2018 Quality Payment Program Final Rule Overview

I.     Overview of Final Rule.

On November 2nd, the Centers for Medicare & Medicaid Services (CMS) issued the final rule for the second year of the Quality Payment Program (QPP).  The rule outlines the requirements for the 2018 Merit-Based Incentive Payment System (MIPS) as well as Advanced Alternative Payment Models (APMs).  Like the proposed rule, the final rule continues many of the flexibilities included in the first year of the QPP but begins to prepare participants for a more robust program in future years.  The following outlines some of the key highlights of the final rule.

Major changes from the proposed QPP rule.

While CMS adopted the majority of the proposed rule provisions, several key changes were included in the final 2018 QPP rule.  In particular, CMS was unable to finalize some of its proposals due to time and resource limitations.  Significant changes from the 2018 proposed rule include:

  • Weighting the cost category of MIPS at 10% of the overall score, up from 0% in the proposed rule.
  • Delaying the option for participants to use multiple submission mechanisms within the MIPS categories, but CMS suggests this option will be available in the 2019 performance period.
  • Delaying the start of facility-based measurement reporting (which would allow entities to use their performance from the hospital-value based reporting program for part of their MIPS score), but CMS indicates this option should be available in subsequent years.

Total impact – fewer MIPS participants, many will earn neutral or small incentives.

Overall, the changes in the 2018 final QPP rule will have the effect of allowing more clinicians to qualify for an exemption, especially smaller practices.

  • CMS estimates that, because of the expansion of the low-volume threshold, about 123,000 more clinicians will be exempt from MIPS in 2018 than in 2017.
  • As explained in more detail in the Advanced APM section below, roughly double the number of clinicians will be in Advanced APMs and not subject to MIPS.
  • Over half of remaining participants will be in practices of 100 or more clinicians (e.g., large practices).
  • In total, only about forty percent of eligible clinicians will remain in the MIPS program after exclusions.

In sum, since most small practices are excluded, this would leave larger sized practices to compete with one another in the MIPS program. 

MIPS generally operates as a budget neutral program—bonus payments are equal to the number of penalties for poor performance.  If, as CMS predicts, many MIPS participants meet or exceed the performance threshold for 2018, the result will be that:

  • Incentives: more participants will earn an incentive; however, the incentive will be fairly small since it will be divided across numerous participants.
  • Penalties: In contrast, the opposite is true for penalties under the MIPS program—few will earn a penalty but those that do will see larger penalties to offset the large number of participants earning an incentive payment.

CMS depicted this skewed distribution of penalties and incentives in the following chart—all those above the performance threshold will earn an incentive, while those below will earn a penalty.  The adjustment factor depicts the size of the overall incentive or penalty.

II.     Overview of Adjustments to the MIPS program.

Similar reporting requirements.

For those remaining in the MIPS program, reporting requirements will be very similar to the 2017 program.  Quality reporting will still be the most significant determinant of most participants’ score—new exemptions to the advancing care information (ACI) category could also increase the weight of quality reporting to 75% of the total MIPS score for some participants. Overall, this means that quality performance will remain the main factor in the overall MIPS score and should be the focus for most participants.  However, in future years, the cost category will take on more weight and will become increasingly more important for participants.

Although CMS raised the performance threshold to 15 points, up from 3 points, the agency estimates that over 95% of participants will have either a positive or neutral payment adjustment based on 2018 performance.  Participants can meet the threshold in a variety of ways, including submitting the full requirements for the Improvement Activities category (without reporting on any other category) or simply submitting and meeting the data completeness requirements of the quality category (even if actual performance on the quality measures is low).

Most small practices will receive assistance.

As CMS noted in its fact sheets and press release, the agency has focused on providing relief to small practices.  Many of these practices will be excluded from the QPP requirements by falling under the low-volume threshold. This threshold was significantly expanded from the 2017 performance year to exclude clinicians or groups with less than or equal to $90,000 in Part B allowed charges or less than or equal to 200 Part B beneficiaries (up from $30,000 and 100 beneficiaries for the 2017 QPP respectively).  Consequently, an estimated 540,000 clinicians will be excluded from the program by falling under the low-volume threshold. 

Other assistance provided to small practices (defined as 15 or fewer eligible clinicians) include:

  • Adding 5 bonus points to the final score for small practices;
  • Giving solo practitioners and small practices the choice to form or join a Virtual Group to participate with other practices;
    • Note that solo practitioners and small groups may only participate in a Virtual Group if you exceed the low-volume threshold.
  • Continuing to award small practices 3 points for measures in the Quality performance category that don’t meet data completeness requirements; and
  • Adding a new hardship exception for the ACI performance category for small practices.

Part B drugs included in overall MIPS penalties and incentives.

While the MIPS legacy programs (PQRS, the value-based modifier and Meaningful Use) excluded Part B drug payments when determining overall incentives and penalties, CMS clarified that MIPS will include these payments in its calculations.  Furthermore, inclusion of Part B drugs would begin for the 2017 performance period, impacting payments starting in 2019.  This could mean that certain specialists who administer many Part B drugs, such as oncologist, rheumatologists, and ophthalmologists, could see substantial payment changes depending on their performance.  Part B drugs will also be included in the MIPS cost measure calculations while Part D drugs will be excluded.  Again, this will likely create variations depending on the type of drugs a practice uses.

MIPS to measure improvement for the first time.

One major difference from the 2017 MIPS program is that CMS will begin to score improvement in MIPS.  Specifically, CMS will evaluate improvement in the cost and quality categories but is establishing two separate ways of tracking performance—improvement in quality will be measured at the category level (providing up to 10 additional percentage points) while improvement in the cost category will be evaluated for each measure (providing up to 1 additional percentage point).  Notably, the improvement scoring can only help a participant’s MIPS score—CMS will not reduce points earned if a participant does not show improvement.  This helps address high-performers who may be unable to show improvement since they are already reporting at top levels.

Virtual groups established but must act quickly for 2018.

New to the 2018 QPP program is the option for small practices to join together to establish virtual groups, which should reduce reporting burdens.  However, the deadline to establish a virtual group is December 31, 2017 for the 2018 performance year, meaning entities must act quickly.  To participate in a virtual group, CMS will require a formal written agreement among all members of the virtual group as well as election of a virtual group representative and information bout each participant within the virtual group. CMS has made technical assistance available to clinicians considering this option, including a Virtual Group Toolkit outlining the election process in more detail. 

Other Provisions.

CMS provides relief from reporting requirements to help physicians impacted by hurricanes

Irma, Harvey, and Maria and other natural disasters.  These clinicians would be able to submit hardship exceptions so that those in affected areas who do not submit data will not be penalized for 2017. Those that do submit data will still be scored, allowing them to potentially earn incentives.

Changes to MIPS categories:

Quality

The quality category of MIPS has been reweighted to 50% for 2018, reflecting the change to the cost category weight.  In addition, CMS moved forward with a number of proposals that make quality reporting a bit more challenging for participants.  These include.

  • Increasing the data completeness requirement from 50% to 60% and planning to increase this threshold in future years of the program.  
    • Measures that do not meet this threshold will automatically earn 1 out of the 10 total points, with an exception for small practices.
  • CMS is also moving forward with its proposal to remove quality measures that it considers “topped-out” or measures that have a high rate of performance and CMS feels are becoming too easy or too broadly used by participants.  Stakeholders have opposed this policy, stating that it removes measures that are broadly applicable to participants, creates instability in the program, and requires practices to constantly search for new applicable measures when these may not be available.   To address some of these concerns, CMS is using a longer timeline to remove these measures over a four year period and reducing the possible earned points for these measures.

Cost

While many see the biggest change from the proposed to final 2018 QPP rule as the weighting of the cost category, physicians already have experience with this category.  The two finalized cost measures were previously used in the value-based modifier program— the total per capita costs and Medicare Spending per Beneficiary (MSPB).  Participants will not need to report anything related to these measures, CMS will calculate them using claims data.  Furthermore, many participants may be excluded from the cost category due to case minimum requirements— the total per capita cost measures requires at least 20 unique beneficiaries and the MSPB measure requires at least 35 cases (clinicians who do not see patients in the hospital will not be scored on the measure).   Again, smaller practices will likely not be judged on this category.

CMS also decided not to use the 10 episode-based measures it adopted in the 2017 rule but continues plans to develop new episode-based measures.  Relevance of the cost category may become more important in the future, especially depending on the new episodes developed by CMS and as the weight of the category increases—the statute requires the cost category to increase by 30% for the 2019 performance year.  In particular, it remains to be seen if CMS will first focus on certain costly episode measures or if it will attempt to finalize a broader set of episode-based measures for future QPP years. 

Advancing Care Information (ACI)

Recognizing that not all vendors had released updated versions of their electronic health records (EHRs), the rule allows participants to use either the 2014 or 2015 EHR certified edition.  Participants are therefore not mandated to update their products but can earn 10 bonus points if they exclusively use the 2015 technology.  The rule also reinstates exclusions for two ACI measures, one for e-prescribing and another for health information exchange, which is retroactive to the 2017 performance period.  This will ensure that certain specialties are not prevented from earning an ACI score.

Finally more specialties will be exempt from the ACI category.  The final rule implements provisions of the 21st Century Cures Act that provides exclusions for ambulatory surgical centers, hospital-based clinicians, participants with decertified EHR technology, and also adds exclusions for small practices.  In most cases, the 25% ACI category score will be re-weighted to the quality MIPS performance category—increasing the weight of the quality score to 75% of the total performance score in some cases.

Improvement Activities (IAs)

Clinicians can choose from 21 new improvement activities for the 2018 QPP performance year and will also have more opportunities to earn bonus points for activities that are completed using certified EHR technology, expanding options for participants.  The final rule did not change the IA scoring, allowing physicians to continue to simply attest to activities, and also maintained the 90-day reporting period for this MIPS category.  Overall, few changes were made to this category of MIPS.  CMS will continue to accept proposals for new IAs for future program years during the annual call for IA measures, which is a separate process than the QPP rules.

III.     Overview of Adjustments for Advanced APMs.

More APMs for 2018.

The final rule includes additional flexibility that will allow more participants to quality for APMs under the QPP.  CMS estimates that APM participation would more than double in 2018 compared to 2017, with approximately 185,000 to 250,000 participants.   The expansion is due in part to including the Medicare ACO Track 1+ Model as an advanced APM.

In addition, the final rule also eases requirements and extends policies from the 2017 QPP that would ensure flexibility for advanced APM participation.  Specifically, the rule:

  • Extends the 8% revenue-based standard for two additional years, through performance year 2020;
  • Exempts Round 1 Comprehensive Primary Care Plus (CPC+) participants from the 50 clinician limit on medical home models;
  • More slowly increases the total financial risk required amount for Medical Home models; and
  • Adds additional periods for clinicians to qualify as Advanced APMs.

All- Payer Advanced APMs to begin in 2019.

MACRA allows clinicians to earn advanced APM incentives only for participation in Medicare advanced APMs in 2017 and 2018.  Beginning in 2019, clinicians will be able to earn incentives for combined participation in Medicare advanced APMs and “other-payer advanced APMs” (e.g., Medicare Advantage, Medicaid, and private payers).  Under the all-payer option, participants could meet eligibility requirements by using their participation in both Medicare and other-payer models, making it easier for some practices to qualify as an advanced APM.  Incentive payments will still be based on Medicare Part B payments.

PTAC models must focus on Medicare.

PTAC is charged with reviewing and making recommendations on physician-focused payment models (PFPMs).  In its proposed rule, CMS considered broadening the definition of a PFPM to include payment arrangements that involved Medicaid or CHIP.  The final rule, however, does not adopt this change and maintains the requirement that PFPMs include only payment arrangements with Medicare as a payer.

For any questions regarding this summary or for further information about the Quality Payment Program, please contact Kristen O’Brien at (202) 518-6330 or kobrien@ofw.law.com.

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