Some Notes On MACRA For Digital Health Startups

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Over the weekend I spent some time reviewing the 2015 Medicare Access & CHIP Reauthorization Act final rule (MACRA) that was released by HHS last week.

MACRA was a bi-partisan law focused on the Obama administration’s goal of moving 50% of Medicare payment away from fee-for-service and towards alternative payment models. The final rule lays out details on how the program will work and how clinicians can participate.

For those of you that are new to this stuff, the goal of all of this is to allow clinicians to focus on (and get paid for) the quality of care they provide as opposed to the quantity of care they provide; with a focus on disease prevention and improving coordination between clinicians. This is a major part of how we're going to reduce the $3 trillion cost of healthcare in the U.S.

The overarching set of policies that make up MACRA are referred to as the Quality Payment Program.

The document released by HHS last week that explains all of this is 2,398 pages long though the majority of it is made up of responses to public comments made regarding the proposed rule (you can find a 24 page summary of the document here). The rule will be implemented beginning in January of 2017 and will impact nearly all stakeholders across the healthcare system.

I thought I’d capture some of my notes on the rule here with a particular focus on those things that might matter to digital health companies. If your company is focused on improving outcomes, patient engagement, patient volume, interoperability or care coordination then you should take some time to understand MACRA. Key points from the rule below:

  • For context, Medicare covers 55 million people and accounts for more than 20% of all U.S. healthcare spend. Medicare’s approach to payment is generally followed by commercial payers — in fact, many of these payers are farther down the road in payment reform than Medicare is at this point.
  • MACRA is a statement by the government that they are dead serious about paying clinicians for value. If your business relies on a flat fee-for-service model it's time to start thinking hard about how you can get ahead of this change.
  • Medicare has setup a transition year for the Quality Payment Program (2017), but physicians must act in some form during 2017. If clinicians do nothing in 2017 with regard to the Quality Payment Program, they’ll receive a 4% penalty against their Medicare payments beginning in 2019.
  • With all of these acronyms the Quality Payment Program can seem confusing. It's really not. There are two simple payment programs that clinicians can participate in: 1. Merit-based Incentive Payment System (MIPS) or 2. Alternative Payment Model (APM) — NextGen ACO, Medicare Shared Savings ACO, etc.
  • If a clinician is already in an APM nothing will change for them and they'll receive a 5% lump sum incentive payment that will run through 2024 and they can avoid the reporting requirements that will come with MIPS.
  • Some of the APM options in 2017 will include Comprehensive ESRD (end-stage renal disease), Comprehensive Primary Care (CPC+), Next Generation ACO. Medicare Shared Savings Program - Tracks 2 and 3 (Track 2 allows clinicians to take up to 60% of shared savings; Track 3 - 75%).
  • If a clinician is not participating in an APM, they can participate in MIPS. MIPS will focus on 3 areas: quality measures, advancing care information and general improvement activities. Medicare has created a nice set of guidelines to help better under the measures associated withe each of these areas. Vendors should take a hard look at these measures as these are major business drivers that non-APM clinicians will be thinking about next year.
  • The MIPS program allows for more flexibility than previous programs in that clinicians can select their own pace and the amount of data they would like to collect and submit to Medicare. There are three options to participate in MIPS in 2017. 1. Test the program by submitting a minimum amount of quality data. 2. Submit 90 days of 2017 data. 3. Submit a full year of data.
  • The timeline for implementation looks like this. At some point in 2017, clinicians must collect some amount of performance data and collect data documenting their use of technology and submit that data to Medicare by March of 2018. Medicare will give feedback on that data during the remainder of 2018. If eligible, clinicians will then earn a positive MIPS payment adjustment or APM incentive beginning in January of 2019. The payment adjustment will start at 5% and increase to 9% in 2022.
  • MIPS will consolidate three existing programs: the Physician Quality Reporting System, the Physician Value-Based Payment Modifier and the Medicare EHR Incentive Program.
  • The program will impact 600,000 clinicians.
  • Clinicians must participate if they receive $30k+ in Medicare billings and care of more than 100 Medicare patients per year.
  • “Quality” will be measured using both evidence-based standards and practice-based improvement efforts.
  • The payment program applies to physicians, physician assistants, nurse practitioners,  clinical nurse specialists, certified nurse anesthetists.
  • Medicare is putting aside $100 million to be paid over 5 years to train small practices on the rule.
  • CMS will also allow “reporting as a group” for clinicians that put themselves under the same tax identification number.
  • MIPS replaces meaningful use with the "advancing care information" program which speaks to use of technology. This program is focused on only 5 key areas: 1. Security risk analysis, 2. e-prescribing, 3. patient access, 4. summary of care, 5. request/accept summary of care. Again this is a good area for digital health companies to dive in.
  • The rule is set to be finalized on October 19th.

For the most part, commentators are praising this effort by Medicare. The Quality Payment Program does a nice job of setting up clear objectives for clinicians, with flexible levels of participation and lots of concessions for smaller providers that don't have the infrastructure or resources to facilitate complicated reimbursement activities.

With a new administration coming next year and the inevitable confusion around what will come next, the Quality Payment Program does a nice job of making it much easier for clinicians to embrace those activities that will significantly lower cost and improve quality and ultimately patient health.

Exciting times in healthcare.