Health Law Alert: The Wait is Over: CMS Releases Final MACRA Rule

October 18, 2016

On Friday, October 14, 2016, the Centers for Medicare and Medicaid Services (CMS) released its highly anticipated final rule for implementing the Medicare Access and CHIP Reauthorization Act (MACRA). The landmark rule finalizes the new payment system for Medicare clinicians that will transform the way the health care industry pays for care. The new system replaces Medicare’s sustainable growth rate and finalizes MACRA’s Quality Payment Program, which aims to shift health care away from the existing practice of paying for volume to paying for quality and value through two new payment systems – or tracks – for clinicians.

Since the proposed rule was issued in April, stakeholders have anxiously awaited CMS’ final rule. With its release on Friday, the final rule reveals the inclusion of several notable revisions included specifically to address the unprecedented industrywide feedback received by CMS. Per CMS, the concerns were mainly focused on the need for more flexibility and greater support for smaller practices.

In addition to the final rule itself, CMS has been vocal about responding to the comments and anticipated issues. CMS' Acting Administrator, Andy Slavitt, acknowledged growing concerns stemming from the rule through an announcement issued last month to prepare the industry before the final rule’s release. The statement outlined workable solutions in response to several points of criticism promising that physicians will be able to “transition at their own pace” and will have more avenues available to them to participate in Advanced Alternative Payment Models (APMs). CMS also reiterated its long-term commitment to supporting program implementation identifying a range of initiatives, including the launch of its new Quality Payment Program educational website as well as an annual budgeted amount of $20 million over five years to offer small practices with 15 or fewer doctors training and education as well as local, on-the-ground specialized assistance.

In keeping with this more supportive approach, CMS’ executive summary of the final rule accepts that the Quality Payment Program is expected to evolve over several years through a “staged approach” to policy development that results in the rule being finalized with a comment period to allow for CMS to “continue iterating on these policies.” The rule also grants physicians a break from the proposed brief implementation deadlines as the timeline now designates 2017 as a transition year allowing providers the option of starting any time between January 1 and October 2, 2017 with a deadline of March 31, 2018 to submit performance data. The first payment adjustments that are performance based go into effect on January 1, 2019.

In addition to CMS’ clear intent to work alongside providers to ensure smooth implementation, the final rule upholds the use of the two designated payment models introduced in the proposed rule and includes several provisions addressing the two available Quality Payment Program tracks – the Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (Advanced APMs).

Advanced APMs are a subset of APMs and incorporate Medicare incentive payments for taking on risks related to patients’ outcomes. The final rule gives physicians more options if they choose to participate in this payment track. Criteria require the use of certified electronic health record technology, payments tied to quality measures that align with MIPS measures and a structure that bears some downside risk for reimbursement. In the final rule, CMS acknowledges limited options exist for Advanced APM participation and has therefore committed to expanding the number of APMs that will qualify under MACRA including “retrofitting” existing APMs to qualify as Advanced APMs as well as the creation of new models. An example of this is the creation of the Track 1+ model for small and rural providers that would include lower risk levels that are capped based on Medicare revenue. In addition to CMS Advanced APMs, the rule also indicates that physicians can opt to participate in Other Payer Advanced APMs, which are value-based models run on the payer side.

MIPS participants will earn a Medicare payment adjustment established by evidence-based and practice-specific quality data. Eligible clinicians will be measured on quality, resource use, clinical practice improvements and meaningful use of certified EHR technology. In contrast to the initial proposal, the final rule reduces the total number of required measures in the advancing care information performance category from eleven to five. The requisite performance period has also been adjusted to allow clinicians flexibility in choosing participation timing in 2017 that now allows for a minimum period of any 90 continuous days to be eligible for payment adjustment above neutral to determine 2019’s scheduled payment adjustment.

Given the final rule’s length of nearly 2,400 pages, the industry will need time to fully understand MACRA and all of its implications. This challenge, along with the final rule’s built-in 60-day comment period and CMS’ commitment to continuing to work with stakeholders, means the final rule is far from “final.” Even CMS acknowledges an expectation that the Quality Payment Program will need to evolve over multiple years to ensure the ultimate goal of payment reform is achieved.