician’s MIPS score would impact not only their professional services reimbursement but also billed Medicare Part B drugs. These are often very expensive drugs and include those used in the treatment of such diseases as cancer and renal failure. Injected and infused drugs are included as well as those related to transplantation, osteoporosis, and numerous other conditions. The Proposed Rule indicated these Part B drug costs in most circumstances would be included in the MIPS reimbursement and eligibility calculations.

According to the CMS:

“MACRA legislation now requires that MIPS payment adjustments be made to payments for both items and services under Medicare Part B, including Part B drugs. For each MIPS payment year, the MIPS payment adjustment factor, and, if applicable, the additional MIPS payment adjustment factor for exceptional performance are applied to Medicare Part B payments for items and services furnished by MIPS eligible clinicians during the year. These adjustments apply to all of the Medicare Part B items and services furnished by, and billed under, the combined Taxpayer Identification Number (TIN)/National Provider Identifier (NPI) of a MIPS eligible clinician and not only to services paid under the Medicare PFS.”

Complex patients

There has been a lot of discussion since the Quality Payment Program was unveiled regarding how complex patients could drag down quality metric reporting as physicians struggle for adherence and/or care improvement. In 2018, CMS will award five bonus points in the MIPS program for treatment of such patients. This is seen as a move to appease critics who urged CMS not to water down standards and maintain their uniformity, while acknowledging adherence struggles for some patient

QPP’s unintended consequences

Politico recently reported that physicians are avoiding some of the nation's sickest patients out of concern that deaths or other poor outcomes following treatment could cause Medicare or insurers to cut their payments or shame them with poor marks on their health care quality measures.

"It breaks my heart because it's undermining engagement of physicians with their patients," said David Barbe, president of the American Medical Association said to Politico, who added he often hears a colleague say he or she is avoiding a complex patient because it will "kill my scores."

In fact, a recent study found that physicians who served higher-risk patients under the Value-Based Payment Modifier (the precursor to QPP) ultimately had lower quality scores, giving them more penalities and fewer bonuses.

"If people see that pattern happening, they will have a lot of incentive to stop caring for sick patients," said Karen Joynt, the study's author and physician at the Washington University School of Medicine.

Reactions to final rule

Becker’s Hospital Review rounded up quotes from across the health care industry. Two in particular that stood out:

Tim Gronniger, former CMS deputy chief of staff and senior vice president of strategy and development at Caravan Health, a consultant, presented a mixed reaction. "The final rule for 2018 makes clear that for the vast majority of clinicians MACRA is here to stay, so it's time to start planning for how to succeed rather than hoping CMS makes it all go away," Mr. Gronniger said. "While we would have preferred CMS not increase the low-volume threshold, clinicians who see any significant number of Medicare patients are still in the program, and clinicians who are excluded will see their compensation frozen for the coming five years."

Tom Nickels, executive vice president of government relations and public policy at the American Hospital Association, felt the final rule "continues a flexible approach to the MACRA's physician quality payment program urged by hospitals, health systems, and the more than 500,000 employed and contracted physicians with whom they partner to deliver care."

"While we believe it could be adopted in 2018, we understand CMS' decision to eventually adopt a facility-based clinician measurement option that will allow many hospitals and clinicians to spend less time collecting data, and more time collaborating to improve care," Mr. Nickels said. "While we applaud CMS for providing much-needed relief from unrealistic and unfunded mandates for EHR capabilities for clinicians, we are disappointed the agency has yet to provide similar relief for hospitals. We also urge CMS to provide additional avenues for clinicians to earn incentives for partnering with hospitals to provide better quality, more efficient care through advanced alternative payment models.”

November 06, 2017

CMS Releases Final Rule for Second Year of QPP - Includes PI-QI CME Improvement Activity


Last week, the Centers for Medicare & Medicaid Services (CMS) released a final rule that makes changes in the second year of the Quality Payment Program (QPP) under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), including the Merit-based Incentive Program (MIPS) and Advanced Payment Models (APMs). The second year of the QPP continues to build on transitional year 1 policies, noting that a “second year to ramp-up the program will continue to help build upon the iterative learning and development of year 1 in preparation for a robust program in year 3.”

In addition to the final rule, CMS also published an interim final rule with comment period to immediately apply an extreme and uncontrollable circumstances policy for providers that were impacted by natural disasters in the 2017 performance period.

Some of the important pieces of the interim final rule include the following:

Extreme and Uncontrollable Circumstance Policy

To account for Hurricanes Harvey, Irma, and Maria, as well as other disasters that have occurred during the 2017 MIPS performance period, CMS is establishing in an interim final rule with comment period an automatic extreme and uncontrollable circumstance policy for the quality, improvement activities, and advancing care information performance categories for the 2017 MIPS performance period.

CMS will apply the extreme and uncontrollable circumstance policies for the MIPS performance categories to individual MIPS eligible clinicians for the 2017 MIPS performance period without requiring a MIPS eligible clinician to submit an application when it determines a triggering natural disaster/event has occurred and the clinician is in an affected area.

Facility-Based Measurement

In the proposed rule, CMS outlined a proposal to implement facility-based measurement for clinicians whose primary professional responsibilities are in a healthcare facility, to assess performance in the quality and cost performance categories of MIPS based on the performance of that facility in another value-based purchasing program.

In the final rule, the agency opts to adopt this proposal in 2019 (year three of the QPP) rather than 2018 as proposed, and says it will use 2018 “to ensure that clinicians better understand the opportunity and ensure operational readiness to offer facility-based measurement.”

Complex Patient Bonus

CMS also finalizes its proposal to apply a complex patient bonus to MIPS eligible clinicians who care for complex patients while it continues to examine issues surrounding socioeconomic status adjustment. Rather than a bonus of three points as was proposed, the agency will cap the bonus at five points “in part to align with the small practice bonus.”

CMS says the bonus will be based on both average HCC risk scores and a ratio of dual eligible beneficiaries, and the final score will be compared against the MIPS performance threshold of 15 points for the 2020 MIPS payment year. “A 15-point final score equal to the performance threshold can be achieved via multiple pathways and continues the gradual transition into MIPS,” the agency writes.


CMS finalizes policies for the second year of MIPS, which include the 2018 performance period and 2020 MIPS payment year. The MIPS final score would be composed of: Quality (50 percent), Cost (10 percent), Improvement Activities (15 percent), and Advancing Care Information (25 percent). CMS also finalizes a 12-month calendar year performance period for Cost and Quality (Jan. 1, 2018 through Dec. 31, 2018), and a 90-day minimum performance period for Improvement Activities, Advancing Care Information, and Cost.

Quality Performance Category; Cost Performance Category

Deviating from the proposal that the Quality Performance category remains at 60 percent weighting of the final score, CMS finalizes a 50 percent weighting for the payment year 2020.

CMS also finalized weighting of the Cost category at 10 percent (up from a proposed zero percent).

The statutory 30 percent weight for the Cost category would apply for the 2021 payment year.

For the Cost category, CMS will continue to use the total per capita costs for all attributed beneficiaries measure and the Medicare Spending per Beneficiary (MSPB) measure during the 2018 MIPS performance period and plans to offer performance feedback on episodes. However, the agency will not use the 10 episode-based measures adopted for the 2017 MIPS performance period and will be developing new episode-based measures with stakeholder input and soliciting feedback on some of these measures fall 2018. CMS says it expects to propose new measures in future rulemakings. (p. 29).

Quality Measures Additions and Changes

As proposed, CMS adds nine new quality measures to MIPS for the 2018 performance period, including:

  • Average Change in Back Pain following Lumbar Discectomy/Laminotomy;
  • Average Change in Back Pain following Lumbar Fusion;
  • Average Change in Leg Pain following Lumbar Discectomy/Laminotomy;
  • Bone Density Evaluation for Patients with Prostate Cancer and Receiving Androgen Deprivation Therapy;
  • Prevention of Post-Operative Vomiting (POV) - Combination Therapy (Pediatrics);
  • Otitis Media with Effusion (OME): Systemic Antimicrobials-Avoidance of Inappropriate Use;
  • Uterine Artery Embolization Technique: Documentation of Angiographic Endpoints and Interrogation of Ovarian Arteries;
  • Well-Child Visits in the Third, Fourth, Fifth, and Sixth Years of Life; and
  • Developmental Screening in the First Three Years of Life.

Improvement Activities

CMS finalized that the weight of the Improvement Activities category remains at 15 percent of the final score. CMS also formalized an annual “call for activities process” for Quality Payment Program Year 3 and future years.

CMS also finalized the improvement activity for QI-PI continuing medical education program that addresses performance or quality improvement as a medium weight activity if it meets the following criteria: 

  • The activity must address a quality or safety gap that is supported by a needs assessment or problem analysis, or must support the completion of such a needs assessment as part of the activity; 
  • The activity must have specific, measurable aim(s) for improvement; 
  • The activity must include interventions intended to result in improvement;
  • The activity must include data collection and analysis of performance data to assess the impact of the interventions; and 
  • The accredited program must define meaningful clinician participation in their activity, describe the mechanism for identifying clinicians who meet the requirements and provide participant completion information. 

For 2018, CMS finalizes its proposal that at least 50 percent of the practice sites within a TIN must be recognized as a certified or recognized patient-centered medical home or comparable specialty practice to receive full credit in the improvement activities performance category. CMS will continue to seek new improvement activities as the program evolves.  

Advance Payment Models (APMs)

CMS included several proposals within the final rule and interim final rule relating to APMs. Some of them are below.

Nominal Risk Standard

An eight percent revenue-based nominal amount standard was finalized for an additional two years through PY 2020. To qualify as an Advanced APM, participating entities 1) be a Medical Home Model expanded under section 1115A(c) of MACRA; or 2) must bear risk for monetary losses of a more than “nominal” amount, which was determined to be at least eight percent of their Medicare Parts A and B revenue. The agency also finalized changes to the nominal amount standard for Medical Home Models so that the minimum required amount of total risk increases more slowly; beginning at 2.5 percent of the Parts A and B revenue in PY 2018, increasing incrementally to five percent for PY 2021 and later.

Qualifying APM Participant (QP) and Medicare QP Performance Period

A qualifying participant (QP) is an eligible clinician who has met a threshold for a certain percentage of their patients or payments through an Advanced APM. QPs who have met the threshold are excluded from MIPS for the year and receive a five percent APM Incentive Payment for each year they are QPs from 2019 through 2024.

CMS will calculate QP Threshold Scores for Advanced APMs that are actively tested continuously for a minimum of 60 days during the Medicare QP Performance Period (Jan. 1-Aug. 31). For Advanced APMs that start or end during the Medicare QP Performance Period, the threshold score will be calculated using only the dates that APM entities were able to participate in the Advanced APM per the terms of the Advanced APM, as long as they were able to participate for at least 60 continuous days during the QP performance period.

Eligible clinicians who participate in Advanced APMs but do not meet the QP or Partial QP thresholds are subject to MIPS reporting requirements and payment adjustments. CMS estimates that approximately 185,000 to 250,000 eligible clinicians may become QPs for the payment year 2020 based on Advanced APM participation in the performance year 2018.


Small Practice Considerations

CMS gave special consideration though too small practices in drafting this final rule and interim final rule. Some of the policies specifically aimed at smaller practices include the following.

Increased Low Volume Threshold

CMS increased the threshold to exclude individual MIPS eligible clinicians or groups with less than $90,000 in Part B allowed charges or less than 200 Part B beneficiaries. CMS also finalized a proposal that during the 30-day preview period, these eligible clinicians and groups will have the option to opt out of having their data publicly reported on Physician Compare.

Bonus Points  

If the eligible clinician or group submits data on at least one performance category in an applicable performance period, CMS will add five points to the final score of any eligible clinician or group who’s in a small practice.

Virtual Groups

A Virtual Group is defined as solo practitioners and groups of 10 or fewer eligible clinicians, otherwise eligible to participate in MIPS, who come together “virtually” with at least 1 other such solo practitioner or group to participate in MIPS for a performance period of a year. CMS notes that if a group of clinicians chooses to join or form a Virtual Group, all eligible clinicians under the TIN would have their performance assessed as part of the Virtual Group. The Virtual Group election process for 2018 is currently running through December 31, 2017.

Regulatory Impact Analysis

CMS estimates that 622,000 eligible clinicians will be subject to MIPS reporting requirements and payment adjustments for the 2020 payment year. About 540,000 others will be excluded for not meeting the low-volume threshold.

CMS anticipates an equal distribution of $118 million in positive and $118 million in negative adjustments to providers, as well as up to $500 million additionally available under the statute for “exceptional performance.” CMS notes that starting with “modest” payment adjustments will help the QPP start off on the right foot even if it minimizes the degree of initial incentives.

Effective Date

The provisions of this final rule with comment period and interim final rule with comment period are effective on January 1, 2018. Comments must be received no later than January 2, 2018.

August 11, 2017

MACRA Categories and Codes in CMS Proposed Fee Schedule


In the 2018 proposed Medicare Fee Schedule rule, CMS reviews MACRA patient relationship categories and codes, their development and timelines, and provides details for the initial claims-based reporting of the relationship categories and codes to CMS.


Section 101(f) of MACRA added a new subsection (r) to section 1848 of the Act entitled Collaborating with the Physician, Practitioner, and Other Stakeholder Communities to Improve Resource Use Measurement. Section 1848(r)(2) requires the development of care episode and patient condition groups plus group classification codes. To satisfy the purpose of patient and/or episode attribution to one or more clinicians, it further requires:

  • The categories and codes must define and distinguish an applicable practitioner’s relationship to and responsibility for each patient when an item or service is furnished to the patient by that practitioner.
  • The categories shall include different potential practitioner-patient relationship types.
  • The categories shall reflect various potential responsibility types.
  • The categories shall capture the frequency with which the practitioner delivers care to the

Patient Relationship Categories

CMS posted and solicited public comment upon a draft relationship categories list and the list’s foundational principles in April 2016. Potential category modifications were developed based upon comments received. In December 2016, CMS sought comments about such modifications and about operational approaches for reporting the categories on Medicare claims. After comment review, CMS posted the first operational list of patient relationship categories on May 17, 2017:

  • Continuous/Broad Services,
  • Continuous/Focused Services,
  • Episodic/Broad Services,
  • Episodic/Focused Services, and
  • Only as Ordered by Another Clinician.

Patient Relationship Reporting Using Modifiers

Section 1848(r)(4) of the Act specifies that claims for services furnished beginning January 1, 2018, shall include, as determined appropriate by the Secretary, the following:

  • Any applicable codes for care episode groups,
  • Any applicable codes for patient condition groups,
  • Any applicable codes for patient relationship categories, and
  • The NPI of the ordering physician or applicable practitioner.

CMS describes having planned to use procedure code modifiers for patient relationship code reporting via claims. In December 2016, commenters indicated a preference for CPT modifier codes rather than HCPCS Level II modifiers. CMS submitted a CPT code application that was rejected in June 2017, as the CPT Editorial Panel preferred to wait until the proposed modifiers were finalized before issuing Category I CPT codes. CMS is therefore proposing HCPCS modifiers as shown in Table 26 reproduced from the proposed rule:

Proposed Patient Relations HCPCS Modifiers and Categories


Proposed HCPCS Modifier

Patient Relationship Categories



Continuous/Broad Services



Continuous/Focused Services



Episodic/Broad Services



Episodic/Focused Services



Only as Ordered by Another Clinician

CMS proposes that claims for services furnished beginning January 1, 2018, shall include the appropriate modifier selected from Table 26 and the NPI of the ordering practitioner. CMS proposes that modifier reporting will be voluntary. Modifier use would not be a condition of payment, affect payment, change the meaning of a reported procedure code(s), or be tied to any reported E/M service(s) intensity. The duration of the voluntary HCPCS modifier reporting period is not specified by CMS. Finally, CMS notes that the relationship codes may be incorporated into future QPP measures. CMS seeks comment on the proposed modifier list, the plan to resubmit the modifiers for CPT code assignments, and the initial voluntary reporting of the proposed modifiers.


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