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MACRANOMICSFebruary 9, 2017

Overwhelming bipartisan support

On 3/26/15, the House passed H.R. 2 by 392-37 vote

On 4/14/15, the Senate passed the House bill by a vote of 92-8, and the President signed the bill.

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MEDICARE’S SUSTAINABLE GROWTH RATE (SGR)Replaces the 1997 SGR formula, which capped Medicare physician per beneficiary spending growth at GDP growth rate

MACRANOMICS > MEDICARE ACCESS & CHIP REAUTHORIZATION ACT

https://youtu.be/ylVF44lpbeU?list=PL3ZQ5CpNulQkFOkgVuzunWXpnhSR4A_lv

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OVERVIEWStarting 2019, physicians must choose from or land in one of two paths: MIPS or APMs

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)

Merit-Based Incentive Payment System Alternative Payment Models MIPS APMs

However, their decisions will need to be made sooner than 2019, as the initial performance period for MIPS is 2017!

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MACRA IS PART OF A BROADER PUSH TOWARDS QUALITY & VALUEFebruary 2015 Goals

Medicare Fee-For-Service:

Track 1: Value-based payments

Track 2: Alternative payment models

2016 2018

85% 90%of all medicare payments


of all medicare payments


Volume to VALUE

Focus Areas Description

Incentives

Promote value-based payment systems

- Test new alternative payment models

- Increase linkage of Medicaid, Medicare FFS, and other payments to value

Bring proven payment models to scale

Care Delivery

Encourage the integration and coordination of clinical care services

Improve population health

Promote patient engagement through shared decision making

InformationCreate transparency on cost and quality information

Bring electronic health information to the point of care for meaningful use

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MACRA IS PART OF A BROADER PUSH TOWARDS QUALITY & VALUEIn January 2015, the Department of Health and Human Services announced new goals for value-based payments and APMs in Medicare

March 2016 Announcement:

Medicare Fee-For-Service:

APM goal reached 10 months ahead of schedule! In March 2016:

receiving care through providers participating in ACOs, bundled payment

arrangements, advanced PCMHs & other APMs

70%

30%

out of a projected $380B of Medicare

payments tied to APMs

$117B 10MMEDICARE PATIENTS

Track 1: Value-based payments

Track 2: Alternative payment models

2016 2018





Volume to VALUE

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MACRANOMICS > MACRA TIMELINE

TIMELINE

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Fee schedule updates

0.5% 0.5% 0.5% 0 0 0 0 0 0 00.75

QAPMCF1

0.25 N-QAPMCF2

Consolidtation of PQRS3, Value Modifier and Meaningful Use Programs into one composite score

Qualifying APM participant

Physician Fee

1 Qualifying AMP conversion factor 2 Non-Qualifying APM conversion factor 3 Physician Quality Reporting System

+/- 9%+/- 4% +/- 5% +/- 7%

5% Incentive Payment

MIPS

Eligible AMPs

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MACRANOMICS > MIPS

MIPS CHANGES HOW MEDICARE LINKS PAYMENT TO PERFORMANCEThere are currently multiple individual Quality and Value Programs for Medicare physicians and practitioners:

PHYSICIAN QUALITY REPORTING PROGRAM

(PQRS)

VALUE-BASED PAYMENT MODIFIER

MEDICARE EHR INCENTIVE PROGRAM

(MEANINGFUL USE)

MACRA streamlines those programs into MIPS Merit-Based Incentive

Payment System

MIPS

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MACRANOMICS > MIPS

THE MACRA FINAL RULEFor the transitional year 2017, CMS established four paths providers may follow, each with the minimum performance threshold to avoid a

payment penalty reduced. The four paths are:

1. report under MIPS for 90 days;

2. report under MIPS for less than a year but more than 90 days and report more than one quality measure, more than one improvement activity, or more than the required measures in the advancing care information performance category;

3. report one measure in each MIPS category (besides resource use which is automatically reported) for the entire year; or

4. participate in an Advanced APM.

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HOW WILL PHYSICIANS AND CLINICIANS BE SCORED UNDER MIPS?

+ + + =

+ + + =

MEANINGFUL USE (25 PTS)

QUALITY PQRS (50 PTS)

RESOURCE USE - VBM (10 PTS)

CLINICAL PRACTICE

IMPROVEMENT (15 PTS)

100 PTS




CLINICAL PRACTICE


100 PTS




CLINICAL PRACTICE


100 PTS+ + + =

2017 REPORTING

2018 REPORTING

2019 REPORTING+

A single MIPS Composite Performance Score will factor in performance in 4 Weighted Performance Categories

MACRANOMICS > MIPS

NEW!

+ + + =MEANINGFUL USE (25 PTS)



CLINICAL PRACTICE


100 PTS2017 REPORTING

PROPOSED

FINAL

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THE MEASURES

ADVANCING CARE

INFORMATION

QUALITY PQRS

RESOURCE USE

CLINICAL PRACTICE

IMPROVEMENT

Assessment based on advancing care information measures/objectives

Information Security

Earn 50% for reporting and 50% for performance

Minimum of 6 Measures

At least one cross-cutting measure

At least one outcome measure (if avail)

2-3 claims based measures

Continuation of 2 Measures

Total cost per capita for all beneficiaries

Medicare Spending per Beneficiary

Episode-based Measures may be used in lieu of the two cost measures

No legislative mandate on number of CPIAs.

Medium & High weighting categories

Proposed: 3 high weighted or 6 medium weighted CPIAs

November 1, 2016 Final list of quality measures will be published in the Federal Register

July 1, 2017 CMS will provide performance feedback on quality and resource use performance categories

MACRANOMICS > MIPS

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RESOURCE USEMany providers desired to transition to Episode-Based Measures and away from the general total per capita measures used in VM.

In lieu of the two traditional VM measures, episode-based measures for a variety of conditions and procedures that are high cost, have high variability in resource use, or are high impact conditions:

• MASTECTOMY FOR BREAST CANCER • AMI W/O PCI/CABG • ABDOMINAL AORTIC ANEURYSM • THORACIC AORTIC ANEURYSM • AORTIC/MITRAL VALVE SURGERY • ATRIAL FIBIRILLATION/FLUTTER, ACUTE EXACERBATION • ATRIAL FIBIRILLATION/FLUTTER, CHRONIC • CABG • HEART FAILURE, ACUTE EXACERBATION • HEART FAILURE, CHRONIC • ISCHEMIC HEART DISEASE • PACEMAKER • PCI • ISCHEMIC STROKE • CAROTID ENDARTERECTOMY • CHOLECYSTITIS • C DIFF COLITIS • DIVERTICULITIS • PROSTATECTOMY

• NEPHRITIS AND UTI’S • OSTROPOSIS • PARKINSON DISEASE • RHEUMATOID ARTHRITIS • HIP/FEMUR FX - IP • HIP/KNEE REPLACEMENT • SPINAL FUSION • ASTHMA/COPD • PNEUMONIA - IP • PNEUMONIA - OP • PE, ACUTE • URI, SIMPLE

MACRANOMICS > MIPS

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NEW CLINICAL IMPROVEMENT ACTIVITIESClinical Improvement Activities will incorporate at least the following elements:

EXPANDED PRACTICE ACCESS

POPULATION MANAGEMENT

CARE COORDINATION

BENEFICIARY ENGAGEMENT

PATIENT SAFETY AND PRACTICE ASSESSMENT

PCMH

BOTTOM LINE

“Certified” PCMH and PCMH Specialty practices receive highest potential score and

APM participants earn 50% of possible score

If you are in primary care, becoming a PCMH is the answer! For subspecialists, becoming a PCMH neighbor / specialty practice will be a huge benefit!

MACRANOMICS > MIPS

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MEASURE REPORTING

PERFORMANCE CATEGORY GROUP PRACTICE REPORTING MECHANISMS

Quality Claims Qualified Registry EHR CMS Web Interface (Group with >25 providers) CMS-approved survey vendor for CAHPS for MIPS Administrative Claims (no submission required)

Resource Use Administrative Claims (no submission required)

Advancing Care Information Attestation QCDR Qualified Registry EHR CMS Web Interface (Group with >25 providers)

Clinical Performance Improvement Activity Attestation QCDR Qualified Registry EHR CMS Web Interface (Group with >25 providers) Administrative Claims (if technically feasible, no submission required)

Groups may only use one submission mechanism per category

Bonus points will be awarded in the quality scoring section to groups utilizing QCDR, qualified registry, web interface, or CEHRT

MACRANOMICS > MIPS

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HISTORICAL PERFORMANCE2016 Value Modifier Payment Adjustments (based on 2014 performance):

13,813 physician groups, as identified by their Medicare enrolled TIN, with 10 or more EP’s are subject to the value modifier.

128 GROUPS

8,208 GROUPS

59 GROUPS

5,418 GROUPS

(1%) WILL RECEIVE AN UPWARD ADJUSTMENT

OF EITHER 15.92% OR 31.84%

(59%) WILL RECEIVE A NEUTRAL, MEANING

NO ADJUSTMENT

(0.4%) WILL RECEIVE A DOWNWARD ADJUSTMENT

OF -1.0% OR -2.0%

(39%) WILL RECEIVE AN DOWNWARD ADJUSTMENT

AUTOMATICALLY OF -2.0%*

*Because they did not meet the minimum reporting requirements

MACRANOMICS > MIPS

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HOW MUCH CAN MIPS AFFECT PAYMENTS?Clinical improvement activities will incorporate at least the following elements:

Based on the MIPS composite performance score, physicians and practitioners will receive positive, negative, or neutral adjustments up to the percentages above.

MIPS adjustments are budget neutral. A scaling factor may be applied to upward adjustments to make total upward and downward adjustments equal.

Those who score in top 25% are eligible for an additional annual performance adjustment of up to 10%, 2019-24 (NOT budget neutral)

MACRANOMICS > MIPS

Maximum adjustments

4% 5% 7% 9%

-4% -5% -7% -9%

2019 2020 2021 2022+

Merit-Based Incentive Payment System (MIPS)

Adjustment to provider’s base rate of Medicare Part B payment

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MIPS CONSOLIDATION OF PQRS, MU, VBM



RESOURCE USE - VBM

(30 PTS)

NEW! CLINICAL PRACTICE


100 PTS+ + + =

Scoring

Performance Threshold

All providers scored

Mean or median determined = performance threshold

If MIPS score > threshold (mean or median), your medicare Part B fee schedule will be higher than what is published.

If MIPS score < threshold, you can expect a haircut on your entire Part B.

If MIPS score < 25% of threshold, the maximum penalty is applied.

If MIPS score is between 25-99% of threshold, you will face a linear declining penalty.

MACRANOMICS > MIPS

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FFS PENALTY RISKS, BONUSES, UPDATES COMPARED

REPEALED LAW - SGR ENACTED LAW - MACRA

YEAR MAX P4P PENALTIES

MAX P4P BONUSES UPDATE SEQUESTER MAX P4P

PENALTIESMAX P4P

BONUSES UPDATE

2014 -2% 0.015 0.005 -2% No change No change 0.5%

2015 -4.5% +4.69 VBM 2015 bonus -0.21 -2% No change No change 0.5% (on 7-15)

2016 -6% VBM -2% No change No change 0.5%


2018 -10% or more VBM -2% No change No change 0.5%

2019 -11% or more VBM -2% -4% 4% (x3?) + 10* 0.5%

2020 -11% or more VBM -2% -5% 5% (x3?) + 10* 0%

2021 -11% or more VBM -2% -7% 7% (x3?) + 10* 0%

2022 -11% or more VBM -2% (thru 2023) -9% 9% (x3?) + 10* 0%

Top bonus could triple if many physicians get penalties and extra $ are available to increase bonuses. Exceptional Performers could earn another 10% funded with $500m a year in new money.

MACRANOMICS > MIPS

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FFS PENALTY RISKS, BONUSES, UPDATES COMPARED

REPEALED LAW - SGR ENACTED LAW - MACRA

YEAR MAX P4P PENALTIES

MAX P4P BONUSES UPDATE SEQUESTER MAX P4P

PENALTIESMAX P4P

BONUSES UPDATE

2014 -2% 0.015 0.005 -2% No change No change 0.5%

2015 -4.5% +4.69 VBM 2015 bonus -0.21 -2% No change No change 0.5% (on 7-15)



2018 -10% or more VBM -2% No change No change 0.5%

2019 -11% or more VBM -2% -4% 4% (x3?) + 10* 0.5%

2020 -11% or more VBM -2% -5% 5% (x3?) + 10* 0%

2021 -11% or more VBM -2% -7% 7% (x3?) + 10* 0%

2022 -11% or more VBM -2% (thru 2023) -9% 9% (x3?) + 10* 0%

Top bonus could triple if many physicians get penalties and extra $ are available to increase bonuses. Exceptional Performers could earn another 10% funded with $500m a year in new money.

BUDGET NEUTRAL

SCALING FACTOR POTENTIAL: 36% HIGHER FEE SCHEDULE PAY FOR A PERFECT MIPS

SCORE IN 2022

MACRANOMICS > MIPS

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MACRANOMICS > APMs

APMsQualified and Non-Qualified Providers in The Context of MACRA

Providers determined to be Qualified Providers “QPs” will qualify for incentive payments.

5% lump sum payment based on the estimated aggregate payment amounts for Part B covered professional services for the preceding year.

EPs determined not to qualify (non QPs) are subject to the MIPS fee schedule

% of payments or patients through an eligible alternative payment entity that EPs must have to qualify each year

0%

25%

50%

75%

100%

2019 2020 2021 2022 2023+

Providers Must Meet Certain Thresholds to be QPs

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APMsWhat Qualifies as an APM?

MACRA stipulates that the specified percent (which differs depending on the year) of an EP’s payments during the most recent period must be attributable to services furnished through an “eligible alternative payment entity” (EAPM Entity)

A CMMI model under section 1115A (other than a Health Care Innovation Award); CPC+, Next Gen

Medicare Shared Savings Program (MSSP) - Track II (minimum)

A demonstration under the Health Care Quality Demonstration Program

A demonstration required by Federal law

An EAPM entity is an entity that:

Participates in an APM and requires participants to use certified EHR technology and provides for payment for covered professional services based on quality measures comparable to the MIPS quality measures established

Either bears financial risk for monetary losses under the APM that are in excess of a nominal amount or is an expanded medical home.

MACRANOMICS > APMs

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APMsWhat Qualifies as an APM?

Major APM Categories 2014 2015 2016 2017 2018

Accountable Care Organizations

Bundled Payments

Medicare Shared Savings Program ACO*

Pioneer ACO*

Comprehensive ESRD Care Model (Capitated payment)

Next Generation ACO (Movement to global payment)

Bundled Payment for Care Improvement*

Comprehensive Care for Joint Replacement

Oncology Care (PMPM care management payment)

Advanced Primary Care

Comprehensive Primary Care*

Multi-payer Advanced Primary Care Practice*

Other Models

Maryland All-Payer Hospital Payments*

ESRD Prospective Payment System*

(Possible expansion)

CPC+ (PMPM care mgmt pymt insurer alignment)

CMS will continue to test new models and will identify opportunities to expand existing modelsModel completion or expansion

MACRANOMICS > APMs

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APMsTo Qualify for 5% Bonus Within The APM Track?

Nominal amount of risk for monetary losses:

Marginal Risk 30%

4% minimum loss rate

4% total risk rate

At least 50% of participants use CEHRT in Year 1 and 75% in Year 2

Base Payment based on quality measures with at least 1 outcome measure

Be a medical home comparable to 115A of ACA Medical Home

MA Plans putting clinicians at risk qualify in 2021

25%

50%

75%

2019-20

2021-22

2023 +

Medicare only

Medicare* and all-payer

Medicare* and all-payer

Total payments exclude payments made by the Secretaries of Defense/Veterans Affairs and Medicaid payments in states without medical home programs or Medicaid APMs.

Total payments exclude payments made by the Secretaries of Defense / Veterans Affairs and Medicaid payments in states without medical home programs or Medicaid APMs.

MACRANOMICS > APMs

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DEFINING NORMAL RISKAn entity must bear “more than nominal risk” to qualify as an APM

An entity must bear “more than nominal risk” to qualify an as APM.

1.  Marginal risk >= 30%: the percentage of the amount by which actual expenditures exceed expected expenditures for which an APM Entity would be liable under the APM. (how cost overruns split)

2.  Minimum Loss Rate <4% of expected expenditures: MLR is a percentage by which actual expenditures may exceed expected expenditures without triggering financial risk. (what is a forgivable overrun)

3.  Total Potential Risk >4% of expected expenditures: TPR refers to the maximum potential payment for which an APM Entity could be liable under the APM. (stop loss)

Example APM: MR=30%, MLR=3%, TPR=5%

An APM has expected expenditures of $1,000,000

If actual expenditures had been $1,100,000. $100,000 excess

-$100,000 exceeds the minimum loss rate of 3% or $30,000. Cost sharing is on the remaining $70,000

-$70,000 x 30% MR = $21,000 cost share /penalty.

-$21,000 is 2.1% of the $1,000,000 expected expenditures and below the $40,000 TPR in this arrangement If actual expenditures had been $1,200,000. $200,000 excess

-Cost share in excess of MLR = $170,000

-$170,000 x 30% MR = $51,000 exceeds the 4% TPR

-Actual losses to the APM are capped at $40,000

1. MARGINAL RISK >= 30%:The percentage of the amount by which actual expenditures exceed expected expenditures for which an AMP entity would be liable under the APM (how

cost overruns split).

2. MINIMUM LOSS RATE < 4% OF EXPECTED EXPENDITURES:MLR is a percentage by which actual expenditures may exceed expected expenditures without triggering financial risk (what is a forgivable return).

3. TOTAL POTENTIAL RISK > 4% OF EXPECTED EXPENDITURES:TPR refers to the maximum potential payment for which an APM Entity could be liable under the APM (stop loss).

Example:

MACRANOMICS > APMs

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MACRANOMICS > MIPS or APMs

POTENTIAL IMPACTAnalysis of Potential Impact Favors Participation in Alternative Payment Models:

-20,000,000

-15,000,000

-10,000,000

-5,000,000

0

5,000,000

10,000,000

15,000,000

2019 2020 2021 2022+

Penalty

Likely hospital volume reduction

Incentive

-20,000,000

-15,000,000

-10,000,000

-5,000,000

0

5,000,000

10,000,000

15,000,000

2019 2020 2021 2022+

Bonus Shared Savings

Potential downside risk & volume reduction

Alternative Payment Model (e.g., ACO)

Merit-Based Incentive Payment System

MIPS

APMs

MACRA Financial Impact Example:

5 hospital system Employs 250 physicians

$1.5M revenue per physician 40% Medicare

-18,000,000

-13,500,000

-9,000,000

-4,500,000

0

4,500,000

9,000,000

13,500,000

18,000,000

2015 2016 2017 2018

Penalty

Incentive

Current Program Impact (MU, PQRS, VM)

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?WHAT SHOULD WE DO?

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MACRANOMICS > THE REALITIES

REALITY NO. 1The Playing Field is Uneven

REALITY NO. 2

REALITY NO. 3

You Have Less Time Than You Think

APM is The Goal. Can We Get There By 2018? 2019? 2020?

2019 Forecast:

Performance bonuses up to 4% to about 412,000 providers

Penalties of up to 4% to about 346,000 providers, mostly in practices that have between one and 24 providers

The finalized version of the proposal has been released, giving physicians/IDNs an option to report for 90 days without taking a hit in 2019. If we chose not to participate in 2

EMPLOYED PHYSICIANS AS LOSS LEADERS

MACRANOMICS > THE REALITIES

Net Loss Per FTE Physician MetricsAnalysis of net loss per FTE physician metrics for hospital/IDS owned physician practices, as reported by 2015 MGMA cost survey reveals:

Pediatrics Dermatology Family Med

Internal Med ENT

Endocrinology Anesthesiology

Infec;ous Disease Pulmonary Medicine

Neurology Gastroenterology

Psychiatry Urology OB/GYN

Surgery: General Orthopedic Surgery Surgery: Vascular

Cardiology Surgery: Oncology Surgery: Trauma

Hematology/Oncology Surgery: Neurological

Surgery: Cardiovascular Surgery: Pediatric

-‐$800,000 -‐$600,000 -‐$400,000 -‐$200,000 $0 $200,000

-$782,263-$749,212-$609,131-$512,208-$497,990-$421,303-$388,260-$369,128-$333,665-$276,750-$252,635-$244,799-$237,860-$219,878-$216,504-$199,243-$196,492-$192,155-$166,310-$136,812-$136,518-$110,529

-$2,747$207

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Net income, excluding financial support

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VALUE vs VOLUME: TUG OF WAR

MACRANOMICS > STRATEGY

“We’re a schizophrenic organization…On Monday, Tom (Priselac) called me to tell me what a great job we’ve been doing in managing the full risk business…on Tuesday, the COO calls me to tell me that we need to meet urgently, because the OR volumes for the managed care lives are way down!”

-Tom Gordon, CEO, Cedars Sinai Medical Group

HOSPITAL / FINANCIAL STRATEGY

POPULATION HEALTH

Provide episodic care Production (volume-based) Caring for the sick PCP’S: Low revenue generating unit Specialists: Indispensable commodity

Enterprise Care Management Performance (value-based) Keeping people well PCP’S: Indispensable commodity Specialists: Support population needs

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NEW SOURCES OF COMPETITIONNew competitors may enter your market

MACRANOMICS > STRATEGY

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ACCOUNTABLE CARE

MACRANOMICS > IT ALL BOILS DOWN TO CARE MANAGEMENT

How savings are generated

Care Management

Lower Cost Site

Throughput (volume)

50%

15-20%

15-20%

15-20%Standardization

Integrated delivery network

Population Management

Well Care

Chronic Disease Management

Effective Use of Appropriate Clinicians

Medical Home

Bundled Payment

Post-Acute

Outpatient

ER Use

Extended Hours

Higher Occupancy

Narrower Network

Generic Use

GPO

Standardization

Appropriate Economic Indicators

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MACRANOMICS > DISCUSSION

KEY QUESTIONS

Who are you EPs and how are they structured?

How much of your revenue is at risk under MIPS?

Do you feel confident in your ability to be in the incentive range of MIPS?

Does your organization view MACRA as a physician alignment opportunity?

Do you know which APM strategies are available and will cover your employed physicians and what percent this would represent of your total Part B professional revenue?

How big is your network and is it the right composition (e.g. primary care v/s specialists)?

What is your organization’s APM strategy?

How much risk would you need to take on in an APM?

What risk is there that someone else will become an APM first and shift market share?

Will your state Medicaid efforts count as APMs?

Will private payers provide contracts that align?

Does your primary care physician base have the care management expertise to be successful in APMs? Will MIPS get them there?

Are you prepared for the potential IP volume reductions that can come on the heels of MACRA in the next five years?

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