On Oct. 14, the Centers for Medicare and Medicaid Services ("CMS") issued a final rule implementing the Merit-Based Incentive Payment System ("MIPS") and Advanced Alternative Payment Models ("APMs") incentive payment provisions of the Medicare Access and CHIP Reauthorization Act of 2015 ("MACRA"), which are collectively referred to as the Quality Payment Program. MACRA permanently repealed CMS’ sustainable growth rate formula, which was used to calculate the physician fee schedule, and replaced it with the MIPS and APMs.

According to CMS, the Quality Payment Program has three goals:

• Supporting care improvement by focusing on better patient outcomes, decreased provider burden and preservation of independent clinical practice.
• Promoting the adoption of APMs that align incentives across stakeholders.
• Advancing existing efforts of delivery system reform, including insuring a smooth transition to a new system that promotes high-quality, efficient care through unification of CMS legacy programs.

Providers must choose to participate in either an APM or the MIPS program. APMs are payment approaches that provide added incentives to deliver high-quality and cost-efficient care and can apply to a specific clinical condition, care episode or population, while the MIPS consolidates components of three existing CMS programs: Physician Quality Reporting System, the Physician Value-based Payment Modifier and the EHR Incentive Program.

Merit-Based Incentive Payment System

The MIPS applies to eligible providers (physicians, physician assistants, nurse practitioners, clinical nurse specialists and certified registered nurse anesthetists) who bill Medicare Part B more than $30,000 per year or provide care to at least 100 Medicare patients per year. Providers may be exempt if 2017 is their first year participating in Medicare Part B.

Providers will be allowed to pick their pace of participation for the first performance period in the Quality Payment Program that begins on Jan. 1, 2017. Data collected during 2017 will result in payment adjustments beginning in January 2019. Because 2017 is the transition year when CMS and providers will build reporting capabilities and gain experience with the Quality Payment Program, the Final Rule allows providers to choose their course of participation in 2017 from one of four options for the MIPS program.

• Voluntary non-participation, which would result in an automatic 4% negative payment adjustment.
• Submission of data on one measure in the quality performance category, one measure in the improvement activities category or reporting the required measures of the advancing care information performance category. This submission would result in a neutral payment adjustment.
• Submission of data for a full 90-day period — specifically, reporting more than one quality measure, more than one improvement activity or more than the required measures in advancing care information performance category. Such submission would lead to a neutral or small positive payment adjustment.
• Full participation, which requires submission of data on each of the aforementioned MIPS performance categories for a minimum period of 90 days (data submission for all of 2017 is not required but would help increase the positive payment adjustment).
  • For full MIPS participation, providers must submit the following:
    • Quality – providers must report at least six quality measures or one specialty-specific or subspecialty-specific measure set.
    • Improvement Activities – providers can engage in up to four activities.
    • Advancing Care Information – providers must report on five required measures.

Any MIPS payment adjustments will apply starting in 2019. The maximum adjustment in 2019 will be 4% of a provider’s base rate of Medicare Part B payments, increasing to 9% by 2022.

Advanced Alternative Payment Models

APMs must meet the following requirements:

• The APM must require participants to use certified electronic health record technology.
• The APM must provide for payment for covered professional services based on quality measures comparable to those in the quality performance category under the MIPS.
• The APM must either require that the participating entities bear more than nominal risk or be a Medical Home Model. 

In 2017, CMS anticipates that the models set forth below will be recognized APMs under the Quality Payment Program. CMS will publish a final list of APMs for 2017 prior to the end of this year.

• Comprehensive End Stage Renal Disease Care – Two-Sided Risk
• Comprehensive Primary Care Plus
• Medicare Next Generation ACO Model
• Medicare Shared Savings Program – Track 2
• Medicare Shared Savings Program – Track 3

Participation in an APM will allow providers to earn a lump sum incentive payment equal to 5% of the provider’s Medicare Part B payments each year from 2019-2024 and avoid the MIPS reporting requirements and payment adjustments.

As 2017 nears, eligible providers should focus their attention on picking a mode of participation in the Quality Payment Program and determining the range of reporting that they would like to undertake, as failure to participate in an APM or report any measures under the MIPS for 2017 will result in a 4% negative payment adjustment for 2019. Participating providers can start collecting data between Jan. 1 and Oct. 2, 2017, and must submit such data to CMS by March 31, 2018.