Before delving into the exemption recently announced by the CMS, I want to provide some context. In 2015, Congress enacted—and President Barack Obama signed into the law—the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). As part of MACRA, a program called the Quality Payment Program (QPP) changes the way physicians are paid for treating Medicare beneficiaries. QPP creates two tracks for physician payment: the Merit-Based Incentive Payment System (MIPS) track and the Alternative Payment Model (APM) track. Under MIPS, providers have to report a range of performance metrics, and their payment amount is adjusted based on their performance. Under Advanced APMs, providers take on financial risk to earn the Advanced APM incentive payment.
On Jan. 9, 2018, the CMS announced the release of a new voluntary bundled payment model. Building on the prior Bundled Payments for Care Improvement (BPCI), the new Bundled Payments for Care Improvement Advanced (BPCI Advanced) initiative will qualify as an Advanced APM under the QPP. These models are not straightforward.
For example, a Participant is defined as “an entity that enters into a Participation Agreement with CMS to participate in the Model. BPCI Advanced will require downside financial risk of all Participants from the outset of the Model Performance Period.” What is downside financial risk? Fundamentally, it is the estimation of an item’s (usually a security) probability to suffer a decline in value if the conditions change. The conditions are typically market conditions.
On June 29, 2018, CMS announced it was “advancing the Medicare Advantage Qualifying Payment Arrangement Incentive (MAQI) Demonstration, which, when approved and adopted, would waive MIPS requirements for clinicians who participate sufficiently in certain Medicare Advantage plans that involve taking on risk. CMS seeks public comment on the information collection burdens associated with the demonstration, which is under consideration for formal approval.”
For physicians, this means knowing their payer mix and plans as well as having adequate reserves to cushion the deficit of payment if the standards are not met. Physicians also need to assess their appetite for risk, which equals probability multiplied by severity. In sum, a physician needs to consider what their risk tolerance is and the range for upside and downside risk in the QPP.
Rachel V. Rose, JD, MBA, advises clients on compliance and transactions in healthcare, cybersecurity, corporate and securities law, while representing plaintiffs in False Claims Act and Dodd-Frank whistleblower cases. She also teaches bioethics at Baylor College of Medicine in Houston. Rachel can be reached through her website, www.rvrose.com.
 MIPs and APMs vary greatly. MIPS is based on a range of performance metrics and payments are adjusted based on meeting those standards. APMs are based on financial risk.