Observations from the Corner of Medicare Advantage and MACRA

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In early October, The Centers for Medicare & Medicaid (CMS) surprised everyone and published the highly anticipated Final Rule on MACRA well ahead of schedule. A number of blogs have since provided high-level summaries of the rule, but we want to dive deeper into how MACRA directly impacts Medicare Advantage (MA) plans and providers.

The final rule doesn’t depart significantly from the proposed rule when it comes to MA. Here are the four key takeaways:

  1. MA membership alone does not count toward low volume thresholds or Advanced Alternative Payment Model (APM) thresholds. Although CMS telegraphed this move in the proposed rule, many industry participants hoped the agency would change its mind and allow MA plans under the APM tent. In the MA Comments section, CMS pointed to MACRA’s statutory language, which states, “…beneficiaries enrolled in Medicare Advantage plans that receive their Part B services through their Medicare Advantage plan will not be included in allowed charges billed under Medicare Part B for determining the low-volume threshold.”
  1. MA provider contracts do not by themselves count as meeting the financial risk criteria for Advanced APMs, but full risk capitation contracts will meet this financial risk criteria. Here CMS draws a distinction between “capitation as a risk arrangement and capitation as only a cash flow mechanism.” MA plans consider their provider contracting arrangements as proprietary and don’t reveal specifics. Some such contracts might include reconciliations or true-ups with physicians to limit their downside risk. CMS only recognizes arrangements that have potential up and down side risk as qualifying for Advanced APM status.
  1. As stated in the proposed rule, providers subcontracted with MA plans must participate in APMs under the All-Payer Combination Option that begins in Performance Year 2019 and Payment Year 2021. Although not an immediate play, this provision was a bit of a win for MA plans. Beginning with the 2019 performance year, CMS will allow qualifying MA lines of business to be included with other all-payer lines of business for Advanced APM patient or revenue volume threshold calculations.
  1. CMS will be releasing more guidance as to how providers will submit documentation related to their risk sharing arrangements with other payers. It is worth noting that it will be the providers, not the payers submitting this Advanced APM qualifying information to CMS.

There is no doubt Medicare Advantage plans have grown tremendously in popularity over the past decade. MA plans also have a proven track record for cost reduction and producing better outcomes for beneficiaries, which are two components of the Triple Aim. With that said, it is curious that CMS didn’t reward the portion of Medicare offering the most innovation and desired results. Perhaps future legislation will remedy this.

Clark Cameron, manager of payer market strategy and development for 3M Health Information Systems, and Gretchen Millsmanager of market strategy for populations and payment solutions at 3M Health Information Systems, originally wrote this post.

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