MACRA Changes Have Far-Reaching Implications for Providers

On the second day of the Fall 2016 ACO & Emerging Healthcare Delivery Coalition, healthcare attorney James M. Daniel, Jr, JD, MBA, explained how healthcare providers will be impacted by CMS’ newly released final rule on the implementation of the Medicare Access and CHIP Reauthorization Act (MACRA). As director of Hancock, Daniel, Johnson & Nagle, PC, Daniel advises clients as they contend with a changing healthcare landscape of new delivery models and payment structures.

His session presentation praised MACRA as a piece of legislation that had received overwhelming bipartisan support in Congress when it passed in 2015, and he mentioned its importance in repealing the unpopular sustainable growth rate (SGR) formula that threatened to reduce Medicare payments yearly, eventually resulting in physicians facing a 21% payment cut in 2015.

“How do physicians invest in the future and develop their practices wondering if they’re going to have a 20% payment cut next year?” Daniel asked the audience to demonstrate the impracticality of the SGR.

In the MACRA rule, CMS replaced the SGR with a Quality Payment Program (QPP) that consists of two tracks: MIPS (Merit-Based Incentive Payment System), which Daniel called the “off-the-rack” option, and advanced Alternative Payment Models (APMs).

The final rule released on October 14 had some important differences from when it was proposed in April 2016. One such amendment was a change in the weighting of the different measures (quality, resource use, advancing care information, and clinical practice improvement) that will be used to determine payment adjustments under MIPS. The final rule designated 2017 as a transition year when resource use would not be included in the calculation; quality would instead comprise 60% of the composite score, not the proposed 50%.

“Not only did they increase the weighting of quality in the final rule, they made it easier to report,” said Daniel as he explained how the final rule is more favorable to practitioners who may be struggling to implement and report the new measures in the first year. The transition period in 2017 dictates that providers can pick their own pace for that year, allowing them to “ease into the water a bit before you jump all the way in,” according to Daniel.

Daniel also explained the intricacies of the Advanced APM track, which offers greater possible incentives but increasingly more stringent risk thresholds over time. He cited CMS estimates predicting that advanced APMs will increase from 5% to 8% participation by eligible clinicians in 2017 to 8% to 16% in 2018, which would translate to 125,000 to 250,000 providers. By 2019, CMS anticipates an estimated $333 million to $571 million will be distributed as incentive payments to advanced APM participants.

Finally, Daniel addressed the proposed Part B drug model, which would change the add-on drug payment (in addition to the drug’s average sales price) from the current 6% add-on to a proposed payment of a 2.5% add-on plus a $16.80 flat fee per drug per day. He said that this model would reward providers who prescribe low-cost drugs, but could negatively impact practitioners like medical oncologists due to the high cost of the drugs needed for their specialty.

Audience members praised Daniel’s succinct explanation of the MACRA final rule and how it could impact providers. Daniel’s presentation was “fantastic in terms of taking a very complex topic and making it as easily digestible as possible,” said Dennis Scanlon, PhD, professor of health policy and administration at Penn State University.