May 26, 2016

Many of you may be aware that CMS recently published a proposed rule implementing a significant piece of legislation known as “MACRA”. This rule, once finalized, will significantly change the way physicians using the Medicare Physician Fee Schedule are reimbursed for Medicare services. Naturally, many people have asked: Does this affect RHCs? At least for the near-term, the answer is: mostly no.

However, this does not mean the RHC community should ignore this proposed rule. Some of the initiatives in it may very well make their way into the RHC payment methodology at some point in the future.

Merit-Based Incentive Payment System (MIPS)

Under MIPS The Merit-Based Incentive Payment System (MIPS) physicians, PAs and NPs billing Medicare using the Physician Fee Schedule will required to report various measures which will be used to determine end-of-year payment adjustments.  Although RHCs are exempt from the reporting requirements, CMS has provided RHC eligible clinicians the opportunity to “voluntarily report on applicable measures and activities for MIPS.”  RHC clinicians opting to voluntarily report will have no bearing on RHC payments.

MIPS combines three quality programs (PQRS, value modifier, and EHR Meaningful Use) into one. Eligible clinicians receive an overall score called the Composite Performance Score (CPS) which then dictates what kind of Medicare Physician Fee Schedule (PFS) payment adjustment that eligible clinician will get for the corresponding payment year. Roughly half of all clinicians will receive some upward adjustment and half will receive a downward adjustment.

Similar to PQRS, MIPS does not apply to RHC services, however non-RHC services such as labs or anything billed on a 1500 form could be subject to MIPS reporting and MIPS adjustments. Unlike PQRS, there is a low-volume exemption for individual providers who “have Medicare billing charges less than or equal to $10,000 worth of allowable claims AND provides care to fewer than 100 Part B-enrolled Medicare beneficiaries.” It is our estimation that full-time RHC practitioners would likely not bill $10,000 worth of non-RHC PFS services, but could feasibly see (as an individual) 100 Medicare patients. As such, we will be asking CMS to consider changing the low-volume exception in the final rule to: bill less than $10,000 worth of claims OR fewer than 100 Medicare patients.

For those who may be interested in learning more about how MIPS works, we would refer you to our summary of the program.

Alternative Payment Models (APMs)

The ultimate goal of these payment reforms is to “encourage” providers to participate in Alternative Payment Models (APMs). These models go beyond the MIPS quality scores by incorporating quality with shared financial risk to the providers. The hope is that these APMs will transition the healthcare system from paying for volume to paying for value. For over a year, we were unsure of exactly what qualified as an APM for the purposes of MACRA, but the proposed rule gives us the first details of how these models will be structured.

Clinicians can avoid MIPS negative payment adjustments if they are instead “qualified” by their participation in so-called “advanced APM models”. Clinicians qualify if a certain percent of their revenue comes from or a certain percent of their patients participate in an “advanced APM model”.

It is important to note that the term APM has been used to describe various different “models” but many of those “APMs” do not qualify as “advanced APM models” for the purposes of MACRA.

Providers that qualify because they reach the threshold of revenue-from patients-in an APM, are considered “Qualifying Participants” and will receive a lump sum incentive payment equivalent to 5% of their total Medicare reimbursement. Because RHCs are not reimbursed under the Physician Fee Schedule (PFS), RHC services would not be considered part of the amount upon which the APM incentive payment is based.

We should note that RHCs can participate in ACOs – a type of advanced APM model – but have numerous caveats for their participation. Those RHCs that are considering joining an ACO, or are already in one, should carefully review this section of the proposed rule.

While the MIPS and APM models get their own yearly adjustments. The RHC cap will continue to be adjusted based off of medical inflation.

Nathan Baugh
(202) 544-1880

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