October 5, 2017

MACRA – MIPS and APMS: Democratic Groups Can Prosper in the New System

Some believe that fee-for-service medicine is not likely to survive this latest round of complex payment schemes and that independent emergency physician groups will soon be on the endangered list. The changes appear to some to be so daunting as to overwhelm the average emergency physician group that is looking to meet its commitments to its patients, hospital and providers.

The Medicare and CHIP Reauthorization Act of 2015 (MACRA) was a landmark piece of legislation that put into law various cost-containment schemes that have been swirling around CMS for years. It ended the dreaded SGR policy of pushing down the road each year draconian pay reductions, replacing it with the “volume-to-value” mantra chanted throughout the new legislation. It also adds a great deal to the reimbursement lexicon of acronyms. The two that will affect emergency physician reimbursement the most in coming years are MIPS and APMs.

Pay for Production Moves toward Income for Outcomes

CMS is phasing in the full implementation of MACRA/MIPS through 2020 but penalties and incentives will be applied from 2017 reporting. Groups who delay reporting until late 2017 will not likely win additional incentives this year but penalties are easily avoided. Even with the delay, changes are coming, so let’s first look at what the changes mean.

We now know that fee schedule updates in 2016-2019 will increase at a base rate of 0.5% overall in each year, with some other small adjustments made each year based on RVU expansion and contraction. No updates are planned after 2019 as value based payment methodologies will be in effect. As you can see, fee-for-service isn’t going away; it’s being updated through 2021 (payment changes lag 2 years behind performance reporting).

Unless further delays are planned by CMS, bigger changes take place January 1, 2020.

MIPS is replacing the PQRS system. In the first and second years of MIPS, 2017 and 2018, most of the new MIPS-defined measures are the same as 2016 PQRS measures. For the next 3-5 years, claims-based reporting still exists and your billing company can meet those requirements, so you can avoid the costly and complicated Clinical Data Registry reporting option for at least the next three years, through 2019.

The Merit-Based Incentive Payment System (MIPS) rates clinicians each year on a 100-point performance scale, where providers compete with each other over positive or negative adjustments to their payments with the aggregate effect of Medicare budget neutrality. The Alternative Payment Models (APMs) include other measurement schemes that set requirements for the use of certified EHR technology, quality measurement, and financial risk. A practice that participates in a qualified APM is exempt from MIPS, while some participants in Advanced APMS have the option to participate in MIPS, as well.

The MIPS measures

The MIPS and APM programs are two paths to the same destination – cost reduction with a nod toward quality improvement. The paths cross occasionally but are essentially different incentive plans for changes in certain practice performance measures.

When physicians read “Merit-Based”, the conditioned response sometimes is – they are taking away payments. That is both true and false in many regards but, for the near future emergency practices can win some additional reimbursement. MIPS is, in the aggregate, a zero-sum game, some will win what others will lose. It will not be as easy for other specialties to win as it will be for emergency medicine.

Under MIPS most providers will score points on quality, resource use, practice improvement activities and, EHR use. In 2017, emergency medicine will only be scored on quality and improvement activities with payments adjusted according to your score compared to everyone else’s scores.

To be clear, your payment percentage up or down changes based on scoring but the fee-for-service basis remains. You perform services and you get paid for those services. How much you are paid has been determined by RVU production multiplied by the Conversion Factor. This calculation remains, but now your actual payments are adjusted up or down under the new scoring system.

APM involvement appears to threaten independent practice. Many believe, incorrectly, that physicians cannot participate in APMs unless they are employed by the entity. There is no current APM structure that involves emergency medicine but when they are developed, independent practices can contract with the APM for proper cost control. If negotiated properly, emergency physicians can preserve or even expand income under future APMs.

Venture capital is pouring millions into buying emergency physician groups, just as it did in the 1990s, because investors understand that money always flows out of the cracks in complex schemes, if you can find the seams. Independent practices do not have to sell just because payment mechanisms are changing. 

They will simply need administrative support to recognize the seams and engage profitably with the new entities and players in the ACO/APM marketplace. 

The Path to Profitability under MACRA

Start with where you are – like politics, all reimbursement is essentially local. If you’re billing independently, be certain your billing operations are helping you meet the MIPS scoring measures so that you avoid the penalties. CMS estimates that 54.1% of all providers will be winners and 45.5% will be losers, only 0.4% will break even. With a small amount of planning and performance improvement, your practice can hold its own and even win small increases over the average practice.

If you have done MIPS reporting successfully, you will not need to participate in an APM. There are no effective APMs for emergency medicine presently, and the few in the works will not likely be available to emergency physicians until 2019 or after. Where PQRS was like 8th grad math, APMs are more like college calculus. You might need guidance and administrative support to assist you in choosing this path.

Success Is Not Easy but It Can Be Assured

The rules and definitions of “performance” under these programs are complicated. So, the program plays into suspicions that the system is intended to work against a physician group. On first read, it might seem that way but be careful not to over-react. That’s not the clear intent or even the expected result for emergency medicine. 

Whenever CMS changes the rules of the game, the new rules are strange and complicated, until we learn them. When managed care hit emergency medicine in the early 90s, groups sold out to hospitals or larger groups or were taken over by PSOs (Physician Service Organizations) to contract with the new health plans and despair set in. The independent practice of emergency medicine appeared destined to be lost as patients would be kept out of EDs by managed care plans and capitation. That pay scheme shut out emergency medicine. 

When the 1995 Documentation Guidelines for Evaluation and Management Services were put in place by Medicare in the late 90’s the reaction from the provider community was mixed with outrage, suspicion and reasonable fear that the system was too complicated to be mastered. It was all considered to be just another way for Medicare to take away money.

And yet, look how physicians responded. In the 20+ years since the 1995 DGs went into place, emergency medicine’s reporting of 99285 services has increased from around 25% of all Medicare patients to 57% of all these patients. 

All of these changes did affect the practice of emergency medicine significantly, and not all for the better, but we learned how to accommodate and even to thrive as the true value of emergency physicians became clearer – we were really good at keeping patients out of the hospital, doing great workups far beyond what the primary care providers had the resources to do and we were flexible enough to accommodate documentation hoop-jumping. 

How the Payment Flows

CMS must still clarify a few things about measure applicability. At this writing, almost four months into the program, there is no universal agreement on which quality measures are truly “applicable” for claims-based reporting. However, here is what most billing consultants agree are pertinent facts about the MIPS reporting system.

  • Providers can report through claims or through a Clinical Data Registry (CDR), or both, with the highest score of either mechanism being assigned as the Provider’s “Final Score”. Measure reporting requirements differ depending on the reporting mechanism.
  • Providers must report as many measures as are “applicable” to the provider, up to 6, whether by claims or by CDR. Medicare continues to give unclear guidance on how scoring will be done when less than 6 measures are applicable.
  • Each applicable measure will be scored on a 10-point scale with final points assigned based on the provider’s performance rate as compared to the deciles established as benchmarks from previous years of reporting of that measure. 
  • Providers who fail to report on an applicable measure will receive the lowest possible score for that measure on the 10-point scale. This year the lowest possible score is 3 points. In future years the lowest will be zero points. 

From the MIPS Final Rule, it appears that measure applicability is based on a 2-part rule. A measure is applicable and therefore must be scored for a provider when: 1) A particular measure’s target denominator and/or diagnosis code set is found on the Provider’s claim; 2) A minimum reporting threshold of 20 such claims for the entire Tax ID/entity are filed within the reporting period (Jan-Dec 2017). 

For example, if a closed head injury diagnosis code appears on a Medicare claim form, the denominator applicability test is met for measure #415 CT for CHI. Then, if more than 20 of such claims are filed for a group during the performance year, that measure meets the minimum threshold applicability test. Measure #415 is therefore deemed “applicable” to that provider group and performance will be scored for that measure. 

There is a possible third criterion, the specialty measure set. A measure might only be applicable to an emergency provider if it appears in the Emergency Medicine Specialty set, a subset of MIPS measures selected by CMS as likely to apply to our specialty. Designation in the Specialty Set was done by CMS without consultation with emergency physicians, and many of the measures do not even meet the denominator or volume threshold essential criteria for any MIPS measure. The Final Rule is unclear on this as an applicability test and CMS has been to-date, unwilling to give clear guidance to the many emergency medicine billers and consultants on this question.  

Scoring Example

Assume that you billed 4,000 Medicare fee-for-service patients between January 1 and December 31, 2017 with ED visit level codes. They are all eligible for measure #317 because ED E&M codes are in the denominator for this measure. Assume that, for various reasons, your biller did not report a measure code on 250 of these. Your resulting “data completeness” rate for this measure is 94%, being the total patients reported with any measure #317 quality code, divided by the total possible number of patients that could be reported - all 4,000 of your patients where a 99281-99285 code was billed. You have therefore met the “data completeness” threshold of 50% of the eligible patients and will now be scored for performance.

Of the 3,750 patients where a measure code was reported, 250 of them were reported as “measure not met” because the biller could not determine that a blood pressure had been done. Or, a pressure above the target was documented but there was no mention of the need for follow-up in those charts. This leaves 3,500 patients where you did report that the measure was met or that the patient was excluded, such as when the presentation was for urgent or emergent evaluation. Most of your patients would meet that exclusion. Dividing the numerator (3,500) by the denominator (4,000) yields a performance rate of 87.5%.

Finally, to determine your measure #317 Final Score, we compare your performance rate with the historical benchmark decile table, shown to the right, as provided by CMS. This shows the 10 decile ranks and the low and high performance rates within each decile. The data is taken from historical measure reporting during the 2015 PQRS reporting period.

We can determine that your performance rate of 87.5% falls within Decile 7 and you are awarded a base value of 7 points. We then add intra-decile points based on the performance rate threshold between the lowest limit, in this case 78.64% and the upper limit of 92.67%. Your rate of 87.5% is 63% of the way to the next decile, so you are awarded 0.63 intra-decile points for a total score of 7.63.

Two other common emergency medicine measures, #415 CT for Closed Head Injury and #419 Imaging Avoidance for Headache, were newly created in 2016 so there are no historical performance benchmarks for them. We, therefore, cannot predict how your performance in 2017 will be scored exactly if you report them. Deciles will be determined by Medicare in early 2018 and you will be scored for these measures against the 2016 decile rankings.

There are other claims-based measures that might have enough volume in a typical emergency department to apply to your practice (#1 HbA1c control, #326 A-fib therapy) because you report the 99281-99291 series of E&M codes, however, their applicability is not clear. CMS has left unclear whether these will apply to all providers who report these E&M codes.

For illustration purposes, let’s assume that you reported and scored 7.5 points on measure #415 and 7.5 points on measure #419, and that no other measures were applicable to you. CMS has not yet clarified that these might be your only scoring options, so our example is for illustration purposes at this time. Adding your 7.63 for #317 with the other 15 points yields 22.63 total points out of a possible 30 points (3 applicable measures times 10 possible points each). Your MIPS Quality Final Score would therefore be 7.54.  

That score will then be added to your Practice Improvement Activity score for a Weighted Final Score that will be compared in a decile ranking to the Weighted Final Scores of all physicians treating Medicare patients in the country. The decile ranking and Final Scores will be published and available to you in mid-2018. 

A total weighted score above 70 points, as in our example shown here, will be awarded an additional bonus amount above the 4.0% top end performance adjustment that will be applied to 2019 payments. Medicare has set aside $500 million in this performance threshold category to be distributed to practices who score more than 70 total points this year. 

With the way that the MIPS Categories have been redistributed for emergency medicine this year (Resource Use and Advance Care performance weights were added to our Quality weights), it might be possible that high-performing emergency groups can achieve the performance threshold and receive bonus monies. In our example above, the group exceeded the 70 point performance threshold and would be eligible for additional bonus monies, payable in 2019.

Remember, fee-for-service reimbursement as we have known it is not going away any time soon. Not now, possibly not ever. MACRA simply lays a cost-containment cap on it, just like SGR used to do and like managed care did before that. The new payment mechanisms are certainly more complicated (capitation formulas in the 90s were not very simple) but they do not mean the end of productivity based compensation or the opportunity to do well by doing good.

James Blakeman has been involved in emergency medicine billing and coding policy for more than 30 years. He writes and lectures nationally on coding and documentation issues. 

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