Proposed Budget Deal Impacts MACRA, Other Physician Pay Provisions

February 9, 2018
Policy Snapshot

As a result of the Society’s advocacy efforts, along with the American Medical Association (AMA) and other physician groups, language extending the misvalued code offset has changed for the better. Earlier reports were that Congress was considering two additional years of this policy which would result in negative updates in 2020, threatening to reduce Medicare payments to below 2015 levels. However, as proposed, the policy is still expected to significantly reduce the statutory update of 0.5% for 2019.

This week the Senate leaders announced a budget deal that included a number of MACRA fixes specifically: elimination of the application of MIPS adjustments to Part B drugs; three years of additional flexibility for the implementation of both the cost component of MIPS and the requirement that the threshold for success be set at either the mean or median; and additional authority for the Physician Focused Payment Model Technical Advisory Committee (PTAC) to provide feedback to model developers.

Significantly, the package also reauthorizes funding for community health centers and the National Health Service Corps, and the Teaching Health Center GME program is reauthorized and significantly expanded.

As an offset, significant cuts were made to the Prevention and Public Health Fund. Though the bill technically eliminates the fund after 2027, it is expected that the provision will be removed at some point.

Some more specifics for extenders included in the budget are:

Technical Amendments to MACRA:
Makes several changes to the Medicare Access and CHIP Reauthorization Act (MACRA) including:

  • Excludes Medicare Part B drug costs from MIPS payment adjustments;
  • Eliminates improvement scoring for the cost performance category for the second, third, fourth and fifth years of MIPS;
  • Allows CMS to reweigh the cost performance category to not less than 10 percent for the second, third, fourth, and fifth years of MIPS;
    • Requires CMS to update on CMS’ website by December 31st of each year information on resource use measures including measures under development, the time-frame for such development, potential future resource use measure topics, a description of stakeholder engagement and the percent of expenditures under Medicare Parts A and B that are covered by resource use measures
  • Allows CMS flexibility in setting the performance threshold for years two through five to ensure a gradual and incremental transition to the performance threshold set at the mean or median for the sixth year;
  • And allows the Physician Focused Payment Model Technical Advisory Committee (PTAC) to provide initial feedback on models regarding the extent to which they meet criteria and an explanation of the basis for the feedback.

Misvalued Codes
Extends the misvalued codes provision for one additional year (2019), which would require CMS (based on the recommendations of the AMA / Specialty Society Relative Value Scale Update Committee (RUC)) to reallocate 0.5% of fee schedule spending from “overvalued” codes. If less than 0.5% adjustments are found, all physician fee schedule services would be reduced by the difference. This process has produced significant reallocation among services since the RUC undertook the project almost ten years ago and almost all of the fee schedule spending that is available for review has already been reviewed. Given this fact, extension of the provision into 2019 is expected to significantly reduce 0.5% fee schedule update for 2019. Many groups continue to strongly advocate against this provision, as it would eliminate the scheduled updates that physicians would receive under MACRA.

EHR Standards and Significant Hardship

  • This provision removes the mandate that meaningful use standards become more stringent over time.
  • The bill eases burden on physicians because they no longer have to submit and receive a hardship exception from HHS.
  • Furthermore, the bill should apply to both meaningful use and QPP’s advancing care information.

Funding for quality measure endorsement, input, and selection
Appropriates $7.5 million for 2018 and 2019 for HHS’ contract with a consensus based entity for priority setting, measure endorsement, measure maintenance and annual reporting to Congress. This extends the provision in MACRA that went thought Oct. 1, 2017 for two more years until Sept. 30, 2019; however, it reduces the appropriation from $30 million to $7.5 million.

Provides flexibility for beneficiaries to be a part of an ACO
Allows a Medicare Shared Savings Program (MSSP) Accountable Care Organization (ACO) to choose to have its beneficiaries assigned prospectively.

ACO Beneficiary Incentive Program
Provisions include:

  • Allows eligible ACOs (i.e., MSSP Track 2 ACOs, MSSP Track 3 ACOs, and future two-sided risk ACOs) to directly give beneficiaries up to $20 for showing up to a primary care visit
  • No additional federal funds are provided to participating ACOs
  • Participating ACOs can use shared savings to fund the Beneficiary Incentive Program
  • Any payment made by an ACO does not impact the application of their shared savings calculation
  • Provides protection for participation in the Beneficiary Incentive Program from the anti-kickback statute and, in turn, the civil monetary penalties law.

Medicare payment cap for therapy services
This provision would permanently repeal the outpatient therapy caps beginning on January 1, 2018. It would continue to require that an appropriate modifier be included on claims over the current exception threshold indicating that the services are medically necessary, and would lower the threshold for the targeted manual medical review process from $3,700 to $3,000.

Telehealth in Medicare Advantage
Permits a Medicare Advantage (MA) plan to offer additional telehealth benefits in its annual bid amount beyond the services that currently receive payment under Part B beginning in 2020. MA plans must offer both telehealth and in-person options to the beneficiary.

Telehealth and ACOs
Removes geographic restrictions on provision of telehealth services for the Medicare Shared Savings Program (MSSP) Track II (only if an ACO chooses prospective assignment and remains at two-sided risk), MSSP Track III, and two-sided risk ACO models with prospective assignment that are tested or expanded through Center for Medicare and Medicaid Innovation (CMMI), as determined appropriate by the Secretary of Health and Human Services (HHS). Also, it allows patients to receive telehealth services from the beneficiary’s residence.

Teaching Health Center Graduate Medical Education
Funding for Teaching Health Center Graduate Medical Education is extended for two years at an annual level of $126.5 million, more than doubling the current annual funding for this program.

The House will have to approve the legislation if/when it passes the Senate. In that process there may still be changes to some of the provisions in the legislation.

The Society will provide updates as this legislation moves forward.