CMS proposes higher performance standards for year three of MACRA Quality Payment Program

Significant changes to part B coding requirements

On July 12, 2018, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule detailing the payment updates and policy proposals for the Medicare Part B Physician Fee Schedule (PFS) and the Quality Payment Program (QPP) under the Medicare Access and CHIP Reauthorization Act (MACRA).

July 19, 2018 | Health care

As CMS moves forward with implementation of MACRA, the agency proposes raising the performance thresholds under the Merit-based Incentive Payment System (MIPS) for 2019. As a result, a greater percentage of clinicians participating in MIPS would face larger negative payment adjustments in 2021, while a lesser percentage of clinicians would qualify for an additional positive payment adjustment for exceptional performance. The proposed increase in the weight of the Cost measure in MIPS would be an additional challenge for many clinicians, especially as they work to adapt to new performance measures including measures that focus on the efficiency of care delivery in eight episodes of care.

The proposed rule would present unique opportunities for health plans as the All Payer Combination Option begins on January 1, 2019, and CMS opens up the payer-initiated process for commercial and other private payers to submit payment models to CMS for qualification as an Other Payer Advanced APM for the 2020 performance year. In addition, a demonstration project under consideration would present a unique opportunity for Medicare Advantage organizations (MAOs) who incorporate certain risk-based payment arrangements into their contracts with clinicians.

For other health care stakeholders, the higher performance standards under MIPS and the move away from fee-for-service reimbursement will present opportunities to partner with clinicians on efforts to more effectively monitor and improve performance in the Cost and Quality performance categories.

With regard to proposed coding changes under the PFS, health care provider organizations may want to consider an analysis as to how the proposed workflow and payment changes might affect them.

The proposed rule also moves forward with implementation of health care provisions of the Bipartisan Budget Act of 2018 (BBA).

The proposed rule is scheduled to be published in the Federal Register on July 27, 2018. Public comments are due to CMS by September 10, 2018.

Highlights of key provisions of the proposed rule are detailed below.


MACRA, which was enacted in April 2015, repealed the Sustainable Growth Rate (SGR) formula for updates to the Medicare Part B PFS and set payment updates for all years in the future. At the same time, MACRA created two new Part B payment tracks for clinicians to participate in the QPP:

  • The Merit-based incentive payment system (MIPS), which provides positive or negative payment adjustments for clinicians whose practices are more closely tied to fee-for-service reimbursement; and
  • Advanced alternative payment model (AAPM) for Qualifying Participants (QPs), which allows clinicians who have significant percentages of their practices in risk-bearing, coordinated care models to receive temporary financial bonuses and higher payment updates in the long-term.

Although 2019 will be the third performance year for the QPP, it is the first year that payment adjustments under MIPS will be applied to Medicare Part B payments to participating clinicians and the first year that other clinicians will receive QP incentive payments based on their participation in AAPMs. Additionally, for the first time performance information for clinicians participating in MIPS will be publicly available via the Medicare Physician Compare website.


Performance year 2019 under the QPP will dictate MIPS payment adjustments and eligibility for QP incentive payments for 2021. Under the statute, MIPS payment adjustments for 2021 can range from +/-7 percent.

Notably, the BBA narrowed the scope of MIPS payment adjustments, so that adjustments will apply only to covered professional services paid through the PFS, rather than to all items and services under Medicare Part B. As a result, MIPS payment adjustments will not be applied to payments for Part B drugs.

MIPS performance threshold for 2019

CMS proposes to set the MIPS performance threshold at 30 points for 2019, reflecting implementation of a provision of the BBA that provides flexibility to the HHS Secretary to set the MIPS threshold score at less than the mathematic mean of MIPS performance scores through performance year 2021.

The MIPS threshold score is the score between zero and 100 points that CMS uses to determine which clinicians participating in MIPS will receive a negative, neutral, or positive payment adjustment. For the 2017 and 2018 performance years, CMS set the threshold score at three points and 15 points, respectively, in an effort to limit the application of negative payment adjustments while MACRA’s QPP is implemented.

In addition, CMS proposed to set the additional performance threshold for exceptional performance score at 80 points for 2019, an increase from the previous threshold of 70 points for the 2017 and 2018 performance years. Clinicians whose MIPS performance scores meet or exceed the exceptional performance threshold will qualify for an additional payment adjustment.

The table below summarizes MIPS performance thresholds for performance years 2017 through 2018.

Weight of MIPS performance categories in final score for 2019

For final MIPS performance scores for 2019, CMS proposes weighing each performance category as follows:

  • Quality: Forty-five percent
  • Cost: Fifteen percent
  • Promoting Interoperability (PI; formerly Advancing Care Information): 25 percent
  • Improvement Activities (IA): Fifteen percent

In 2019, CMS proposes to allow clinicians to submit a single quality measure via multiple collection types (previously called submission mechanisms) and be scored on the data submission with the greatest number of measure achievement points. For the 2017 and 2018 performance years, CMS required clinicians participating in MIPS to submit quality measures via a single submission mechanism.

Available collection types are listed below.

  • Electronic clinical quality measures (eCQMs)
  • Quality Clinical Data Registry (QCDR) measures
  • Part B claims measures
  • The CMS web interface measures
  • The CAHPS for MIPS survey measure
  • Administrative claims measures

In addition, CMS proposes adding four patient-reported outcome measures and seven high-priority measures to the available MIPS Quality measures. CMS also proposed changes to three measures and the removal of 34 existing quality measures.

In the proposed rule, CMS states that the agency will continue to phase out topped out measures and to replace more process measures with outcome measure in future years.

CMS also seeks comment on a tiered scoring system for quality measures, in which varying weights would be assigned to different measures based on the value of a particular quality measure. Under such a system, outcome measures, composite measures, and measures that address agency priorities could be assigned higher values.


CMS proposed a weight of 15 percent for the Cost performance category for 2019, up from 10 percent in 2018. The weight of the Cost performance category must increase to 30 percent by 2022, a three-year delay included in the BBA.

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 would be based on performance in Medicare Spending per Beneficiary (MSPB), Total Per Capita Cost (TCPC), and eight new episodes of care:

  • Elective outpatient percutaneous intervention (PCI)
  • Knee arthroplasty
  • Revascularization for lower extremity chronic critical limb ischemia
  • Routine cataract removal with intraocular lens (IOL) implantation
  • Screening/surveillance colonoscopy
  • Intracranial hemorrhage or cerebral infarction
  • Simple pneumonia with hospitalization
  • ST-elevation myocardial infarction (STEMI) with percutaneous intervention (PCI)

For acute inpatient medical condition episode groups beginning in the 2019 performance year, CMS proposes to attribute episodes to each MIPS-eligible clinician who bills evaluation and management (E/M) claim lines during a trigger inpatient hospitalization under a tax identification number (TIN) that renders at least 30 percent of the inpatient E/M claim lines in that hospitalization.

MSPB is a measure initiated by an inpatient hospital admission, lasting from three days prior to the admission to 30 days after discharge from the hospital. The MSPB measure is attributed to the MIPS-eligible clinician who submitted the plurality of claims for Part B services for an index hospital admission.

TCPC is a measure of the total cost of care for an attributed individual beneficiary across Medicare Parts A and B for a calendar year. A beneficiary is attributed to a MIPS-eligible clinician’s tax identification number/National Provider Identifier (TIN/NPI) combination if a beneficiary received more primary care services (PCS) from primary care physicians (PCPs), nurse practitioners (NPs), physician assistants (PAs), and clinical nurse specialists (CNSs) in that TIN-NPI than in any other TIN-NPI or CMS Certification Number (CCN).

Promoting interoperability (PI)

Over the past year, CMS has undertaken an overhaul of the Electronic Health Record (EHR) Meaningful Use program for providers, rebranding it as Promoting Interoperability. Subsequently, the Meaningful Use MIPS performance category also was renamed Promoting Interoperability (PI).

Most notably, CMS proposes requiring clinicians to use 2015 Edition Certified Electronic Health Record Technology (CEHRT) for 2019.

Under PI, MIPS practitioners report on a series of electronic clinical quality measures (eCQMs). For 2019, CMS proposes to align the MIPS eCQMs with those used for the Medicaid version of the PI program in an effort to reduce overall complexity.

In addition, the proposed rule lays out a new methodology to score each MIPS eCQM individually and then add them together to receive up to 100 possible points (weighted to account for 25 percent of the MIPS composite score in 2019).

Improvement activities (IA)

IA is proposed to remain unchanged, accounting for 15 percent of the MIPS composite score in Performance Year 3. Clinicians do not need to report more than four activities—four medium or two high-weighted activities—to receive full credit for IA for the 2019 performance period. This is the same standard used for the 2018 performance period.

Of the overall list of activities for clinicians to choose from, CMS proposed to add six new improvement activities, remove one existing activity, and modify five activities.

In prior rulemaking, the IA performance category had a PI bonus score. With the changes to the PI performance category, CMS proposes removing that bonus in the 2019 scoring.

Public reporting via Physician Compare

The Performance Year 3 proposed standards for public reporting on Physician Compare remains largely unchanged from Performance Year 2. Public reporting continues to use the Achievable Benchmark of Care (ABC™) methodology to set the terms for measuring Quality, Cost, Improvement Activities, and Promoting Interoperability. The benchmark drives a 5-star rating for each measure.

For both the Quality and Cost performance categories, CMS proposes that newly introduced measures will not be publicly reported for the first two years of use.

For the PI category, CMS proposes to include only an indicator for “successful” performance as opposed to “high” or “successful” indicators in Year 2.

Facility-based scoring methodology

CMS proposes to implement facility-based scoring for the Quality and Cost MIPS performance categories for clinicians who furnish 75 percent or more of their services in an inpatient or on-campus outpatient hospital setting. This scoring methodology would utilize the measures and benchmarks adopted under the Hospital Value-Based Purchasing (VBP) program to assign MIPS scores.

A facility-based clinician would be attributed to the hospital where they provide services to the greatest number of Medicare beneficiaries.

MIPS eligibility changes

Low-volume threshold

Under the proposed rule for 2019, CMS proposes adding a third criterion for the low-volume threshold based on the number of covered professional services provided in a performance period. Thus, clinicians could be exempted from MIPS participation if they:

  • Billed no more than $90,000 in Medicare Part B charges
  • Provided care to no more than 200 Medicare Part B beneficiaries
  • Provide no more than 200 professional services under the PFS

As part of this additional low-volume threshold evaluation, CMS proposes to allow clinicians to opt in to MIPS participation as long as they do not meet all three of the low-volume threshold criteria.

Additional MIPS-eligible clinicians

Beginning in 2019, CMS proposes making additional categories of clinicians eligible to participate in MIPS. The additional categories are:

  • Physical therapists
  • Occupational therapists
  • Clinical social workers
  • Clinical psychologists

In addition, CMS requests feedback on whether to add qualified speech-language pathologists, qualified audiologists, certified nurse-midwives, and registered dietitians or nutrition professionals as MIPS eligible clinicians in the final rule.

Each of the categories of clinicians CMS has proposed to include in MIPS in 2019 or has requested comment on including in MIPS in 2019 is currently eligible to participate in a Medicare AAPM.

Advanced APMs

To be considered qualifying participants (QPs) in Advanced APMs (AAPMs) for payment year 2021 under the Medicare-only Option, clinicians in the 2019 performance period must receive at least 50 percent of Medicare Part B payments, or see at least 35 percent of Medicare Part B beneficiaries through a Medicare AAPM.

Beginning with the 2019 performance period, MACRA also provides for the All-Payer Combination Option. Clinicians can achieve QP status if they receive at least 50 percent of payments from all payers, or see at least 35 percent of patients through a combination of Medicare AAPMs and Other Payer APMs. For the payment standard, at least 25 percent of Medicare Part B payments would have to come through Medicare AAPMs. For the patient count standard, at least 20 percent of Medicare Part B beneficiaries would have to be seen through a Medicare AAPM.

Revenue-based standard

The proposed rule would maintain the revenue-based nominal amount standard for financial risk at 8 percent of the average estimated revenue from Parts A and B for providers in participating Medicare AAPM entities through performance year 2024.

For the All Payer Combination Option, the proposed rule would maintain the revenue-based nominal amount standard for financial risk at 8 percent of total combined revenues from the payer of providers and suppliers in participating APM entities through performance year 2024.

Advanced APM quality measures

AAPMs are required to include quality measures that are substantively comparable to those reported under MIPS. The 2019 proposed rule would provide for quality measures for Medicare AAPMs and Other Payer Advanced APMs to be considered MIPS comparable if the measure is:

  • From the MIPS final list
  • Endorsed by a consensus-based entity
  • Otherwise determined to be evidence-based, reliable and valid by CMS

The proposed rule also would allow additional measures that are determined to be “evidence-based, reliable, and valid by CMS” for the 2020 performance year.

Certified Electronic Health Record Technology (CEHRT)

CMS proposes to increase the minimum CEHRT use threshold for Medicare AAPMs and Other Payer AAPMs from 50 percent to 75 percent in 2019. This threshold would require at least 75 percent of eligible clinicians in an AAPM entity to use CEHRT to document and communicate clinical care with patients and other health care professionals.

Under the All-Payer Combination Option, the proposed rule would permit either payers or eligible clinicians to submit evidence on the use of CEHRT.

Payer-initiated process for the 2020 QP performance period

Under the proposed rule for 2019, commercial and other private payers would be permitted to submit payment models to CMS for qualification as an Other Payer Advanced APM for the 2020 performance year. For the 2019 performance year, only Medicare Advantage organizations, state Medicaid programs, and multi-payer models operating under the Center for Medicare and Medicaid Innovation (CMMI) were permitted to submit payment arrangements to CMS via the payer-initiated process.

In addition, the proposed rule would provide a streamlined certification process for future years for Other Payer Advanced APMs that participated in previous years, rather than being required to resubmit all documentation for CMS review on an annual basis.

Medicare Advantage Qualifying Payment Arrangement Incentive (MAQI) demonstration

The proposed rule provides additional detail on a demonstration project currently under consideration that would exempt clinicians from MIPS if they “participate to a sufficient degree” in Qualifying Payment Arrangements with Medicare Advantage organizations (MAOs). If finalized, the demonstration would test whether exempting clinicians from the MIPS reporting requirements and payment adjustments would drive greater participation in payment arrangements similar to Medicare AAPMs with MAOs and change clinicians’ care delivery.

The proposed rule states that if the demonstration were finalized, it would apply requirements for Qualifying Payment Arrangements that are consistent with the criteria for Other Payer APMs. In addition, the proposed rule indicates that CMS would apply the combined thresholds for Medicare payments or patients to Qualifying Payment Arrangements with MAOs and CMS Advanced APMs (e.g., 25 percent of payments for the 2017 and 2018 performance years, 50 percent of payments for the 2019 and 2020 performance years). Importantly, the proposed rule states that the MAQI demonstration project would use aggregate participation in CMS Advanced APMs and Qualifying Payment Arrangements, without applying a specific minimum participation threshold in either type of payment arrangement.

If finalized, the demonstration project would begin in 2018 and run for five years.

QP determination at Tax Identification Number (TIN) level

Beginning in 2019, CMS would allow for QP determinations under the All-Payer Combination Option to be requested at the TIN level, in addition to the APM entity level and individual level. CMS proposed this change based on feedback about how commercial and non-Medicare contracts are executed.

Part B physician fee schedule

The proposed rule also addresses changes to the Medicare Part B physician fee schedule and other Medicare Part B payment policies, including the proposed addition of new codes for telemedicine and other technology-based services and changes to evaluation and management (E/M) coding requirements.

Payment update

Most notably, the overall update to the Part B PFS for 2019 will be +0.25 percent, implementing a provision of the BBA that reduced the payment update from the 0.5 percent update included in the MACRA statute.

E/M coding

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. Almost every specialty has E/M visits, but they represent a larger portion of the total allowed services for clinicians such as primary care providers and specialist offices who do not routinely perform medical procedures or diagnostic testing.

The 2019 PFS proposed rule includes several proposals intended to reduce administrative burden and improve payment adequacy within office and outpatient visits beginning January 1, 2019, including:

  • Allowing practitioners to use the existing framework of applying the current 1995 or 1997 E/M documentation guidelines, or choose instead to document E/M visits using medical decision-making or time
  • Expanding current options by allowing practitioners to use time as the governing factor in selecting visit level and documenting the E/M visit, regardless of whether counseling or care coordination are the primary uses of the visit
  • Expanding current options for documenting the patient history and exam, making it possible for practitioners to focus their documentation on what has or has not changed since the last visit, rather than re-documenting information
  • Allowing practitioners to simply review and verify certain information in the medical record that is entered by ancillary staff or the beneficiary, rather than personally re-entering it

Under the proposed rule, CMS would adopt a single blended payment rate for new and established patients for office/outpatient E/M visit levels two through five, explaining the agency’s view that “allowing practitioners to choose the most appropriate basis for distinguishing among the levels of E/M visits and applying a minimum documentation requirement, together with reducing the payment variation among E/M visit levels, would significantly reduce administrative burden for practitioners, and would avoid the current need to make coding and documentation decisions based on codes and documentation guidelines that are not a good fit with current medical practice.”

CMS also proposes a series of add-on codes “to reflect resources involved in furnishing primary care and non-procedural specialty generally recognized services.”

CMS seeks public comment on the timeframe to implement the changes to E/M procedure, along with other ideas on how E/M coding can be improved in future rulemaking, such as eliminating the prohibition on same-day visits by practitioners of the same group and specialty.

Communication technology-based services

Under Medicare statute, telehealth services must ordinarily correspond to a service that can be furnished in-person, but are instead furnished using interactive, real-time technology. Telehealth services are subject to several statutory provisions affecting geography, and the origin of the service request.

In recent years, CMS has sought public comment on how best to expand the use of telehealth within current law, as well as other potential uses of other communication technology. The 2019 PFS proposed rule lays out several new services performed through communication technology that are not subject to the requirements that Medicare telehealth services encounter, and would be reimbursed in the same manner as other physician services on the fee schedule. Services for which CMS is proposing new reimbursement codes include:

  • Interprofessional consultations via the Internet and other communications methods
  • Brief Communication Technology-Based Service, including activities like “Virtual Check-ins” that work with a patient to evaluate whether an office visit or other service is needed
  • Remote Evaluation of Pre-Recorded Patient Information, providing for a separate Medicare payment when a physician uses recorded video or images taken by the patient themselves in order to evaluate their condition

In addition, CMS is proposing payment for Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) for communication technology-based services and remote evaluation services that are furnished by an RHC or FQHC practitioner when there is no associated billable visit.


The proposed rule would add reimbursement codes for prolonged preventive services to the list of telehealth codes eligible for Medicare reimbursement. The proposed rule also would make changes to telehealth coding to allow for greater home-based management of End-Stage Renal Disease (ESRD) and acute stroke, implementing provisions of the BBA.

Functional status reporting (FSR)

With the elimination of Medicare therapy caps under the BBA, CMS proposes to eliminate the FSR requirement for outpatient therapy beginning in 2019.

Outpatient physical therapy (PT) and occupational therapy

CMS proposes a new payment modifier for outpatient physical therapy (PT) and occupational therapy (OT) furnished by therapy assistants. This modifier is in preparation for a scheduled payment reduction in 2022. The modifiers will not be required on claims until 2020.

Changes to Part B drug payments

By law, payments for most Part B drugs are based on Average Sales Price (ASP), plus a six percent add-on payment. Drugs such as single-source products, or recently launched drugs do not have ASP data, and are instead paid the Wholesale Acquisition Cost (WAC), plus six percent. WAC prices do not include the discounts that are part of an ASP, meaning that a WAC-based payment amount for the same drug will typically be significantly higher.

The proposed rule would lower the add-on amount for WAC payments to three percent. This proposed payment reduction was included in the President’s FY 2019 Budget, and other proposals from the Administration to change the pricing incentive structure for drugs.

Off-campus provider-based hospital department payments

For 2019, CMS proposes to hold payments at 40 percent of the Outpatient Prospective Payment System (OPPS) rates for newly formed or “non-excepted” off-campus provider-based hospital departments (HOPDs).

Medicare Shared Savings Program (MSSP)

MSSP participants are currently required to report on 31 distinct measures. The PFS rule proposes to reduce the number of measures to 24, and to make other changes to the measure set in an effort to more closely capture patient outcomes and experiences.

The proposed measure set also aligns with reporting required under MIPS, including an additional CMS Web Interface measure that is already reported under MIPS.

Clinical laboratory fee schedules

CMS proposes to change the clinical laboratory fee schedule (CLFS) to account for Medicare Advantage payments in the definition of “applicable laboratory,” in order for additional laboratories that serve a high proportion of MA enrollees to reach the Medicare revenue thresholds needed to be considered an applicable laboratory and therefore report data to CMS.

CMS is also seeking public comments on alternative approaches for a definition of an applicable laboratory.

Ambulance fee schedules

The ambulance fee schedule (AFS) reflects the extension of temporary add-on payments for ground ambulance services that the BAA reauthorized for five years. The add-on payments grant a three percent increase for ground ambulances in rural areas, two percent in urban areas, and a 22.6 percent “super rural” bonus increase for transports that originated in an area at or below the lowest 25th percentile of all rural populations by population density.

The BBA also increased the reduction from 10 percent to 23 percent for payments for non-emergency basic life support transports of beneficiaries with ESRD for renal dialysis services.

Price transparency

In the proposed rule’s request for information on price transparency, CMS cites ongoing concerns that patients do not have the means to determine the price they will pay for a given service, as well as out-of-network charges. CMS also notes that existing requirements that providers maintain a list of standard charges are insufficient for patients to know the true cost of a service. To that end, CMS seeks comment on several questions, including:

  • How to setting a useful, standardized definition of “standard charges”
  • The types of information would be of greatest benefit to patients
  • Whether providers should be required to inform patients of their out-of-pocket costs
  • How Medigap coverage affects patients understanding of out-of-pocket costs
Substance use disorders

In its ongoing response to the opioid crisis, CMS solicits comments on creating a Bundled Episode of Care for management and consulting treatment for substance use disorders (SUDs). CMS seeks information on whether a bundled episode-based payment would help improve access, quality and efficiency for SUD treatment.

CMS also seeks comment on coding and payment for a bundled episode of care for treatment for SUDs that could include overall treatment management, counseling, and components of a MAT program such as treatment planning, medication management, and observation of drug dosing.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

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Anne Phelps
Deloitte Risk and Financial Advisory

US Health Care Regulatory Leader
Deloitte & Touche LLP


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Ethan Joselow
Deloitte Risk and Financial Advisory

Deloitte & Touche LLP

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