Fig. 1 Distribution of orthopaedic surgeons by Quality Payment Program participation type.
Courtesy of Centers for Medicare & Medicaid Services

AAOS Now

Published 5/1/2017
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Richard Weil, PhD; John Cherf, MD, MPH, MBA

Orthopaedic Participation in APMs: What Are the Options?

Choosing a path forward may be difficult for many practices
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) ushered in the largest change to physician payments in more than a generation. As has been widely reported, the Quality Payment Program (QPP) replaces the sustainable growth rate formula with two payment tracks: the Merit-based Incentive Payment System (MIPS) and the Advanced Alternative Payment Model (APM).

Although these two tracks are presented as separate and distinct, a closer examination of the Final Rule (Nov. 4, 2016) reveals that there are, in fact, four separate but related paths forward for orthopaedic practices. Those paths are as follows:

  • Excluded from MIPS due to low Medicare volume or status as a first-year Medicare provider
  • Excluded from MIPS due to participation in an Advanced APM
  • Participation in MIPS as a group practice or individual provider
  • Participation in MIPS as part of a MIPS-APM

Fig. 1 shows the likely distribution of how orthopaedic surgeons will be paid from Medicare. However, it does not provide any guidance to practice leaders in answering the question, "Which of the above paths is right for our practice?" An answer to that question requires an understanding of the ins and outs of the four paths, as well as local market dynamics and the group's existing cost and quality performance.

Excluded from MIPS—low-volume or first-year provider
In the final rule, the Centers for Medicare & Medicaid Services (CMS) increased the low volume cut-off to include any clinician who has $30,000 or less in Medicare allowable charges or has fewer than 100 Medicare patients (defined as the total number of unique Medicare patients across all claims for an individual clinician's billings for the given performance year). Consequently, CMS expects nearly 380,000 of all clinicians billing under Medicare Part B to be excluded from MIPS because they see a low volume of Medicare patients. First-year Medicare providers also are excluded from MIPS.

Excluded from MIPS—participation in an Advanced APM
Advanced APMs include a meaningful amount of downside financial risk and typically have more stringent requirements, incentives, and penalties than MIPS to encourage a high level of performance on cost and quality of care. Therefore, clinicians participating in any of CMS' Advanced APMs are excluded from MIPS.

In fact, as further incentive, clinicians participating in an Advanced APM receive a 5 percent bonus payment on top of all of their eligible Part B allowed charges. Of note, although the Bundled Payment for Care Improvement (BPCI) project is not considered an Advanced APM, the updated Comprehensive Care for Joint Replacement (CJR) and Surgical Hip and Femur Fracture Treatment (SHFFT) Models are considered Advanced APMs. It is noteworthy that per the latest rulemaking, launch of the SHFFT model and the Advanced APM requirements of CJR have been delayed at least until Oct. 1, 2017, and potentially even later.

CMS anticipates that 70,000 to 120,000 clinicians (5 percent to 8 percent of all clinicians) will participate in Advanced APMs in 2017. Because these clinicians tend to be in larger, multispecialty, independent group practices or integrated hospital practices and because orthopaedic surgeons tend to be in smaller practices, proportionally fewer orthopaedic surgeons are expected to participate in Advanced APMs.

MIPS participation as a group practice or individual provider
The default path forward for most orthopaedic practices is participation in MIPS as a group practice or individual provider. Maximizing Medicare payments in this situation requires performing well on each of the following four MIPS performance categories:

  • Quality (formerly the Physician Quality Reporting System, or PQRS)
  • Resource Use (the cost of care)
  • Advancing Care Information (formerly the Electronic Health Record [EHR] Incentive program, also known as meaningfully using health information technology or Meaningful Use [MU])
  • Improvement Activities (originally called Clinical Practice Improvement Activities)

Quality is by far the most important of the four performance categories, accounting for 60 percent of the MIPS composite performance score (CPS). Advancing Care Information is worth 25 percent of the CPS, and Improvement Activities are worth 15 percent. In 2017, Resource Use will have a 0 percent weighting on the CPS, but will increase to 30 percent over time. As the weighting for Resource Use increases, the Quality weighting will decrease.

MIPS as part of a MIPS-APM
To further encourage participation in APMs, while recognizing that many clinicians are not prepared to take downside financial risk, CMS has structured MIPS to reward participation in the following models:

  • Comprehensive End-Stage Renal Disease Care Model (non-large dialysis organization arrangement, one-sided risk arrangement)
  • Medicare Shared Savings Program (MSSP) (Track 1)
  • Oncology Care Model (one-sided risk arrangement)
  • All advanced APMs (applies to low-volume clinicians participating in an advanced APM)

Physicians who participate in these programs will receive a 100 percent score in the Practice Improvement performance category. The Quality performance score will carry a lower weight, while the Advancing Care Information and Practice Improvement performance categories will carry higher weights. Because achieving a 100 percent score in the Quality domain is difficult, a reduction in its weight in favor of Practice Improvement is a plus.

In addition, under the MSSP, CMS awards several bonus points within the Quality performance category. Clinicians can earn one bonus point for each measure reported through the CMS web interface, one for reporting additional high priority measures, and two bonus points for each additional outcome and patient satisfaction measure reported.

In total, the bonus points will result in an approximately 30 percent increase in a clinician's Quality score. Although these bonus points are accessible to any clinician who reports his or her Quality performance via the CMS web interface using identical measures, practically speaking, very few groups would make the investments required to report in this manner.

For most orthopaedic surgeons, the preferred path is to have a sufficiently low volume of Medicare patients and be excluded from MIPS. However, most orthopaedic surgeons have little ability to significantly alter their payer mix away from Medicare in favor of commercially insured patients. Assuming a stable payer mix, orthopaedic surgeons whose patient volumes are above the low-volume threshold today are likely to meet the threshold in the foreseeable future.

Their default path will be subject to MIPS and the accompanying payment adjustment. As the program is phased in over the next 4 years (payment periods 2019 to 2022 and beyond), this payment adjustment will range from a –4 percent to a –9 percent on the downside, and a potential for a +4 percent to +9 percent bonus on the upside.

CMS expects that smaller and solo practices that have not yet made the investments in cost and quality performance management infrastructure will be more heavily affected by the downside of MIPS. Alternatively, larger practices that have been actively participating in the PQRS and MU programs for several years are likely to receive positive payment adjustments.

Clearly, if orthopaedic surgeons have the option of participating in an Advanced APM, doing so would be advantageous provided the downside risk could be mitigated relative to the guaranteed 5 percent fee-for-service bonus payment. However, the lack of Advanced APMs in the market and the restriction that orthopaedic surgeons cannot participate in these models on their own means that this will only be an option for a select group of orthopaedic surgeons.

As a result, most orthopaedic surgeons will have to turn to MIPS-APMs such as the MSSP Track 1 option. With 438 Track 1 accountable care organizations (ACOs) providing care to approximately nine million Medicare beneficiaries in all 50 states, Washington, D.C., and Puerto Rico, orthopaedic practices should be able to identify one in their market.

The decision to join an ACO should be based on the following:

  • the position of the practice in the market relative to its competitors
  • the degree to which the practice's clinical and patient care philosophies align with those of the ACO
  • the requirements the ACO places on participation (such as use of an EHR, financial contribution, or reporting requirements)

If these factors are acceptable to the practice, it may be possible for an orthopaedic surgeon to perform far better in MIPS as part of a MIPS-APM than through any other pathway.

Richard Weil, PhD, is partner of HC Wisdom. John Cherf, MD, MPH, MBA, is a member of the AAOS Now Editorial Board and Practice Management Section Leader of the AAOS Health Care Systems Committee.