What’s Next for Medicare Provider Payment?

December 1, 2017

Earlier this month, the Centers for Medicare & Medicaid Services (CMS) released its final rule on the Medicare Access and CHIP Reauthorization Act (MACRA), and efforts are well under way around the country to encourage a shift to value based payment models for Medicare providers. Meanwhile, the Medicare Payment Advisory Commission (MedPAC) recently recommended a move away from a key component of MACRA, the Merit-based Incentive Payment System (MIPS), toward a different approach to value-based payment. The goal of this briefing was to provide an update on MACRA implementation, the issues on the table as policymakers consider next steps around shifting the way providers are paid, and what this all means for improving health outcomes and quality.


  • Mark Miller, Medicare Payment Advisory Commission (MedPAC)
  • Elizabeth Mitchell, Network for Regional Healthcare Improvement
  • Aucha Prachanronarong, Division of Electronic and Clinician Quality, Centers for Medicare and Medicaid Services
  • Len Nichols, George Mason University Center for Health Policy Research
  • Greg Woods, Division of Alternative Payment Model Infrastructure, Center for Medicare and Medicaid Innovation
  • Sarah Dash, Alliance for Health Policy (moderator)


This briefing is made possible through a grant from The Commonwealth Fund.


12:00 – 12:10 p.m.      Welcome and Introductions

  • Sarah Dash, Alliance for Health Policy

12:10 – 12:45 p.m.      Presentations

  • Len Nichols, Center for Health Policy Research and Ethics, George Mason University
  • Aucha Prachanronarong, Division of Electronic and Clinician Quality, Division of Electronic and Clinician Quality
  • Gregory Woods, Division of Alternative Payment Model Infrastructure,Center for Medicare and Medicaid Innovation (CMMI)
  • Elizabeth Mitchell,Network for Regional Healthcare Improvement
  • Mark Miller, The Medicare Payment Advisory Commission (MedPAC)

12:45 – 1:30 p.m.        Question and Answer Session

Event Resources

Event Resources

Key Materials (listed chronologically, beginning with the most recent)

“2017 Value-Based Payment Study”. American Academy of Family Physicians. November 29, 2017. Available at http://allh.us/j6At

“Breaking Down the MACRA Final Rule”. Billy Wynne. Health Affairs Blog. November 9, 2017. Available at http://allh.us/YPfC

“CMS Announces MACRA Rule Changes”. Shannon Firth. MedPage Today. November 2, 2017. Available at http://allh.us/4gxm

“Refining an alternative to the Merit-based Incentive Payment System (MIPS)”. Kate Bloniarz and David Glass. MedPAC. November 2, 2017. Available at http://allh.us/8qv9

“Next steps for the Merit-Based Incentive Payment System (MIPS)”. Kate Bloniarz and David Glass. MedPAC. October 5, 2017. Available at http://allh.us/KMa3

“What Should We Conclude From ‘Mixed’ Results In Payment Reform Evaluations?”. Len Nichols, Alison E. Cuellar, Lorens Helmchen, Gilbert Gimm, and Jay Want. Health Affairs Blog. August 14, 2017. Available at http://allh.us/Enyf

“Improve Quality, Control Spending, Maintain Access – Can the Merit-Based Incentive Payment System Deliver?”. Eric C. Schneider and Cornelia J. Hall. NEJM Catalyst. February 13, 2017. Available at http://allh.us/qQdj

“New Directions for Medicare Physician Payment”. Jordan Kiszla and Rachel Nuzum. The Commonwealth Fund. June 21, 2016. Available at http://allh.us/4kBy

Additional Materials (listed chronologically, beginning with the most recent)

“CMS’s Big MACRA Surprise – Physicians Will be Judged Based On Cost In 2018 MIPS Calcualtion”. Lynn Barr, Tim Gronniger, and Tim Putnam. Health Affairs Blog. November 22, 2017. Available at http://allh.us/vmyf

“Medicare Accountable Care Organization Results For 2016: Seeing Improvement, Transformation Takes Time”. Robert Saunders, David Muhlestein, and Mark McClellan. Health Affairs Blog. November 21, 2017. Available at http://allh.us/DkMN

“Consumer Protections in New Medicare Payment and Delivery Models: A Checklist”. Julie Carter. AARP Public Policy Institute. November 20, 2017. Available at http://allh.us/6HUe

“Providers call on CMS for more flexible alternative payment models”. Maria Castellucci. Modern Healthcare. November 20, 2017. Available at http://allh.us/G3Y4

“Quality Payment Program Year 2: Final Rule Overview Fact Sheet”. Centers for Medicare and Medicaid Services. November 16, 2017. Available at http://allh.us/XJAx

“Quality Payment Program Rule Executive Summary”. Centers for Medicare and Medicaid Services. November 16, 2017. Available at http://allh.us/kwpN

“Experts: Payers Will Forge Ahead with New Pay Models”. Shannon Firth. MedPage Today. November 13, 2017. Available at http://allh.us/Jdqy

“CMS allows more docs to sit out MACRA”. Virgil Dickson. Modern Healthcare. November 2, 2017. Available at http://allh.us/AKCG

“Mapping a course to measure the impact of payment reform”. Catalyst for Payment Reform. October 25, 2017. Available at http://allh.us/3E7N

“MedPAC urges repealing MIPS”. Virgil Dickson. Modern Healthcare. October 5, 2017. Available at http://allh.us/AKbY

“MACRA Implementation Timeline and Key Dates You Should Be Aware Of”. Digirad. August 10, 2017. Available at http://allh.us/BgnE

“As MACRA Implementation Proceeds, Changes Are Needed”. John O’Shea. The Heritage Foundation. April 28, 2017. Available at http://allh.us/xrWJ

“How the Money Flows Under MACRA”. Kavita Patel, Loren Adler, Margaret Darling, Paul B. Ginsburg, and Steven M. Lieberman. The Brookings Institution. July 12, 2016. Available at http://allh.us/GywH

“Medicare Delivery System Reform: The Evidence Link: The Latest Facts and Results on Medicare ACO, Medical Home, and Bundled Payment Models”. Kaiser Family Foundation. Available at http://allh.us/49xf



Mark Miller The Medicare Payment Advisory Commission (MedPAC), Executive Director

202-220-3700      mmiller@medpac.gov

Elizabeth Mitchell Network for Regional Healthcare Improvement, President and CEO

207-747-5104      emitchell@nrhi.org

Len Nichols George Mason University Center for Health Policy Research and Ethics, Director

703-993-1978       lnichol9@gmu.edu

Aucha Prachanronarong Centers for Medicare and Medicaid Services, Quality Measurement and Value-Based Incentives Group, Division of Electronic and Clinician Quality, Director

410-786-1879        Aucha.Prachanronarong@cms.hhs.gov

Gregory Woods Center for Medicare and Medicaid Innovation, Division of Alternative Payment Model Infrastructure, Director

410-786-4562        Gregory.Woods1@cms.hhs.gov


Experts and Analysts

Joseph Antos American Enterprise Institute, Wilson H. Taylor Scholar in Health Care and Retirement Policy

202-862-5938       jantos@aei.org

Robert Berenson The Urban Institute, Senior Fellow

202-261-5886       rberenson@urban.org

Shawn Bishop The Commonwealth Fund, Vice President, Controlling Health Care Costs and Advancing Medicare

202-292-6740        smb@cmwf.org

Cristina Boccuti Kaiser Family Foundation, Associate Director Program on Medicare Policy

202-347-5270        cboccuti@kff.org

Cynthia Brown American Medical Association, VP, Government Affairs

202-789-7440        cynthia.brown@ama-assn.org

Stuart Butler The Brookings Institution, Senior Fellow

202-238-3183        smbutler@brookings.edu

Michael Chernew


Harvard Medical School, Director,

Healthcare Markets and Regulation Lab

617-432-0174        chernew@hcp.med.harvard.edu

Paul Ginsburg University of Southern California, Leonard D. Schaeffer Chair in Health Policy Studies Director – Center for Health Policy

202-49409399       pginsbur@usc.edu

Stephanie Glover National Partnership for Women & Families, Health Policy Analyst

202-986-2600        sglover@nationalpartnership.org

Kate Goodrich CMS Center for Clinical Standards and Quality, Director and CMS Chief Medical Officer

410-786-6841        kate.goodrich@cms.hhs.gov  

Stuart Guterman Academy Health, Senior Scholar

202-725-5462        stuart.guterman@academyhealth.org

Jack Hoadley Georgetown University, Health Policy Institute, McCourt School of Public Policy, Research Professor

202-687-1055         jfh7@georgetown.edu

Erin Mackay National Partnership for Women & Families, Associate Director, Health Information Technology Policy & Programs

202-986-2600        mackay@nationalpartnership.org   

R. Shawn Martin American Academy of Family Physicians, Senior Vice President, Advocacy, Practice Advancement, and Policy

(202) 232-9033       smartin@aafp.org

Mara McDermott CAPG, Vice President of Federal Affairs

202-770-1863          mmcdermott@capg.org

Tricia Neuman Kaiser Family Foundation, Senior Vice President

202-347-5270         tneuman@kff.org

Kavita Patel The Brookings Institution, Senior Fellow

301-926-8162          kpatel@brookings.edu

Mai Pham Anthem, Vice President of Provider Alignment Solutions

443-996-7179         hoangmai.pham@anthem.com

Eugene Rich Mathematica Policy Research, Center Director

609-799-3535         erich@mathematica-mpr.com

Emily Roesing Catalyst for Payment Reform, Director of Business Development

301-310-2031         eroesing@catalyze.org

Rob Saunders Duke-Margolis Center for Health Policy Research, Director, Payment and Delivery Reform,

202-621-2800         robert.saunders@duke.edu

Eric Schneider The Commonwealth Fund, Senior Vice President for Policy and Research

212-606-3864         es@cmwf.org

Douglas Stoss Humana, Vice President, Federal Affairs




(Please note this is an unedited transcript, for exact quotes please reference the video.) SARAH DASH:  Alright, well good afternoon, everyone. Thank you so much for joining us on a busy day in Washington for today’s briefing on what’s next for Medicare provider payments.   My name is Sarah Dash, and I am President and CEO of the Alliance for Health Policy. For those who are not familiar with the Alliance, we are a non-partisan organization dedicated to advancing knowledge and understanding of health policy issues. So, we are really glad you’re here, and hello as well to those who might be on Twitter at the hashtag #allhealthlive. You all can feel free to tweet while you’re here too, and feel free to submit questions that way as well.   Before we get started, I would like to thank the Commonwealth Fund for making today’s briefing possible, and for their partnership and support.   Let’s dive into the topic. After a deliberative process lasting since the passage of the Medicare Access and CHIP Reauthorization Act in 2015, earlier in November, CMS released its final rule pertaining to MACRA quality payment program. And as we know, efforts are well underway around the country to encourage a shift to value-based payment models for Medicare providers. Meanwhile, the Medicare Payment Advisory Commission — MedPAC, recently recommended a move away from the key component of MACRA — the Merit Based Incentive Payment System, towards a different approach to value-based payment, and there are many nuances and complexities to the implementation of many of these measures. So, we are here today to examine the issues that are on the table, as healthcare providers around the country work to understand and implement these measures, and as policymakers consider additional shifts to the way providers might be paid. And what all of this really means for improving health outcomes and quality, and for healthcare costs.   You are going to hear today from five really excellent speakers, each of whom brings a different perspective to the discussion, and we are really grateful to have them here today, to shed some light on the discussion.   Joining us today, and I will just introduce them in speaking order. Len Nichols, who is Director of the Center for Health Policy, Research and Ethics at George Mason University. Len was also appointed to the physician-focused Payment Model Technical Advisory Committee, or PTAC, which was created in the MACRA legislation. Len holds a PhD in Economics from University of Illinois at Urbana-Champagne.   Next, Aucha Prachanronarong, who is Director of the Electronic and Clinician Quality Division at the Centers for Medicare and Medicaid Services. And Gregory Woods, who is the Director of the Division of Alternative Payment Model Infrastructure, at the CMS Innovation Center. And they are going to give a joint presentation about efforts at CMS and CMMI. Aucha has a Masters in Health Sciences and Health Policy from Johns Hopkins University, and Gregory holds a Masters in Public Affairs from Princeton’s Woodrow Wilson School.   To my left is Elizabeth Mitchell. She is President and CEO of the Network for Regional Healthcare Improvement, and serves as Vice Chair of the PTAC. She’s also a Guiding Committee Member of the Healthcare Payment Learning and Action Network, or the LAN, and she’s on the Quality Improvement Strategy Technical Expert Panel. So, we are really delighted to have her today. In addition to all of those accomplishments, she’s also served two terms in the Maine State Legislature, and chaired their Health and Human Services Committee.   Finally, last, but certainly not least, we will hear from Mark Miller. Mark is the Executive Director of MedPAC, a non-partisan federal agency that advises Congress on Medicare payment, quality, and access issues. Prior to joining MedPAC in 2002, Mark held leadership positions at the CVO, at CMS, and at OMB. He holds a PhD in Public Policy Analysis from State University of New York at Binghamton, and I have to give a special note, which is, we are really honored to have Mark here today, because this is his last day at MedPAC, and I hope I’m not breaking any news here. Mark has really done extraordinary work with the Commission over the past 15 years, and has really been on a number of Alliance panels as well, helping to eliminate complicated Medicare issues, so we are really, really thrilled that you joined us here today, and wish you well on your next move.   With that, I’m going to turn it over to Len Nichols, to kick things off.   LEN NICHOLS:  Okay. Can you hear me okay in the back? Good.   So, I will just say, basically, very briefly, I’m going to talk about payment reform, but it’s also true, since I have the grayest beard in the office, they wanted me to start with just a little bit of history. All of you of course went to good schools, and learned everything you need to know in kindergarten. It took me till 7th grade, “Two roads diverged in a yellow wood.” You may remember that poem. And so, what I want to show you, is essentially, believe it or not, I know it’s hearsay to say it in this building, but believe it or not, it doesn’t matter who wins these next set of elections, everybody is going to want to cut healthcare cost. Some people would like to spend less on healthcare and Medicare in particular, so that they can spend it on coverage expansion. Some people like to use it to pay for tax cuts, but everybody is going to be pretty seriously focused on getting healthcare costs down, because they have ulterior motives to spend it on.   Now, here comes the first history lesson:  This is the single most important variable that connects the budget debate with the health policy debate, and you are going to hear more and more and more about that, after they vote on the tax cut. And what you have here is the ratio of GDP claimed by debt. That is, what we owe each other, and the Chinese, as a ratio to GDP; which is of course our total National Product. I found this incredible graph, which comes from, I guess, CBO. Yeah, it goes all the way back to the revolution. So, it starts with 1789, and all of that. And we borrowed 25% of our GDP from the French to win the war, and then we had to pay them back, and we did. And we had basically no government there for a while. And then we had the Civil War, and we borrowed some more, and paid it back again. All of the widows finally died off, and so then we didn’t spend any money again. And then World War I, keep going, okay. Then you see the Depression, and it kind of went up a lot. Then you see World War II went up a whole lot. It went up over 100% of GDP, which is proof that you can live that way for a very short amount of time, but it’s also true, if you look very carefully, you will see after World War II, it started coming down. What that is — I know you have never seen this in your lifetime, but this is called a bi-partisan consensus to get your fiscal house in order. And what we did was, we did what you are supposed to do. You borrow when you have to, because you had to borrow to build those battleships, to defeat tyranny around the world. We face an existential threat to our way of life. But then we paid it off when we could. And that’s what happened. And we got it down to 20% of GDP, and there were some hiccups. All those little hiccups on the way down are recessions. Big recession in ’74 when OPEC happened, and oil prices jumped up. But still, we were in high 20s, low 30s. Then it started going up in 1981. Anybody remember what happened in 1981? Cardinals did not win the World Series. Ronald Reagan. And Ronald Reagan, sort of like today, told us that we could cut taxes and balance the budget. It turns out, you can’t. so, what happened was, debt started going back up, until Ross Perot. Anybody remember Ross Perot? I personally love Ross Perot. He’s the only public speaker that has bigger ears than me. And Ross Perot bought TV time with his one money, held up one little Power Point, and said, we’ve got to do something about this debt. And he did that enough so that Clinton and Gingrich — notice, bipartisan. Notice, don’t agree on much, but did agree on a balanced budget act, boom, and then the debt started to fall in a serious way. When Clinton left office, he had a two hundred-billion-dollar surplus. And that rocked along until we had Medicare drug benefit we didn’t pay for, we had a couple of wars we didn’t pay for, and then recent economic Great Recession, and the stimulus package was the last third of that.   So, again, we face the next single threat to our way of life — it’s okay to borrow when you are in a big bind. But then you need a bi-partisan consensus to pay it off when you can. That is what we lack, which is why it heads up and up and up, and it’s going now — it’s headed toward a direction way above 100% of GDP, and there will come a point when we have no choice, because guess what? The Chinese want their money back. So, we do have to deal with this, and let me tell you, there is no way to deal with this unless we deal with healthcare cost growth, which is why everybody cares.   Okay, so what you have next, is another version of history lesson, focused on Medicare. And what I’m going to show you here, all the different big policy changes that occurred through time. What you have here, is Medicare spending as a shared GDP. It starts out, 65, when the program was created very low. About a half a percent of GDP until 1970. Then it starts going up, and you see TEFRA. How many of you know what TEFRA is? Very good. Historians in the bunch. TEFRA invented what we now call Medicare Advantage. Private sector health plans to organize Medicare services. DRGs — have you heard of DRGs? DRGs did not come from God, they started in 1983; and what they did was they changed the way we paid hospitals, and look what happened. Share of Medicare, claim on GDP, was pretty flat after DRGs. They worked. Fundamentally changed incentives for hospitals, length of stay fell a day and a half within a year. And nobody died. It was pretty amazing. And once they figured out they could get the Medicare population out the door quicker, they started getting everybody out the door quicker. It actually did change incentives in a serious way.   Then RBRS. That’s how we pay docs, right? RBRS. Look what happened. That might be the single biggest disaster in Mark Miller’s lifetime. RBRS just didn’t work. We started paying ‘em more systematically, but guess what? The people who control the payment system like to create new codes, and now we have 9000 codes, and off we go.   So, then we got the BBA. Do you remember the BBA? The BBA was the Clinton/Gingrich solution to — and look it worked — Medicare share, GDP fell. It fell so much, people got nervous, and of course they started to try to modify it. And then back up in Part D, and so forth.   And then the ACA, and look, the only other period where Medicare as a shared GDP is relatively constant, only other period other than the five or ten years after DRG is the ACA. Now, we could say that’s because of the brilliant activities that have been going on in the innovation center. And lord knows, there are brilliant activities going on in the innovation center, but that ain’t why this happened. This happened because of market reduction. It happened because of Medicare payment for hospital changes. Right? And that’s really what drove those savings. Therefore, what we have is a bunch of ideas that are being tested. I’m going to talk about them in just a minute. They are trying to set in motion a set of incentive changes that will at least try to hold the rate of growth of healthcare down to the rate of growth of the GDP, preferably below overtime, and it leaves — it tries to get Medicare under control. MACRA, of course, the last little piece of the puzzle so far, you may get the theme here, we keep trying to do this because we don’t really succeed. MACRA is designed to turbo-charge the way we change, the way we pay physicians, and we will talk about that the rest of the time.   What do we know so far? Well, kind of interestingly, a whole bunch of evaluations have come out in the last year of the very clever — I’m not being factitious at all — very clever innovations that were tested as a result of the Affordable Care Act, and ACL has got the most attention. Shared savings pioneer now, Next Gen. Primary care — comprehensive primary care has now morphed into CPC Plus. And of course, the bundled payment models; all of which held great promise. All of which were good ideas; we had to try them, right? The bad news is, shared savings cost us money. The good news is, Pioneer actually satisfied the conditions to be expanded, but only 12 Pioneers remain. Next Gen sort of learned from that, I think 45 of them. You get the point. It’s really hard to save money, even though it looks like incentives are aligned. And those who are ready to bear risk can all fit in my Prius. So, it’s really true, we don’t have enough people who are quite ready to go full speed. Then let’s look at the biggest innovation that was tried. Biggest in terms of number of docs. The Comprehensive Primary Care Initiative. It’s Christmas, so everything is red and green. Red is bad, green is good. Okay, green means you save money, red means you didn’t. You notice first of all, not a whole lot of red or green. Second, you may notice — I don’t know if you can read that — in year three, that is to say the cumulative over the three years, we did not save money in a comprehensive primary car initiative. Oklahoma did, God bless them. We can explain that why, in a bar, later. But it really did work in Oklahoma. No place else sustained it over time. And no one saved money compared to the PMPM we paid them. This is disappointing. Then you go to the private sector, and I think it’s fair to say, there is a heck of a lot of innovation in the private sector in this patient-centered medical home space in particular. A couple of surveys have been done of recent, sort of meta-analysis, and some of them are disappointing, except for those examples that focused on particurly high cost patients. Multiple chronic conditions, et cetera. And I would say, the bottom line here is that a lot of people are concluding, even if some of these private sector ones — and I think the Care First one around here did save about 2% off trend. Even if they did save that, it’s not enough. We’ve got to move beyond what care coordination win-win kinds of utilization reductions can give us. And so, this is the bundled payment, I will just say basically, we did save money in the bundled payment initiative in model two, which is a combination of post-acute, and acute. By the way, that was Mark Miller’s first major contribution to health economics, showing the post-acute bundle is a good idea. So, we did save money, but we didn’t save money in in-patient setting, only by reducing utilization in post-acute. And by the way, the other bundled payment models didn’t save money.   So, to sum up, here are the big lessons that I think we can learn from where we are, and I would say, at some level, the MACRA bill and all this stuff that’s coming out about what you are going to hear, that’s a result of the reality that we haven’t solved the problem. We do need to work harder on changing incentives. The Physician-Focused Payment Model Technical Advisory Committee, which is surely the longest name of a committee in the history of civilization, on which I and Elizabeth Mitchell sit, was created to make a window into CMMI to try to bring ideas from the private sector — hey, what a concept — so that people can say how they would like to reorganize the way they are paid in incentives. They think it would make sense for their particular sets of patients. And you will hear more about that going on. But anyway, this is where I would think the literature kind of the egghead stink we have learned from what we’ve done so far. Focus on identifying the right patients. Those patient-centered medical homes that worked, all have to do with picking the right patients and focusing on them. And that may be more important than building quality improvement capacity across the entire patient population or the practice. Per member, per month, payment up front, doesn’t necessarily perform better than other kinds of things. Maybe risk is not as important as we thought, but what does seem to really matter is targeted in-kind assistance. A lot of these practices, you give them PMPM, they don’t know how to spend the money. You can tell them how to spend the money, that’s what CPC did, but it didn’t work. So, maybe what you want is a collaboration between the payer and the provider, and some of that is really creative, going on in Medicare. A lot of it is creative going on in the private sector. Third, don’t give up on total cost of care. My personal disappointment in the way CPC Plus evolved from CPCI, is that CPCI, you may have noticed didn’t save money on that. So, they dropped total cost of care as part of the objective function in CPC Plus. That was a wrong decision in my opinions. It’s true, primary care can’t control all spending, but they darn well can influence what choices are made, and you don’t want to take that off the goal. Second, or finally, I would say the other big lesson is: We’ve got to focus on prices. Great paper written by the late, great Jerry Anderson a few years ago, It’s the Price That’s Stupid. We pay more than everybody in the world for everything. And we are probably going to have to stop doing that, if we really want to save money.   Finally, I would say, you probably want to think about focusing on social determinants of health. It turns out, some interventions in those areas really can save money. Some interventions in those areas like housing first for the seriously mentally ill, and people with substance use disorder, transportation of non-emergency, as well as some forms of food, actually reduce healthcare cost and criminal justice cost enough to pay for the stuff you are doing. Really cool stuff.   Finally, I will say, our HIT systems, you may have heard this before, are not quite ready for primetime. There is a tremendous amount of frustration in the physician community, a lot of it has to do with the fact that these HIT systems were oversold. They are not the public — the population health tools that they were told they would be. And it’s incredibly frustrating to report this stuff on their own, at night, after they have seen patients all day. We’ve got to figure out how to bill back-office HIT, which exists, which is why Tulsa did what they did, so that we suck the data out and don’t require docs to push it.   I don’t think I’ve depressed you completely, but it looks like I’ve done a lot, so I will stop now, and we’ll move on. Thank you.   SARAH DASH:   Thank you, Len, for setting that context and that overview, and now we will hear from Aucha and Gregory.   AUCHA PRACHANRONARONG:  Thank you. So, we are going to do a quick overview of the MACRA Year 2 Rule, since it just came out about a month ago. As a reminder, MACRA will replace the sustainable growth rate formula for updating physician fee scheduled payments with a program that provides for two participation tracks.   The first track is the merit-based incentive payment system, or MIPS, which consolidates and replaces three legacy programs — the Physician Quality Reporting System, the Medicare Electronic Health Record Incentive Program for Eligible Professionals, and the Value-Based Modifier. The second participation tract is the Advanced Alternative Payments Models track, and when we sought to implement what we call the Quality Payment Program, we sought to improve beneficiary outcomes through patient-centered MIPS and APM policy design and development, enhance the clinician experience to increase the adoption of alternative payment models, or APMs. To promote program understanding and participation, to improve data and information sharing, to deliver IT system capabilities that meet the needs of users, and to ensure operational excellence. We want to support patients and their clinicians in making their own decisions, and about healthcare, using data driven insights, increasing aligned and meaningful quality measures, and innovative technology. The quality payment program is really designed to be flexible, transparent, and is structured to improve over time, and will continue to evolve as we hear more from clinicians, patients, and other stakeholders.   I’m going to start with giving an overview of the MIPS portion of the Year 2 Rule, and then I will turn it over to my colleague, Greg Woods, who will provide the overview of the APM portion of the rule. Just as a quick overview, the Merit-Based Incentive Payment System is based on performance in four different performance categories: Quality, cost, improvement activities, and advancing care information. The points from each performance category are added together to give you the MIPS final score. Then what we do, is we compare the final score to what’s called a MIPS performance threshold. If your final score is equal to the MIPS performance threshold, then the clinician gets no payment adjustment. If the final score is above the MIPS performance threshold, then the clinician or group will get a positive payment adjustment. And if the MIPS final score is below the performance threshold, the clinician or group will get a negative payment adjustment. The payment adjustments are budget neutral and the amount at risk increases over time. So, for example, for the first payment year, there is a maximum of 4% at risk; for the second payment year, there is a maximum of 5% at risk. In the calendar year, 2018, final rule with comment period, we continued to build and improve upon our transition year policies, as well as address elements of MACRA that were not included in the transition year policies, including virtual groups, and beginning in 2019, the ability to be assessed based on facility performance. In this final rule with comment period, we continue the slow ramp-up of the program, by establishing policies that are aimed at encouraging successful participation while reducing burden, reducing the number of the clinicians that are required to participate in the program, and preparing clinicians for full implementation by Year 3, which is what is required by law.   In your packet, you should have a more comprehensive summary of what’s in the Year 2 rule, but a few key highlights that I wanted to share with you today, are: The cost performance category is weighted at 10% in 2018. For the first performance period, as you will recall, cost was weighted at 0%. And then of course, by law, in Year 3, cost has to be weighted at 30%. Second, we increase the MIPS performance threshold to 15 points from 3 points during the transition year. Previously we had stated that for the Advanced and Care information, Performance category, clinicians and groups were required to use the 2015 certified electronic health record technology for Year 2, but in this final rule with comment period, we are giving clinicians the flexibility to use either 2014 addition certified electronic health record technology, or 2015 certified electronic health record technology, or a combination. And of course, those that are fully using the 2015 edition technology would get bonus points under the advancing care information performance category. We are also awarding up to five bonus points for clinicians that afford the treatment of complex patients, and we’ve also added policies to reweight the quality advancing care information improvement activities based on natural disasters that may prevent or hinder clinicians’ ability to submit data. We are awarding five bonus points to the MIPS final score for small practices, which are defined as practices with 15 or fewer clinicians. And then practices that have 10 or fewer clinicians, or solo practices, can join together to form what is called a virtual group, and participate together as a virtual group. And then lastly, we are decreasing the number of clinicians that are required to participate in MIPS by increasing the low volume threshold to exclude clinicians or groups with less than or equal to $90,000 in Part B allowed charges, or less than or equal to 200 Medicare Part B beneficiaries.   And then although this was finalized in the transition year rule, I just wanted to highlight that the minimum performance period for a cost and quality for Year 2, is 12 months, compared to 90 days in Year 1, there is no change in the minimum performance category between Year 2 and Year 1 for the improvement activities and the advancing care information performance category.   Lastly, just a quick slide — this depicts a quick overview of the timeline for Year 2 clinicians, it should be collecting and capturing data between January 1st, 2018 and December 31st 2018. And then the submission of data to CMS needs to occur by March 31st, 2019. Then CMS will take the data, analyze it, calculate scores, and calculate payment adjustments, and apply payment adjustments beginning January 1st, 2020. So, I will turn it over to Greg now.   GREGORY WOODS:  And according to the clock in front of me, I have seconds to tell you everything about APMs and MACRA, so I think this should go well.   On a high level, what are we talking about, when we talk about alternative payment models, or APMs? What we mean is innovative approaches to paying for healthcare that quality and value. There is a specific definition in MACRA, which defines APMs as anything tested by the CMS Innovation Center, where I work. Also, the Medicare Shared Savings Program, which was a separate program set up by the Affordable Care Act. And certain other demonstrations required by federal law. What this means in practice, is that includes things like ACO’s, bundled payments, medical home models, the kinds of things that Len discussed. Also, it includes everything else that the Innovation Center does, so that includes things like models focused on the social determinants of health, models focused on health plans in Medicare Part C or D. Models focused on the dual-eligible populations. So, there is a broader universe of what we talk about when we talk about APMs. In the context of MACRA, most frequently when we talk about APMs, what we are talking about is what we call in the rule, advanced APMs. And this is a specific subset of all of the alternative payment models that are out there, that meet certain criteria. So, specifically, they must require participants to use certified VHR technology. They must base payment on performance on quality measures comparable to those used in MIPS. And lastly, and this is the one that is the tough one:  It must either be a medical home model expanded under Innovation Center authority, and at the moment, that’s a null set. Or, require participants to bear more than a nominal amount of financial risk. So, that’s what we mean when we say, an advanced APM. In 2017, which is the first year of MACRA, we have a list of advanced APMs, they include the downside risk-bearing tracks of the Medicare Shared Savings program, or Next Generation ACL model. It includes our comprehensive drug replacement episode based payment model. It includes our ESRD total cost of care model. It also includes our Comprehensive Primary Care Plus initiative.   What does it mean to be part of an Advanced APM? Four eligible clinicians — so, this is physicians and other clinicians covered by MACRA who are part of an advanced APM. If they are participating in that advance APM to a sufficient degree, and there are certain thresholds that are expressed in terms of payments or patients that are set forth in the statute. They get a couple of benefits. One, they are exempted from MIPS, so they don’t have to worry about reporting all of the things that Aucha just talked about. There is no payment adjustment there. Two, at least for the first several years under MACRA, they are eligible for a five percent bonus payment. And this, I should make clear, is separate from whatever incentives are embedded in the models in which they participate. So, for instance, if you are an eligible clinician, you are participating in an ACO. You are eligible for this five percent incentive payment. You also would be eligible to receive shared savings payments, should your ACO qualify. So, it’s a separate incentive layer on top.   In this year’s rule that we just finalized, let’s just briefly, we largely left our definition of advanced APMs unchanged. I think the most significant policy, which is described here, is we extended the definition of nominal risk for an additional — so what constitutes downside financial risk, which as I said, was the third criteria to be an advanced APM. We extended that for an additional couple of years. In particularly, that will allow the Medicare shared savings program Track One Plus, which is beginning in 2018, to continue to qualify as an advanced APM.   Okay, so that’s advanced APMs. Then there are also what we call MIP APMs, or the APM squaring standard. Briefly, what this means is there are certain APMs that for whatever reason may not meet the criteria to be an advanced APM, or there may be clinicians in advanced APMs who don’t meet the criteria to become QP’s, which is to say, to receive the five percent incentive payment and be exempt from MIPs. However — and I will say, the most prominent example of this, is the Medicare Shared Savings program, Track One, which is a one-sided ACO model. So, there is no downside risk. It’s not an advanced APM, however, clinicians who are participating in that model, are required to report significant quality data, and also are generally required to do certain improvement activities. So, the theory here is:  It would be burdensome to require clinicians to report quality twice. Once as part of their APM, and another time for MIPS. And so, what we are doing here is saying, we can take the qualities out of your report for your ACO, or for your APM, and we are going to use that to give you a MIPS score. We are going to exempt you from cost, and we are going to automatically give you improvement activity points based on your participation in APM.   Again, in this year’s rule, it’s largely continuity from what we did in previous years, although there is a slight change here where some of our MIPS APMs or APMs under the scoring standard, for the first year, because of some technical challenges, we exempted them from being scored on quality for Year 2; for 2018, we expect all APMs under the APMs scoring standard to receive 50% for quality under MIPs APMs. And then very briefly, something that we focused on, and this year’s rule, is the all-payer combination option, and this is something that was built into the MACRA statute, as I said, in order to become a QP, in general, you need to have Medicare participation in advanced APM beyond a certain payment or patient threshold. Starting in Year 3 of the program, so starting in performance Year 2019, there is an additional pathway that is laid out in the statute for becoming a QP, for being exempted from MIPS, and for earning that bonus payment. And what that says is, if you are in a Medicare Advanced APM, you are participating to a significant extent, but not sufficiently to actually become a QP, then you have the option to request that we also look at all of your other payers. So, your participation in advanced APMs that might be offered by Medicaid, by commercial payers, by Medicare Advantage. And we will look at that, and if you hit relevant thresholds based on the combination of participation in a Medicare Advanced APM, and an Advanced APM to cross hair other payers, then that is another alternative for you to be a QP, earn the five percent bonus, be exempted from MIPS. There is a lot of detail in this year’s rule, which I certainly won’t try and summarize here, about the combination option. It’s a slightly new thing for CMS, since it requires us to look at the details of payment arrangements that we don’t actua