CMS provides updates on Quality Payment Program and new episode payment models as MACRA pushes forward

In late December 2016, the Centers for Medicare and Medicaid Services (CMS) released additional guidance for implementing the significant law the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) as a follow-up to the Final Rule released in October 2016.

While the fate of other legislation such as the Affordable Care Act is in question, the implementation of MACRA continues to move forward as planned with bipartisan support.  The released guidance includes a number of updates to support providers transitioning to the Quality Payment Program (QPP) established by MACRA, including the 2017 quality measure performance benchmarks to be used in the Merit-based Incentive Payment System (MIPS) and the patient relationship categories and codes used to measure cost under MIPS.

Additionally, CMS finalized three new episode payment models with tracks which may be considered advanced Alternative Payment Models (APMs) for purposes of the QPP, as well as released additional information on the ACO Track 1+ model, which will qualify as an advanced APM in 2018.

 Quality measure benchmarks

CMS released 2017 performance benchmarks and related information on quality measures submitted for the MIPS quality performance category. Measures will be compared to benchmarks to determine the number of points earned for each measure.  Where available, CMS provides historical benchmarks. For measures without historical benchmarks, CMS will use 2017 performance data to calculate a benchmark for measures submitted by at least 20 eligible clinicians or groups that meet the criteria for establishing a benchmark, including minimum case counts, data completeness and performance. Measures without a historical or calculated benchmark will receive three points.

Historical benchmark sources vary depending on how clinicians submit their performance data:

  • For electronic health record (EHR) and qualified clinical data registry (QCDR)/Registry reporters, benchmarks are based on quality performance data reported in 2015 to the Physician Quality Reporting System (PQRS).
  • For Consumer Assessment of Healthcare Providers and Systems (CAHPS) reporters, two sets of surveys are used – 2015 CAHPS for PQRS and CAHPS for ACOs.
  • For CMS Web Interface reporters, historic benchmarks are the same as the 2017 Shared Savings Program performance benchmarks.

Additionally, some measures that do not show much variability (defined as a median performance rate of 95% or higher; 5% or lower for inverse measures) are considered “topped out.” For these measures, clinicians scoring in the top deciles will all receive the same number of points. CMS notes that these measures may have different scoring in future years.

Clinician performance on quality measures will be assessed against benchmarks in order to assign between three and ten points for each measure. Benchmarks are expressed in terms of deciles, with a certain number of points associated with each decile. For example, if a clinician scores 83% on a measure where the 5th decile is between 72% and 85%, they will receive between 5.0 and 5.9 points for that measure. CMS has implemented a floor of three points for performance year 2017, so clinicians who score below the 3rd decile will still receive three points.

Quality measures and related specifications including submission type, historic benchmarks where available and whether or not the measure has topped out are available on CMS’s QPP website.

Patient relationship categories and codes

On December 29, 2016, CMS released an updated draft of patient relationship categories and a proposed method to operationalize the coding of the categories on claim forms.  The patient relationship categories and codes are required by MACRA and intended to help CMS more effectively measure cost, a performance category under MIPS, by attributing resources to clinicians. After considering public comments submitted in response to draft patient categories posted earlier in 2016, the revised patient categories distinguish both acute and continuing care, as well as whether items and services are furnished on a broad or focused basis. The updated patient categories are as follows:

  1. Continuous/broad, includes clinicians who provide the principal care for a patient where there is no planned endpoint of the relationship (e.g., primary care, certain specialties). Care in this category is comprehensive, dealing with the entire scope of patient problems, either directly or in a care coordination role.
  1. Continuous/focused, includes a specialist (e.g., rheumatology) whose expertise is needed for the ongoing management of a chronic disease or a condition that needs to be managed and followed for a long time.
  1. Episodic/broad, includes clinicians, such as hospitalists, who have broad responsibility for the comprehensive needs of the patients, but only during a defined period and circumstance, such as a hospitalization.
  1. Episodic/focused, includes a specialist focused on particular types of time-limited treatment (e.g., orthopedic surgeons). The patient has a problem, acute or chronic, that will be treated with surgery, radiation, or some other type of generally time-limited intervention.
  1. Only as ordered by another clinician, includes a clinician who furnishes care to the patient only as ordered by another clinician (e.g., radiology). This relationship may not be adequately captured by the alternative categories suggested above and may need to be a separate option for clinicians who are only providing care ordered by other clinicians.

The codes to identify patient relationship categories are required to be included on claims submitted for items and services furnished on or after January 1, 2018. CMS proposes the usage of Healthcare Common Procedure Coding System (HCPCS) modifiers as the most appropriate option to operationalize the coding of the relationship categories on claim forms.

CMS sought comments on the categories and plans to operationalize which were due by January 6, 2017. MACRA requires CMS to post the operational list of patient relationship categories and codes by April 2017.

Medicare ACO Track 1+ Model

CMS released additional details on the recently announced Medicare ACO Track 1+ Model. Starting in 2018, the model will qualify as an advanced APM in the QPP.  The model will require less downside risk than MSSP Tracks 2 and 3 to encourage participation, particularly for smaller clinical practices, and facilitate the transition to performance-based reimbursement.

This new model will have a maximum 50% shared savings rate like Track 1 ACOs, but will introduce a 30% loss sharing rate with the maximum level of downside risk varying depending on the ACO composition. ACOs that include physicians or small rural hospitals may elect to take on lower levels of risk in the first performance years.

Track 1+ ACOs will enter one of two risk arrangements depending on whether the ACO includes:

  1. A participant that is an IPPS hospital, cancer center, or a rural hospital with more than 100 beds;
  2. An ACO participant that is owned or operated by a rural hospital with 100 or fewer beds that is not itself an ACO participant; and
  3. An ACO participant rural hospital with 100 or fewer beds that is owned or operated by a health system.

If none of the above criteria are met, the Track1+ ACO’s loss sharing limit would be 8 percent of ACO Medicare Parts A and B revenue in 2018. If at least one of the above criteria is met, the loss sharing limit will be 4 percent of the ACO’s updated historical benchmark in the first year.

The Track 1+ model incorporates certain elements of Track 3 including beneficiary assignment to allow ACOs to know their patient population in advance, symmetrical thresholds to start sharing in savings or losses, and the option to elect the skilled nursing facility (SNF) 3-day waiver.

The 2018 application cycle for the Track 1+ Model will align with the other Shared Savings Program Tracks, and organizations interested in applying should plan to submit the required Notice of Intent to Apply in May of 2017. Existing track 1 ACOs may apply to participate in the model for the remainder of their current agreement period and may be eligible to renew for one additional three year agreement period if they are up for renewal in 2019 or 2020. In addition, new ACOs and renewing Track 1 ACOs may apply to participate. CMS noted that they will release additional information on this model in the coming months.

Episode payment model

CMS released a final rule on December 20, 2016 that establishes three new-episode payment models (EPMs) and a Cardiac Rehabilitation (CR) incentive payment model. These new models will be tested for five performance years, from July 1, 2017 to December 31, 2021 in certain geographic areas through the Center for Medicare and Medicaid Innovation (CMMI).

This final rule will add the following new EPMs:

  • Acute myocardial infarction (AMI)
  • Coronary artery bypass graft (CABG)
  • Surgical hip/femur fracture treatment (SHFFT) excluding lower extremity joint replacement which is already included in the CJF model

The AMI and CABG models will be tested in 98 Metropolitan Statistical Areas (MSAs) and the SHFFT model will be implemented in the same 67 MSAs where the CJR model is currently underway.

Track 1 of the new EPMs, which requires the usage and attestation of Certified Electronic Health Record Technology (CEHRT), will provide eligible clinicians additional opportunities to participate in Advanced APMs under the QPP.  In addition, the final rule modifies the Comprehensive Care for Joint Replacement (CJR) model so that it will qualify as an Advanced APM under the QPP.  The new Advanced APM opportunities begins in QPP performance years 2018 or 2019 for the new EPMs and potentially QPP performance year 2017 for the modified CJR model.

The first performance period for the new models begins on July 1, 2017.  These models, similar to the existing bundled payment programs like the Bundled Payments for Care Improvement (BPCI) and the CJR models, hold participating providers financially accountable for an entire episode of care. CMS defines the episode to include the inpatient stay plus 90 days post-discharge for all Medicare Parts A and B charges. At the end of the performance year, CMS will compare actual episode payments to the established EPM quality adjusted target price. The new models were met with mixed reactions from industry. While the American Medical Association (AMA) applauded the new payment models, the American Hospital Association (AHA) criticized CMS for finalizing another mandatory payment reform initiative without fully evaluating the results of previously implemented models.

For more on MACRA, visit


Anne Phelps
Principal | Deloitte Advisory
US Health Care Regulatory Leader
Deloitte & Touche LLP
Latest conversations from Anne Phelps on Twitter

Daniel Esquibel
Senior Manager | Deloitte Advisory
Deloitte & Touche LLP

Heather Hagan
Senior Manager | Deloitte Advisory
Deloitte & Touche LLP


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