The Centers for Medicare & Medicaid Services’ (CMS) final rule for Medicare’s new physician payment system offers both challenges and opportunities for hospitals and their employed or contracted physicians, the AHA said last week.

CMS Oct. 14 issued final regulations carrying out key provisions of the payment system required by the 2015 Medicare Access and CHIP Reauthorization Act (MACRA), which replaced the flawed sustainable growth rate methodology for updates to the Medicare physician fee schedule. The law requires CMS to establish a new physician quality and value-based payment program – the Quality Payment Program (QPP) – that starts in 2019. The rule finalizes most of the key policies for the 2019 QPP.

Eligible clinicians will participate in one of two tracks – the default Merit-based Incentive Payment System (MIPS) or alternative payment models (APM). At least 592,000 clinicians are expected to submit data for MIPS during the first performance year.

The final rule creates a transitional period in 2017 and 2018 that allows providers to ease into the MIPS program. Only those who do not send in any data will receive a negative payment adjustment. Providers can receive a small positive adjustment for sending a partial year of data and a slightly larger adjustment for sending a full year.

“We are pleased that CMS has provided clinicians with increased flexibility to meet MACRA’s aggressive timelines and reporting requirements,” AHA Executive Vice President Tom Nickels said in a press statement following release of the final rule. “By allowing them to ‘pick their pace,’ clinicians in a variety of settings will be able to more easily transition to the new program.”

Under the final rule, participation in an advanced APM allows physicians to earn a 5% lump sum incentive payment each year from 2019 through 2024 and avoid MIPS reporting requirements and payment adjustments. To qualify, advanced APMs must meet three requirements: Use certified electronic health record (HER) technology, base payments on quality measures comparable to MIPS and require providers to bear more than nominal risk – a criterion that CMS has interpreted to limit MACRA incentives to models where providers owe Medicare if their spending under the model exceeds projections.

The agency noted that it intends to explore new options for advanced APMs, including an accountable care organization model with more limited risk than current models.

The AHA expressed disappointment that “CMS continues to narrowly define [advanced APMs], which means that less than 10% of clinicians will be rewarded for their care transformation efforts.” But the association is “encouraged that CMS is exploring a new option that would expand the available advanced APMs that qualify for incentives."

The agency also sought to address concerns about the impact on small practices by broadening its exclusion for providers who treat a low volume of Medicare patients from MIPS. CMS will exempt physician practices with less than $30,000 in Medicare charges or fewer than 100 unique Medicare patients per year. The draft rule set the threshold at $10,000 a year.

The AHA said it remains concerned that the “lack of sociodemographic adjustment to the measures used in the MIPS will unfairly disadvantage clinicians and hospitals caring for the poorest patients."

The final rule also puts in effect policies related to blocking of health information and EHR surveillance that apply to all hospitals, critical access hospitals and physicians.

Responding to calls for more flexibility, the final rule departs from the “all-or-nothing” approach previously used in EHR incentive programs. The rule reduces the total number of required measures under the category to five from 11 in the proposed rule. All other measures will be optional for reporting. Reporting on the optional measures can earn physicians bonus points toward their overall score.

The AHA noted that “opportunities remain to further align hospital and clinician performance measurement, and we will work with the agency to make that happen.”

AHA members received an Oct. 14 Special Bulletin with more details on the regulations