Perspectives

As summer break draws to a close, clinicians should prepare for their ‘junior year’ of MACRA

Health Care Current | August 7, 2018

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My Take

As summer break draws to a close, clinicians should prepare for their ‘junior year’ of MACRA

By Anne Phelps, principal, US Health Care Regulatory leader, Deloitte & Touche LLP

Two years ago, as my son was preparing to enter high school, I encouraged him to keep up with his summer reading list. He was about to enter a foundational year, and being prepared as an incoming freshman would help ensure his success in high school. Around the same time, I wrote a blog about “going to school on MACRA” to explain that hospital executives and clinicians were about to enter their first year under the new Medicare Access and CHIP Reauthorization Act (MACRA). Given the enormity of this transformative new law—which puts clinicians on a path toward outcomes-based health care and new risk-bearing payment models—sitting out the first year would not be wise, I advised. Experiences gained in that first year would be invaluable in the years that followed. My son—now a rising junior—has a long summer reading list as he prepares to take several Advanced Placement (AP) classes and begins to think about college. Similarly, in January 2019, we will enter the third year of MACRA, and the course work is getting harder and the consequences steeper.

CMS releases summer reading assignment

On July 12, 2018, the US Centers for Medicare and Medicaid Services (CMS) released proposed changes for the third year of the Quality Payment Program (QPP) under MACRA, and proposed updates for the Medicare physician fee schedule. I find it interesting that CMS decided to combine the Medicare physician fee schedule with proposed MACRA changes. This is like receiving an extensive summer reading assignment before the start of a challenging school year.

MACRA grades on a curve-like distribution

Recognizing that MACRA is a significant and disruptive change, Congress gave hospitals and clinicians time to ease into the new payment models. In 2017, it wasn’t difficult for clinicians to report at least one measure and avoid the negative payment adjustments. But this is changing as CMS is proposing to increase the performance thresholds under the Merit-based Incentive Payment System (MIPS). What this means is for clinicians whose payments are under MIPS, the plusses and minuses are going to be larger. They are going to see bigger swings and MACRA will start to look more like the law that Congress intended.

The agency uses a MIPS final score—between 0 and 100 points—to determine which clinicians will receive a negative, neutral, or positive adjustment to their Medicare Part B payments.

For the 2017 and 2018 performance years, CMS set the performance threshold at 3 points and 15 points, respectively (see table, below). The low threshold early on was an effort to limit the application of negative payment adjustments while MACRA’s QPP is implemented. Under the proposal, the performance thresholds—the point at which a qualified practitioner receives either a neutral or positive payment adjustment or a negative payment adjustment—would increase from 15 points in 2018 to 30 points in 2019. The proposed payment range also increases. The program is budget-neutral, which means the positive payment adjustments must be offset by negative adjustments.

MIPS graph

In a sense, MACRA has been grading on a curve since 2017, but that curve is going to get wider in 2019. The top performers will reap the biggest rewards, and the lower-performers will see deeper cuts. For 2018, clinicians will see favorable adjustments as high as +5, and negative adjustments as low as -5.

CMS also proposed boosting the threshold for exceptional performance to 80 points for 2019—up from the 70-points threshold for 2017 and 2018. Clinicians whose MIPS performance scores meet or exceed the exceptional performance threshold will qualify for an additional payment adjustment.

The cost measure is the new AP math class

Under MIPS, CMS calculates measures of total cost of care for certain conditions that are attributed to clinicians. In 2017, the “cost measure” contributed zero to a clinician’s overall score. It increased to 10 percent in 2018, and will be 15 percent in 2019. Performance in the cost category is measured using a retrospective analysis of claims across Medicare Part A and Part B, and does not require additional reporting by clinicians. For 2019, the cost-performance score will be based on performance in Medicare Spending Per Beneficiary (MSPB), Total Per Capita Cost (TPCC), and certain episodes of care.

With the cost measures, the challenge is not in reporting (since CMS does the calculation based on claims data). But MIPS clinicians will need to understand how to reduce costs while maintaining a high level of care quality.

No one gets to skip coding class

Aside from MACRA, all Medicare clinicians will need to go to school again on coding, especially for evaluation and management services, and also for telemedicine. CMS proposed adding new codes for telemedicine and other technology-based services and changes to evaluation and management (E/M) coding requirements. E/M coding is the process by which Medicare billers and coders translate the patient visit experience into the information needed by Medicare to appropriately reimburse for those visits. E/M codes distinguish visits based on the level of complexity, site of service, and whether the patient is new or established. Under the proposed rule, CMS would adopt a single blended payment rate for new and established patients for office/outpatient E/M visits. Health care providers and clinicians will want to analyze the proposed workflow and payment changes to determine how to comply.

Ducking class is no longer an option

Many physicians still don’t know much about MACRA, according to the results of our latest biennial physician survey. Clinicians and hospital executives who opted to skip the 2017 freshman year of MACRA could find it more difficult to catch up. Here are a few key findings from our Deloitte 2018 survey of US physicians:

  • Two out of five physicians are aware of the law: In 2016, only 18 percent of surveyed physicians said they were familiar with MACRA. That percentage now stands at 41 percent. While the number is up significantly from two years ago, it is still too low. Just 6 percent of physicians say they have an in-depth knowledge of the law.
  • Independent physicians are more aware: About 30 percent of employed physicians say they are familiar with the law and have an in-depth knowledge of its requirements, compared to 51 percent of independent physicians. Unlike independent physicians, employed physicians typically don’t have to figure out how to comply with the law. Our 2016 survey also determined that independent physicians were more aware of the law than employed physicians. But it is important that all physicians understand the law, given its impact.
  • Physicians who got an early start are keeping up: More than 80 percent of physicians who participated in MIPS or APMs during the first year of MACRA have begun to make changes, according to our survey results.

A forthcoming report from Deloitte’s Center for Health Solutions is going to show that, while physicians do get a lot of information on quality measures, they receive limited information about cost in terms of their utilization of resources over an episode of care or spending per beneficiary. And cost is becoming an increasingly important part of the MIPS formula.

Nearly two years have passed since CMS outlined the new payment programs under MACRA. Just as high school gets progressively more difficult each year, MACRA is becoming more challenging for health system executives and clinicians. If this was a high school, rather than a hospital or medical practice, clinicians would be gearing up for their junior year classes. Sadly, summer is not endless. But as I tell my son, the good news is that we still have time for summer reading, even if we have procrastinated a bit.

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In the news

Administration finalizes rule expanding short-term, limited-duration health plans

The final rule to expand the definition of what short-term, limited-duration (STLD) health insurance policies can be offered was published on August 1. Previously, STLD plans were limited to no more than three months and were not renewable. Now, under this rule, insurers can offer consumers STLD coverage that lasts up to 12 months and can renew or extend it up to 36 months. According to the administration, STLD plans are an affordable coverage option for people who have been priced out of the individual market.

This rule finalizes the draft rule that the administration proposed early this year. Stakeholders—including health plans, provider groups, and consumer advocates—have expressed concern that STLD plans could harm consumers who do not understand the plans’ coverage limitations. Additionally, critics of the plans have argued that premiums in the individual market could rise if young, healthy people exit the market and leave sicker people in the risk pool.

For 2019, CMS predicts 600,000 people will enroll in STLD plans, 100,000 of whom are uninsured today. The agency does not anticipate the expanded availability of STLD plans will significantly impact premiums in the individual market, though it is expected that 200,000 people will leave the individual market in 2019. Within the next four years, CMS expects that 1.6 million people will have STLD coverage.

Under the final rule, health plans can decide if consumers can renew coverage without re-applying. STLD plans do not have to comply with some Affordable Care Act (ACA) requirements, including coverage of the essential benefits package or the cost-sharing requirements. Because they cover less, they are cheaper than ACA plans. Health plans that sell STLD plans also can deny coverage to consumers who have pre-existing conditions, and charge higher premiums based on a consumer’s health status.

In their contracts and applications, STLD plans must clearly disclose their exemption from providing certain ACA-mandated benefits.

The final rule will go into effect 60 days after it is posted. States have regulatory authority to approve, or limit, STLD plans.

RELATED: Enrollment in the individual market declined in 2018, mainly because of consumers leaving non-exchange plans

Enrollment in the individual insurance market declined 12 percent in the first quarter of 2018, compared to the same period last year, according to a Kaiser Family Foundation analysis. According to the analysis, which was released July 31, enrollment remained steady in 2016 before dropping 12 percent in 2017. In 2015, there were 17.4 million consumers in the individual insurance market, compared to 15.2 million in 2017, and 14.4 million in the first quarter of 2018. Much of the decline took place in the off-exchange market, where enrollees are not eligible for federal subsidies and were not protected from premium increases in 2017 and 2018.

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CMS approves state reinsurance program requests

CMS approved waivers from Wisconsin and Maine that will allow the states to create their own reinsurance programs. Section 1332 of the ACA allows states to try different coverage models if they retain the basic affordability and quality protections of the ACA.

State reinsurance programs can help stabilize health insurance markets and reduce premiums by covering the financial burden associated with high-cost enrollees. CMS has approved reinsurance programs for four other states under section 1332: Alaska, Hawaii, Minnesota, and Oregon. Two more State Innovation Waiver applications are pending approval at CMS.

Wisconsin’s Healthcare Stability Plan (WIHSP) starts in 2019. Under WIHSP, the state will reimburse health insurers up to 80 percent for claims between $50,000 and $250,000, with a limit of $200 million in total. WIHSP is expected to reduce premiums by an average of 10.4 percent, according to state officials.

Maine will reinstate the Maine Guaranteed Access Reinsurance Association (MGARA), which closed after the launch of the ACA insurance markets. The program is expected to be ready by the next open-enrollment period. Under MGARA, health plans are reimbursed for 90 percent of claims that fall between $47,000 and $77,000, and 100 percent of claims greater than $77,000 for certain high-risk enrollees. Maine estimates the program will trim premiums by 9 percent.

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Senate HELP Committee holds hearing on reducing administrative costs in health care

On July 31, the Senate Committee on Health, Education, Labor & Pensions (HELP) held a hearing to discuss reducing administrative spending in health care. This was the third in a series of hearings focused on curbing health care costs (See the July 24, 2018 Health Care Current). Witnesses included the president and CEO of a state hospital and nursing home association, the president and CEO of America’s Health Insurance Plans (AHIP), an economics professor from Harvard University, and an advisor to the American Action Forum.

HELP Committee Chairman Lamar Alexander (R-Tenn.) referenced a 2017 report from the American Hospital Association (AHA) and noted that hospitals and health care providers must comply with 629 different regulatory requirements from four federal agencies. In addition to the agency requirements, providers must follow other state and federal regulations. The AHA report says that compliance with non-clinical regulatory requirements collectively costs providers almost $39 billion a year. A typical community hospital, for example, must employ 23 full-time workers just to comply with Medicare regulations.

The state hospital association witness reiterated AHA’s findings and noted that the financial burden for small and rural hospitals can be particularly challenging. One of her state’s critical-access hospitals has enough cash reserves to stay open for just over a week, but it will have to spend $65,000 to upgrade its electronic health records (EHR) system to comply with Meaningful Use, as called for by the Health Information Technology for Economic and Clinical Health (HITECH) Act.

During the hearing, several participants discussed how EHRs can increase the burden on clinicians. Citing a family physician who was required to install an EHR to comply with Medicare and Medicaid regulations, Alexander noted how a monthly maintenance fee, periodic system upgrades, and inconsistent software among providers and hospitals can financially strain providers—and complicate patient record-keeping.

The Harvard professor recommended that HHS work with health care organizations to simplify payment, standardize pre-authorization requirements, and integrate EHR and billing systems. No technological issues prevent EHR systems from interfacing with billing systems. However, there is little incentive for health plans and IT vendors to invest in integration.

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FDA schedules hearing on its Biosimilar Action Plan

The US Food and Drug Administration (FDA) will hold a public hearing on September 4 to discuss the agency’s approach to improving competition and innovation among biologic drugs and its efforts to increase the availability of biosimilar drugs. In July, FDA released its nine-page Biosimilar Action Plan, which focuses on four key areas:

  • Improving the efficiency of the biosimilar and interchangeable product-development and approval process.
  • Maximizing scientific and regulatory clarity for the biosimilar product-development community.
  • Developing effective communications to improve the understanding of biosimilars among patients, clinicians, and health plans.
  • Supporting market competition by reducing gaming of FDA requirements or other attempts to unfairly delay competition.

In a July 18 statement, FDA Commissioner Scott Gottlieb, M.D., noted that while less than 2 percent of Americans use biologics, these drugs make up 40 percent of total spending on prescription drugs. FDA officials have said that increased competition coming from biosimilars will save money for patients and the health care system. However, the agency has acknowledged there are challenges to growing the market.

A recent blog from Deloitte outlines five barriers that could keep biosimilar manufacturers from cracking the US market. As of July 1, FDA approved 11 marketing applications for biosimilar products. Most FDA-approved biosimilars are not yet available to patients, according to the agency. The agency wants to use the hearing to receive input from patients, researchers, providers, manufacturers, professional organizations, and the public.

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Opioid use is most prevalent among disabled Medicare beneficiaries, study finds

Opioid use among disabled Medicare beneficiaries increased between 2007 and 2016, according to a study released August 1 by the Mayo Clinic. Researchers analyzed administrative claims data from 48 million individuals, which were categorized into three groups:

  • Commercial beneficiaries (42.5 million individuals)
  • Aged Medicare beneficiaries, including Medicare Advantage (4.6 million individuals)
  • Disabled Medicare beneficiaries, including those below age 65 (825,599 individuals)

According to the study, 52 percent of disabled Medicare beneficiaries used opioids annually, compared to 14 percent of commercially-insured patients, and 26 percent for aged Medicare beneficiaries. The disabled Medicare beneficiary group also had the highest rates of long-term opioid use and the largest average daily dose. From 2007 through 2016, disabled Medicare beneficiaries had an average daily dose of 63 milligram morphine equivalents (MME), an annual use prevalence of 51.5 percent, and a yearly average of 6.2 opioid prescriptions per person. The quarterly use rate for this population rose from 26 percent in 2007 to 39 percent in 2016.

Quarterly prevalence of opioid use changed little among commercial beneficiaries, with the average daily dose of 17 MME remaining constant since 2011. Quarterly opioid use among aged Medicare beneficiaries increased from 11 percent in 2007 to 14 percent in 2016.

Earlier this summer, the Deloitte Center for Health Solutions published a study on strategies that health plans and pharmacy benefit managers (PBMs) have begun adopting to improve opioid abuse prevention and treatment among members.

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Breaking Boundaries

Sweat sensors and smart bandages: small devices on our skin have potential to monitor, heal

Researchers at Stanford University have developed a wearable skin sensor designed to measure a person’s cortisol levels from a drop of sweat. Cortisol is a hormone that spikes in response to stress levels, and can provide clues about metabolism, immune function, and emotional stress. Interest in sweat-sensing devices is growing as scientists try to make it easier for diabetic patients to track their glucose levels and help athletes measure their metabolic conditions. Sweat could also potentially be used to measure medication levels in a person’s system. Finding strategies to measure different biological markers using sweat could open the door to better condition monitoring without the invasiveness of drawing blood.

Early tests on the experimental device are showing potential. Scientists get results in seconds, rather than the hours it takes to analyze blood samples. The next phase of studies aims to improve the reliability and accuracy of the sensor. Researchers are also working to improve the sensitivity of sweat-sensing devices by stimulating sweat glands in a localized area of the skin so individuals do not have to perspire to trigger the measurement.

At Tufts University, researchers are working on a device that can monitor and provide treatment to patients who have chronic wounds. These smart bandages are less than three millimeters thick, and are being tested in pre-clinical trials for treatment of chronic skin wounds caused by burns, diabetes, and other conditions.

Almost six million patients suffer from chronic wounds every year, and many require treatment at an outpatient setting. The experimental smart bandage provides continuous monitoring of the pH and temperature of a wound. It also has flexible sensors for oxygenation, which is another marker of healing. Additionally, the bandages can track inflammation using specific biomarkers. Based on the data, antibiotics can be released automatically from the bandages in the form of a heating gel.

Analysis: Analysts expect the global biosensors market to top $29 billion by 2024. Most of the newly developed biosensors will monitor blood sugar levels, pulse rate, and body temperature. An aging population—combined with an increase in chronic conditions and greater preference for point-of-care testing and remote monitoring—is driving the biosensing device trend.

(Sources: Onur Parlak et al, “Molecularly selective nanoporous membrane-based wearable organic electrochemical device for noninvasive cortisol sensing,” Science Advances, July 20, 2018; Pooria Mostafalu et al, “Smart Bandage for Monitoring and Treatment of Chronic Wounds,” Small, July 6, 2018)

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