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Transform Care October 20, 2016

Making Sense of MACRA: The Resource Use Category

Partner and Chief Medical Officer, Health & Life Sciences, Oliver Wyman
Principal, Oliver Wyman
Key Takeaway
Action Item: Ensure your coding is accurate b/c all Resource Use measures will be calculated by claims data. #MACRA #healthcare

On October 14, the Centers for Medicare and Medicaid Services (CMS) released the final rule for the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), the new payment system that overhauls how Medicare pays doctors and other clinicians. This final rule makes it official: The start date for the performance period of the new payment system is January 1, 2017, and providers will need to collect appropriate data for reporting to CMS over a continuous 90-day period during calendar year 2017. Providers who have not yet taken the time to understand how the change will impact their practice patterns and reporting systems now are scrambling to catch up.

Here, Bruce Hamory, MD, Oliver Wyman’s Chief Medical Officer, and Jac Joubert of Oliver Wyman Actuary take a closer look at the section of the rule that they believe may be the most complex for clinicians to understand: the Resource Use Category.

MACRA establishes two new, value-oriented payment tracks for Medicare physicians: The Merit-Based Incentive Payment System (MIPS) track and the Advanced Alternative Payment Model (APM) track. Most Medicare physicians will fall into the MIPS track (at least to start). MIPS will replace the Sustainable Growth Rate Formula for physician reimbursement and establishes annual updates to payments for the next 10 years, and beyond.

Under MIPS, Medicare providers will see payment rates adjusted based on their performance on four new quality measures: Quality, Clinical Practice Improvement Activities, Advancing Care Information, and Resource Use. In its final rule, CMS delayed the measurement and calculation of the Resource Use category by one year and has reallocated the points from it to the Quality category. However, CMS will still measure and report resource consumption at the individual physician level during calendar 2017 and will report that privately to each clinician.

That means that in 2019 (which is based on performance year 2017), the Resource Use category will comprise 0 percent of the overall weighting. However, the weighting will rise to 10 percent in the 2020 payment year (2018 performance year) and then to 30 percent in 2021 and thereafter. With 30 percent weighting on the line, understanding and learning to adapt to the Resource Use category sooner rather than later will be critical to providers’ success in the new payment system.

The Resource Use Formula

The Resource Use formula normalizes costs across the country by eliminating regional wage indices, as well as removing disproportionate share payments and medical education costs from hospital and facility fees. In doing so, it measures the number and intensity of services, tests, and treatments provided to beneficiaries. However, the result is expressed in dollars compared to expected expenditures nationally for each measure. All resource use measures are adjusted for both geographic differences in payment and for beneficiary risk factors.

Significantly, this is the only one of the four performance categories (the others are quality, clinical practice improvement activities, and advancing care information) that does not require reporting by the clinician. Instead, all data for resource use will be generated from Medicare administrative claims.

It should be noted that clinicians participating in Advanced Alternate Payment Models (MSSP tracks 2 and 3, CPC plus, Next Generation ACO, Comprehensive ESRD, and the two-sided risk Oncology Medical Home model) will not be scored on the Resource use category. In addition, non-patient-facing clinicians (such as pathologists and radiologists) who don’t have enough volume to be scored in the resource use category will see the weights of the other categories increased to maintain a total of 100 on the CPS.

The Three Measures of the Resource Use Category

For clinicians who will be scored on Resource Use, it is important to understand the three measures incorporated into the category:

Total Per Capita Costs: Beneficiaries will be attributed (or assigned) to an individual clinician or to a group of clinicians. According to CMS, the application of these attributions will depend on the development of specific codes for the clinician-patient relationship and codes defining the role of the clinician at the time the service is rendered. These codes will be issued in the autumn of 2016.

Total per capita costs will then be assigned by “the delivery of the plurality of Primary Care Services (under Part B)” delivered by a PCP or Specialist NPI. The definitions of “primary care services” will change slightly from the current VBP methodology, but are the same used throughout all the categories. Total per capita cost represents the total yearly costs (for Parts A and B) for all patients assigned to a provider, divided by the total number of patients assigned to that provider. That number is then compared to the national average costs of a Medicare beneficiary It will also include admissions due to COPD, CHF, CAD, and Diabetes Mellitus.

A “specialty adjustment” will be made for specialists who render primary care services as part of their practice.

Medicare Spend per Beneficiary: This is a measure of resource consumption for beneficiaries assigned to the provider submitting the plurality of Part B claims (allowable charges) billed during the index hospitalization for the measure. The measure includes all Parts A and B payments beginning two days prior to hospitalization and lasting for 30 days following hospitalization. A significant change in this measure from the 2016 PFS final rule is the reduction from 125 cases to 20 cases in order for the measure to apply to a clinician or group.

This measure may apply to a different provider than the one assigned for total per capita costs, though the costs of the hospitalization will be included in the calculation of total per capita costs. Because this measure is risk-adjusted for patient characteristics, there will no longer be a “specialty adjustment” performed.

Condition- and Episode-Based Measures: Forty-one of these measures have been proposed, and while only 10 episode-based measures will be included now, more are being developed and will be introduced later.  Each will be payment standardized and risk-adjusted. Attribution will be to each clinician billing 30 percent or more of the “total inpatient E&M codes during the initial treatment, or trigger event, for the episode.” More than one clinician can be assigned (provided each bills 30% or more of the E&M codes during that episode), and episodes without inpatient E&M codes will not be assigned to an individual.

Procedural episodes will be assigned to each clinician billing a Part B claim with a trigger code during the trigger event of the episode. Outpatient and inpatient procedures will both trigger this measure.

Action Items for Health Systems and Providers

1) Ensure your coding is accurate since all Resource Use measures will be calculated by CMS based on claims data.

2) Review available data for each of your clinicians from the Value-based Payment Modifier (VM) results and the Supplemental Quality and Resource Use Reports (sQRUR). That will help you to determine which clinicians need help in improving the efficiency of their resource use.

3) Begin or accelerate the process of embedding evidence-based medicine into your EHR and establish the trigger events for each MSPB, condition, episode, or procedural category. Monitor adherence to these protocols in real time.

4) Remember that the calculation of per capita costs has as its denominator the total number of beneficiaries assigned to the provider or group. This means that, even after risk adjustment, appropriate visits by relatively healthy patients could improve this measure, by adding to the denominator without contributing as much to the numerator (cost).

5) Examine the payment and utilization of services for your service providers and consultants to identify the most efficient ones. Share this information with your clinicians and help the poor performers to improve. Monitor improvement closely as the group’s pay is influenced by the performance of all.

6) Watch for the new Medicare codes for patient condition, relationship of provider to patient, etc., to be released in October and implement the changes quickly.

7) By establishing a trusted relationship with patients and providing rapid access to appropriate services, you’ll be more likely to retain control of their care and therefore of the associated quality, outcomes, and costs.

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