Background: the easy exchange of information. On June


The Medicare Access and CHIP
Reauthorization Act of 2015 (MACRA) 1 amended Title XVIII of the Social
Security Act (the Act) to repeal the Medicare sustainable growth rate (SGR)
formula, to reauthorize the Children’s Health Insurance Program (CHIP), and to
strengthen Medicare access by improving physician and other clinician payments
and making other improvements. The MACRA advances a forward-looking,
coordinated framework for clinicians to successfully take part in the Quality
Payment Program that rewards value and outcomes in one of two ways:

Alternative Payment Models (Advanced APMs).Merit-based
Incentive Payment System (MIPS).

Goal is to support patients and
clinicians in making their own decisions about health care using data driven
insights, increasingly aligned and meaningful quality measures, and innovative
technology. To implement this vision, the Quality Payment Program emphasizes
high-value care and patient outcomes while minimizing burden on eligible
clinicians. The Quality Payment Program is also designed to be flexible,
transparent, and structured to improve over time with input from clinicians,
patients, and other stakeholders.

In today’s health care system, we
often pay doctors and other clinicians based on the number of services they
perform rather than patient health outcomes. The good work that clinicians do
is not limited to conducting tests or writing prescriptions, but also taking
the time to have a conversation with a patient about test results, being available
to a patient through telehealth or expanded hours, coordinating medicine and
treatments to avoid confusion or errors, and developing care plans.

The Quality Payment Program takes a
comprehensive approach to payment by basing consideration of quality on a set
of evidenced-based measures that were primarily developed by clinicians, thus
encouraging improvement in clinical practice and supporting by advances in
technology that allow for the easy exchange of information.

On June 20, 2017, the Centers for Medicare
and Medicaid Services (CMS) released the proposed 2018 Medicare Quality Payment
Program (QPP) rule. 2 The rule addresses participation requirements
for 2018 and future years under the merit-based incentive payment system (MIPS)
and the advanced alternative payment model (APM) pathways created by the
Medicare Access and CHIP Reauthorization Act (MACRA) of 2015.

Although the MACRA proposed rule for
2018 considers counting participation in advanced APM arrangements in Medicare
Advantage toward the advanced APM thresholds in 2019, CMS needs to recognize
the full spectrum of innovation in the Medicare Advantage program and
incentivize participation in a broader array of APMs.

At the same time, CMS needs to revise
MIPS to better align the two arms of the QPP. Meaningful progress toward both
goals can be achieved using Medicare Advantage as the platform. In this paper I
will be giving overview on how Medicare Advantage can help achieve the goals of


CMS is aware of diversity among
clinician practices in their experience with quality-based payments and expect
the Quality Payment Program to evolve over multiple years. The groundwork has
been laid for expansion toward an innovative, patient-centered, health system
that is both outcome focused and resource effective. A system that leverages
health information technology to support clinicians and patients and builds
collaboration across care settings. The Quality Payment Program: (1) Supports
care improvement by focusing on better outcomes for patients, and preserving
the independent clinical practice; (2) promotes the adoption of APMs that align
incentives for high-quality, low-cost care across healthcare stakeholders; and
(3) advances existing delivery system reform efforts, including ensuring a
smooth transition to a healthcare system that promotes high-value, efficient
care through unification of CMS legacy programs. 3


needed to achieve goals of MACRA:

As originally intended, MACRA had three main goals: repeal the
sustainable growth rate (SGR) Medicare payment system; stabilize payments for a
period of time; and move providers to a value-based payment system. To achieve
the third goal, MACRA established the QPP, which aimed to transition providers
into viable alternatives to traditional fee-for-service by making
fee-for-service increasingly unattractive through MIPS and rewarding
participation in APMs.

Although there is considerable flexibility in MIPS reporting requirements
and financial penalties during the first and likely the second years of
implementation, most providers will experience a “rude awakening” of increased
administrative burden and deteriorating reimbursements once MIPS is fully
implemented. As fee-for-service becomes rapidly untenable, many providers will
not have a viable alternative. Under current MACRA regulations and guidance,
only a small number of complex, risk-based Medicare Part B models, mostly
Center for Medicare and Medicaid Innovation demonstrations, qualify as advanced
APMs. There is no clear “on-ramp” for Medicare providers that want to begin the
transition along the value continuum but lack the resources to meet the current
advanced APM requirements. The early results from current advanced APMs are
disappointing, and their long-term success remains uncertain. 4 In
addition, the current process for developing, testing, and implementing
successful APMs in Medicare may take up to seven years, according to a
Congressional Budget Office analysis. 5

Recently, the effects of MACRA on Medicare spending and use and how the
effects might differ under various scenarios was published in
Health Affairs, April 2017 6. They estimate that physicians’ Medicare
payments will be substantially lower under MACRA than they would have been if
MACRA had never been passed and the cycle of SGR overrides had continued. They
suggest that if MACRA is to fare better than the SGR, well-designed APMs must
be available to physicians. Otherwise, there could be unintended consequences
for patients, and the MACRA program will fail to meet its value-based payment

Assets of
Medicare Advantage

To achieve the original goals of the MACRA legislation, Medicare
Advantage could serve as a platform to reduce the burden on physician
practices, provide an on-ramp to increasingly advanced payment models, and
accelerate the transition to a value-based payment system in Medicare.


Despite reductions in payments to plans authorized by the Affordable Care
Act, Medicare Advantage enrollment has grown 71 percent since 2010 (figure1). 7 As of 2017, one in three
people with Medicare (33 percent or 19 million beneficiaries) is enrolled in
a Medicare Advantage plan, and enrollment is projected to grow
to at least 41 percent over the next decade. 8 Unlike participation in
accountable care organizations, beneficiaries choose to be in Medicare
Advantage plans. Because Medicare Advantage’s cost-reduction efforts can result
in plan rebates that are passed on to the beneficiary as premium reductions or
increased services, patients can be incentivized to make high-value health care




The Medicare Payment advisory committee (MedPAC) and others have
argued that the Medicare Advantage program is more expensive than
fee-for-service Medicare. 9 Yet there is evidence that the techniques
used by Medicare Advantage plans are effective in changing physicians’
care patterns to reduce the use of expensive services, which may actually have
a spending reduction “spillover” effect in fee-for-service Medicare. 10


Several studies suggest that the care provided through Medicare Advantage
may be of higher value than the care offered through traditional Medicare,
especially for patients with chronic medical conditions such as diabetes
and cardiovascular disease.11 Furthermore, there is evidence that
the combination of full-risk capitation and revenue gainsharing agreements in
Medicare Advantage can promote clinical practice transformations at the
provider group level, which are associated with increased office-based care,
decreased hospital-based services, and increased survival for chronically ill,
elderly beneficiaries.12

to Innovate

The current MACRA APM provisions reward only those providers that have
the resources to participate in complex, risk-bearing advanced APMs. By
comparison, a MACRA-mandated CMS study 13 reported to
Congress that Medicare Advantage organizations and their network providers
have long been engaged in payment models that can be classified under every
category of the administration’s payment taxonomy framework.14 The
report also found that Medicare Advantage organizations work with
physician practices as they progress along the payment continuum, from one
category of models to the next and, within a category, from one payment
approach to the next. This payment reform “glide path” is not incentivized in
the current MACRA provisions. In addition, a recent analysis by the Health Care
Payment Learning and Action Network (HCP-LAN) reported that in 2016, as
much as 41 percent of Medicare Advantage health care dollars were in a
composite of more advanced categories three and four payment models. 15 This
is substantially higher than the corresponding portion for other payers and
suggests that Medicare Advantage could play a major role in accelerating the
transition to value in Medicare.

Proposed Rule

Impact Of MIPS

In the 2018 draft rule, CMS proposes treating the 2018 performance year
as another transition year of the QPP, extending program flexibility and
minimizing the MIPS reporting burden and exposure to penalties. Moreover,
mainly through an expansion of the low-volume thresholds (from $30,000 or 100
beneficiaries in 2017 to $90,000 or 200 beneficiaries in 2018), an estimated
two-thirds of clinicians will be exempt from MIPS, substantially limiting the
impact of the program, at least for the first two years. This is welcome news
to many, but not all, providers. As a budget-neutral program, fewer penalties
means significantly smaller rewards for providers that participate and would
otherwise expect to benefit.

While excluding a large number of clinicians from MIPS and temporarily
sheltering many more from the program’s impact addresses the immediate concerns
of many providers, it raises questions about the underlying purpose of MIPS. If
the program’s objective is to improve the quality of care delivered in
fee-for-service Medicare, past experience suggests that MIPS will not achieve
that goal. Although MIPS is by far the largest pay-for-performance initiative
to date, an extensive analysis of pay-for-performance over the past
decade failed to demonstrate a consistent association with improved health
outcomes in any setting. 16

MIPS will, however, achieve the objective of rapidly making
fee-for-service Medicare uncomfortable, if not untenable. In addition to facing
a substantial reporting burden once MIPS is fully implemented, the average
provider in MIPS (no bonuses or penalties) will see its inflation-adjusted
reimbursements fall substantially over the next several years. Furthermore,
small variations in scores may have a large effect on the publicly reported
composite performance score, affecting an individual provider’s reputation and
employability, even though there may be no significant difference in the value
of the care provided. As the June 2017, MedPAC report to Congress concluded,
MIPS, as presently designed, is unlikely to succeed in helping beneficiaries
choose clinicians, helping clinicians change practice patterns to improve their
care, or helping the Medicare program reward clinicians based on value.

of APMS In Medicare Advantage

Under the 2018 proposed rule, participation in Medicare Advantage
payer arrangements that meet the criteria will be considered when determining
whether eligible clinicians earn the 5 percent incentive payment and are exempt
from MIPS, beginning with the 2019 performance period. The rule includes an
option that allows payers to initiate the process on behalf of providers to
identify their arrangements as qualifying advanced APMs. This is a departure
from the 2017 final rule, which largely ignored risk contracts within Medicare
Advantage. However, unless the rules are structured to credit innovation along
the entire payment reform continuum, it will not have the desired effect of
substantially expanding participation in alternatives to fee-for-service.


If MACRA is to achieve its original goals, policy makers need to
incentivize participation in alternatives to fee-for-service at all levels. In
addition, as access to APMs is expanded, the substantial burden in MIPS needs
to be realigned with the goals of the QPP.

Medicare Advantage Into MACRA

While counting risk-based provider contracts in Medicare Advantage toward
the advanced APM participation thresholds in the 2018 proposed rule is a move
in the right direction, there are several additional steps that policy makers
can take to leverage the assets of Medicare Advantage.

Risk-Bearing Medicare Advantage Contracts as Advanced APMs

Through their capitated payment contracts with CMS, Medicare
Advantage plans assume risk for a population of beneficiaries and therefore
offer an alternative to traditional fee-for-service Medicare, which is
well-advanced along the payment reform continuum. CMS should amend MACRA to
consider Medicare Advantage contracts that take on more than nominal
financial risk, meet quality goals through the Star rating system, and use
electronic health record technology as advanced APMs. Providers would then be
able to count their Medicare Advantage participation toward meeting the
revenue or beneficiary thresholds and would be eligible for APM bonus payments
and exemption from MIPS.

Those Medicare Advantage providers that are not participating
providers in an APM within Medicare Advantage would not be eligible for the APM
bonus but would be able to use the star ratings of their contracts to avoid
penalties in MIPS, provided the Star rating is 4.0 or better and they meet MA
participation thresholds.

Incentives for APM Participation Within Medicare Advantage

In addition to the risk assumed by MA plans, many providers within
Medicare Advantage are also engaged in risk-based contracts with the plan.

Instead of providing incentives only for participation in complex, risk-based
advanced APMs, CMS should revise the APM bonus to provide incremental incentives
for participation at all levels of the payment reform continuum. For example,
using the payment model taxonomy as defined by the HCP-LAN, providers
would be eligible for differential bonus payments according to the model
category in which they participate. 17 This would provide the on-ramp to
value-based payment models that is currently missing in MACRA.

The Medicare Advantage plans would submit the participation data to
CMS, and the bonus would be based on revenue that flows through the specific
model, instead of on the providers’ fee schedule payments, as suggested in the
MedPAC June report. The bonus payments would go to the plan, to be distributed
to the providers according to their contracts. This would reduce the
administrative burden on physician practices as well as CMS. Plans would be
reimbursed for additional administrative costs.

Advance the
timeline For Medicare Advantage Incorporation

To help with transition to a value-based system, CMS should consider
allowing plans to submit provider participation and APM-related data in future

MIPS with the goal of the QPP

MIPS, as currently structured, will do little to improve the value of
care, and when fully implemented, the rewards or penalties that providers
receive may also have little to do with the value of their care. Simply
exempting a large number of providers does not address the current lack of
meaningful measures or the inherent difficulty of performance assessment at the
individual provider level. It also does nothing to further the QPP goal of
transitioning to a value-based system.

Instead of expanding the low-volume thresholds, CMS should markedly
reduce the reporting burden in MIPS to a few, easily reportable measures that
can be used to avoid negative updates. Any concern that eliminating potential
large penalties will make MIPS more comfortable and diminish the incentive to
transition to APMs is unfounded. Reducing the number of providers that receive
penalties will also reduce the potential for large bonuses, and the erosion of
inflation-based reimbursement over time will be a strong incentive for
providers to seek an alternative to MIPS. To further ensure that MIPS does not
become too comfortable, CMS should repurpose the “exceptional performance”
payments toward the APM bonuses to better align with the goals of the QPP.




The implementation of MACRA
will have a profound and lasting effect on the future US health care system and
the practice of medicine. However, unless there are substantive changes to how
the law is implemented, MACRA is unlikely to realize the goal of establishing a
Medicare payment system that rewards the value and not the volume of health
care services. Many of the key objectives of the legislation can be achieved
using Medicare Advantage as the platform