At the heart of the new Medicare physician payment plan, outlined in an April 27 proposed rule, is a key question for hospitals and physicians: “Which of the participation tracks makes the most strategic sense?” says AHA’s Akin Demehin, senior associate director of policy.

The two Medicare Access & CHIP Reauthorization Act tracks introduce new acronyms: the Merit-based Incentive Payment System, or MIPS, and the advanced Alternative Payment program (APM).

MIPS is the default track that the Centers for Medicare & Medicaid Services culled from the current physician quality reporting and meaningful use programs. Under MIPS, a pay-for-performance approach, physicians receive annual bonuses or penalties — beginning at 4 percent in 2019, the first payment year — based on their performance in four categories: quality, resource use, health information and clinical practice improvement.

The advanced APM route is an elite track for physicians already invested in risk-based payment and meaningful use. Providers must assume financial risk under value-based payment contracts for a sizable part of their patient population. Plus, the majority of clinicians must use certified electronic health records. APM providers will receive an annual 5 percent lump sum bonus between 2019 and 2024.

Currently, only five federal programs meet CMS criteria for advanced APMs. These include the Comprehensive Primary Care Plus program and Tracks 2 and 3 of the Medicare Shared Savings Program. “To be in the advanced APM, the participating entity has to take on downside risk,” says AHA’s Melissa Jackson, senior associate director of policy. “That’s a very high bar to set.”

CMS stresses that the vast majority of physicians will be assigned to MIPS for 2019. However, physicians could be moved to the advanced APM track in the future, if they qualify.

This hints at a fine detail in the proposed rule: Providers don’t get to elect the MACRA track in which they participate. “It’s not like you apply for one or the other,” says David Wofford, senior manager, ECG Management Consultants. “CMS is going to determine if you qualify for MIPS or APM.”

However, Jackson stresses that hospital and physician leaders must make the high-level strategic choice as to whether to participate in advanced payment models so they can qualify for APM. “It’s a strategic decision by the organization as to whether they want to move into, and experiment with, new payment models.”

While focused on Medicare Part B-eligible clinicians, MACRA impacts hospitals in a variety of ways. Most directly, hospitals employ about 245,000 physicians and contract with an additional 296,000, according to 2013 AHA Annual Survey data. “Who’s really on the hook?” asks Wofford. “The health systems are billing for Parts A and B, and they are taking the financial risk. I think that’s the target.”

MACRA likely will encourage more hospital-physician integration, Wofford adds. “If I’m a hospital administrator and I’m thinking about my medical staff members who are not employees, I would first want to educate them [about MACRA]. Secondly, I would want to say, ‘Where do we have common ground?’”

Jackson and Demehin stress that AHA is conducting a deep dive into the proposed rule and will be providing feedback to CMS. Members are encouraged to share feedback at “We’re looking for a system that measures providers fairly and is sustainable over the long run,” says Demehin.

MACRA Really Starts in 2017, Not 2019

2019 is the first year that physicians will be paid under the Medicare Access & CHIP Reauthorization Act, as outlined in the Centers for Medicare & Medicaid Services proposed rule. But AHA’s Melissa Jackson, senior associate director of policy, warns hospitals not to wait for the final rule, expected by Nov. 1, to start preparing.

That’s because physicians will be paid in 2019 based on their performance in 2017. “There’s only a two-month gap between the final rule and when the provisions go into effect,” Jackson says.

What should hospitals be doing to prepare? CMS notes that most physicians will end up in the MIPS program versus the alternative advanced APM program.

Even if physicians think they will qualify for APM, they won’t know whether CMS will put them on that track until sometime in 2018, says David Wofford, senior manager, ECG Management Consultants.

Thus, for many hospitals and physicians, it makes sense to consider how they can optimize their performance under MIPS to qualify for incentive bonuses and avoid penalties. MIPS combines CMS’s three current physician reporting programs: the Physician Quality Reporting System, Value-Based Payment Modifier, and Medicare Electronic Health Records Incentive Program. 

“I’d say, get busy maximizing your performance under those three programs and that will put you in a pretty good place once CMS flips over to MIPS,” Wofford says.  

He also encourages hospitals and physicians to avoid metric fatigue by thinking strategically about MIPS reporting requirements. “I would encourage you not to think of MACRA as a stand-alone strategy. You don’t want to have a strategy for Blue Cross, a strategy for Aetna and a strategy for Medicare.”

“You need to be thinking about all the different metrics that can be reported under MIPS — and there are many choices — and figure out which ones you can be successful at and which ones are most relevant to your patients and to your other payers,” Wofford adds. “So you’re not trying to boil the ocean, and can get focused on moving the needle in a handful of areas.”