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Practical steps toward MACRA implementation [PODCAST]

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In this episode, Jordan Cohen, Associate at Mintz Levin and Carolyn Hoitela, Director of Practice Management at Conventus outline practical steps and considerations for hospitals and physicians as they consider how to implement MACRA.
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Michael Passanante:   Hi, this is Mike Passanante. Welcome back to the Hospital Finance Podcast. Today, I’m joined by Jordan Cohen who is an associate with Mintz Levin, a law firm with offices across the United States, and Carolyn Hoitela who is the director of Practice Management at Conventus.

Welcome, both of you, to the podcast.

Carolyn Hoitela:  Thank you.

Jordan Cohen: Thanks for having us.

Mike: Jordan, why don’t you tell us a little bit about your practice and what you do?

Jordan: Sure! I am a healthcare attorney based out of New York. I focus primarily on regulatory issues facing the healthcare industry whether that’s fraud and abuse issues such as the Stark Self-Referral Law or the Anti-Kickback Statute. I also do a lot of work in the healthcare privacy and data security space such as HIPAA and state law privacy laws as well. So, it kind of runs the gamut of health law issues. That’s it in a nutshell.

Mike:  It’s great to be here with you. Carolyn, why don’t you tell us a little bit about what Conventus does and what you do there?

Carolyn: Great! Thank you. Conventus is a medical malpractice insurer based here in New Jersey. It does what it says. We insure providers.

But a big part of what Conventus has started to do and where I’ve come in in the role that we were doing is really changing the way that we deal with our insurers or our members. We’re trying to help our providers who want to stay independent in this current changing world or those who want to change into alternative models to really navigate the healthcare environment, figuring out what they want to do, help them improve their practice goals and achieve goals that they’re trying to work towards and also help them build a foundation for patient engagement, practice engagement and overall practice transformation.

So, we’ve just taken a different approach to just being a medical malpractice insurer by really also incorporating the practice as a whole and that transformation that really needs to happen.

Mike: It’s great to have you with us, Carolyn. Thank you.

Carolyn:  Thank you.

Mike: So, why don’t we just jump right in. And we’re going to talk on today’s program about some of the practical implications of implementing MACRA and looking at that both from the physician practice level and also how that affects the interaction between physician practices and hospitals and the different arrangements that can exist that can help them implement MACRA successfully.

So, my first question kind of goes right to the heart of that. When we think about how those relationships work today, many physicians work directly for health systems. Practically speaking, how is MACRA implemented for providers in that situation. Does the health system choose which MACRA pathway to enter? Do the physicians have the option to select their own? Of course, we have the MIPS and we have the APM and some different flavors in between. How does that work practically?

Jordan: It’s actually a very good question, and a complicated one. There are so many different types of arrangements that physicians have with hospitals. And those arrangements are really going to affect how MACRA is layered on top and the decisions that are made.

Physicians and their practices can have professional service agreements with hospitals where they provide certain services to the hospital, but they’re nevertheless largely independent. In those circumstances, it’s really going to be up to the practice to decide how they’re going to approach complying with MACRA, whether they go the MIPS route or the APM route.

But there are also other structures where the practices are much more integrated into the hospital—especially those physicians.

So, if you are employed, let’s say, by a hospital, you typically assign your right to bill Medicare to the hospital for the professional services. So, at that point, the hospital is really taking on the risk of complying with all these different regulations.

So, if they’re part of any APM, then that physician that’s employed is going to be part of an APM. And if they’re not part of an APM, then that those physician professional services are going to be subject to all these MIPS requirements.

So, it really depends on the structure. And there’s no concrete rule. So it’s kind of a fact-sensitive analysis.

Mike: And you talked about some exceptions to that…?

Jordan: There are some exceptions. If a physician does a certain amount of work in the hospital, they will actually be exempted from MIPS. That’s another thing to look at. I believe it’s 75%. They provide 75% of their services—

Carolyn: It goes through a couple of different things. It’s also non-patient-facing, meaning that a certain radiologist, a certain pathologist may not have the patient engagement. They get certain exclusions from portions of reporting under MIPS.

The other thing is providers in their first year, they’ve never had any historical claims in Medicare. That does not include a provider who has left the Medicare program and come back. It’s somebody who’s brand new to the program. They would be excluded.

The changes that some of the weighting of MIPS get recalculated to other categories. So, there’s just a whole lot of exceptions to those rules that kind of get implemented in that.

Mike: So, I want to dive into some of the legal aspects of these arrangements in particular around fraud and abuse. So, what are some of the potential fraud and abuse issues that providers should keep in mind when considering how to participate in MACRA?

Jordan: That’s an interesting question. On the APM side, the fraud and abuse issues really come about in the APM side where you have these different models where there are certain incentives that the physicians have to provide certain types of care. In these types of situations where you’re influencing physician behavior, you can start to run into legal issues like fraud and abuse issues.

For example, you can have kickbacks. You can violate their federal Anti-Kickback Statute. You can have certain self-referral issues if that model is trying to incentivize physicians referring into the entity, into the ACO, for example. You may have certain self-referral issues if there are certain things that are provided to who they’re seeing, the patients. You can run into beneficiary inducement issues.

But one of the most important things is that the federal government has issued certain waivers to those rules for certain alternative payment models.

For example, the Medicare shared savings program, they’ve issued waivers for the Anti-Kickback Statute and the Self-Referral Law and the Beneficiary Inducement Law as well if you satisfy certain requirements. And the primary requirement to satisfy these waivers is that the arrangement is reasonably related to the purposes of the Medicare-shared savings program.

So, they give you a lot of flexibility in fashioning these relationships in an ACO and distributing the shared savings in certain ways provided that the arrangement in the way that you’re distributing the shared savings is related to the ACO in the Medicare Shared Savings Program, the purposes of it. If they didn’t have that flexibility, a lot of these arrangement would technically run afoul of many of the fraud and abuse laws.

My biggest takeaway would be before joining in an APM, take a look at whether there’s been thought behind, making sure that you’re satisfying those fraud and abuse waivers that the federal government has put out.

Mike: Are there any other best practices that providers can do to fashion a compensation arrangement that won’t trigger Stark or Anti-Kickback issues between physicians and hospitals?

Jordan: Sure, sure, certainly. So, in the employment realm, if the physician is employed by the hospital, you’re generally going to look at the Employee Safe Harbor. So, the federal government has these fraud and abuse rules, and under the Anti-Kickback Statute, there are a number of safe harbors. And if you satisfy the criteria for those safe harbors, that conduct is protected from application of those laws.

And so, for employment, there is an employment safe harbor. And under the AKS, it’s actually a very general requirement. The employee needs to be an employee under the IRS rules. So, if they’re paid a certain way and if there are certain control over them, and the IRS would consider them an employee, then for the purposes of the Anti-Kickback Statute safe harbor, they’re consider an employee, and then they would fall under that safe harbor and get protection.

In the non-employment realm (so if you’re an independent contractor), there’s a separate safe harbor for personal services. And that’s a much more specific safe harbor. It’s got more requirements. It requires that these services be described, and that the compensation can’t vary with the volume or value of the referrals or you can’t do a number of things and it’s got to be for a certain period of time. It’s more involved because in those types of relationships, they’re more subject to fraud and abuse issues.

That was for the kickbacks. So then, there’s a whole separate analysis of the Stark.

Mike: That’s what I was going to ask you, yeah.

Jordan: Exactly!

Mike: Could you talk to that a little bit?

Jordan: The Stark Law also has what’s referred to as a bona fide employment exception which is very similar although it does have more requirements.

The thing I would say about Stark is, what distinguishes it from the Anti-Kickback Statute, the Anti-Kickback Statute is an intent-based statute. So, one of the factors that is analyzed under an anti-kickback analysis is whether the party has an intent to violate it.

Under Stark, it’s strict liability. It’s like driving on a road in a speed limit. They don’t care why you’re driving fast. If you’re over the speed limit, you’re going to get a ticket.

If you don’t have an arrangement that complies with the Stark Law, you automatically violate Stark regardless of your intent unless you satisfy one of these exceptions.

One of the exceptions is for bona fide employees. The regulation set out exactly what you need to do to meet that. And it’s a little bit more complicated than the Anti-Kickback Statute employee safe harbor. But that’s definitely something you want to look at as well.

You also want to step away and determine if Stark applies (and that can be a complicated analysis). If it does apply, you want to look at that safe harbor for employees. And then, for non-employees, there’s a similar personal services exception that you would have to meet that sets forth a number of criteria to ensure that it’s not an abusive relationship.

So, really look at the safe harbors and exceptions for those rules. And that would be the number one place I would start.

Mike: Let’s talk about some of the practical aspects of implementing MACRA in a practice. I think maybe one of the first things we should talk about is what are the types of issues that physicians (or maybe it’s the hospitals we talked about or some other entity) should be looking at when they’re deciding between an APM or a MIPS pathway.

Carolyn: I think that the first thing is really to understand your overall performance. Understand what it is you do in your practice. From the standpoint of MIPS, everybody is MIPS eligible. I think providers have to realize that, a large percentage of providers, unless you meet the low volume threshold of less than $30,000 in charges or see less than a hundred Medicare patients (and that’s fee for service again), you’re MIPS eligible.

And I think what needs to happen is if you’re not in an APM or an advanced APM and you are on the MIPS track and you’re working independently, you really need to look at what you currently do? What’s your current performance in your office? What are the quality measures that you have previously reported under PQRS? How well did you perform on those measures? What is your current performance under Meaningful Use Stage II (which converts to the Advancing Care Information Metrics and Measures under the 2014 Certified Product). You need to look at where you are with that.

You also need to look, if you haven’t done anything, what’s your penalty and what risks are you willing to bear in that market because you’re going to take a penalty if you don’t do anything.

The third piece is really look at your QRUR’s, your Quality and Resource Use Reports. CMS has put those out for a couple of years now. They are a valuable tool to understand what CMS sees—your costs, your resource use, your patients’ resource use—and how you can leverage that to potentially change and create a strategic plan for how you want to move your practice forward. I think that’s really key.

And for the APM’s, if you’re going into that, you need to understand what that means, what that work means either in a track 1 (which you will still need to do reporting, it’s just that that APM will help you do some of that reporting or be responsible for that), and if you’re in the track 2 or one of the other advanced models, you’re going to bear some financial risks.

What are you willing to bear? How much can you absorb? And then, what is it that you really want your practice to look like and be in the future? That’s going to determine where you want to be and where you see your future.

Jordan: And what that last point really gets to: what the role of practices in the future is and the integration with hospitals. This is going to provide hospitals, hospital systems with a lot of opportunity to partner with physician practices in various ways. It’s giving them an opening because the physicians are facing a lot of requirements. There’s a lot of reporting. And there can be a lot of overhead with that. So, that provides hospital systems with an opportunity to partner with physician practices and provide care throughout their communities in different ways.

So, I would expect there to be some movement or maybe not consolidation, but certainly differences in the landscape that you’re going to see just because of MACRA. You’re going to see practices that don’t want to deal with it, that would maybe rather be part of an accountable care organization than deal with MIPS. So, it should be an interesting time.

Mike: And one of the things that I think is interesting (and I think in talking before this, it came up around the advanced APM’s) is that it’s not necessarily just a Medicare thing. They’re looking at private payer data or the government would like to include that when they’re thinking about your performance in total.

Can either of you talk a little bit more about that?

Jordan: Sure! I mean the advanced APM and the APM analysis in general is going to include other payers. I think the federal government sees that private payers had been somewhat more flexible than they have (I mean, they are the federal government. They’re very large. It takes some time. They have certain regulatory obligations that they have to deal with before they do certain things), whereas private payers have more flexibility to test these models. And so they’ve been testing various alternative payment models in the private marketplace. And so they have a lot of experience.

And there have been some physicians that have joined these private payer APM’s, so the federal government is going to give you credit for that. They’re going to take that into account when they’re doing their calculations as to where you fall.

So, I think it’s a good thing. I think that they’re looking at it holistically and understanding that physicians are interacting not only with CMS but with a number of private payers who have these alternative payment models. And they’re going to take those into account as well which I think is a positive thing.

Mike: And how that relates back to consumer reporting, I think, Carolyn, you mentioned something to that effect, that this data now becomes visible. It’s something that, pragmatically, providers are having maybe a difficult time dealing with in terms of getting the data out of their systems for one, and then now they’re exposed to a whole different level of transparency in the marketplace around how that data is looked at and perceived.

Carolyn: And we’ve had this for a few years. I think that if you look at it now, we have Physician Compare and we have multiple compare sites up there. So you’ve got Hospital Compare, and there’s Nursing Home Compare, Compare Home Health. They’ve all been up there.

And right now, the physician side looks at a small framework. It looks at whether you report PQRS. It looks at whether you participate in the EHR incentive program or Meaningful Use. And it looks if you’re participating in Million Hearts.

I think it’s a very small snapshot. It doesn’t give program detail like the other programs (like the hospital or nursing home does). This is going to expand. And under Physician Compare, we are going to see more data come out about patient satisfaction, about high priority measures like diabetes, like heart failure. We’re going to see measures that are going to be reported based on what a provider reports and the programs that they successfully participate in or do not.

So, again, patients can go online and look at “What is my provider doing? What is my practice doing? How do they rate compared to others in the community and others across the nation?”

I mean, again, that’s the point here: to give patients choices. So, all of the data that MIPS collects, all that’s going to be reported under MIPS will come out in a public reporting format under the Physician Compare.

And I think that’s the focus to bring it back to the patient center side of this, giving our patients or our consumers better choices. They’re spending a lot of money for their healthcare. They should have good choices.

And right now, we see it. We just don’t see it under a CMS structure, but Yelp, RateMDs, HealthGrades, everybody puts a rating about a provider. This is going to be a better way to see truly what is my provider doing from a structured reporting standpoint and how well are they performing compared to others?

Mike: So, this is sort of the “pick your pathway” time period that we’re in. And there’s a website that the federal government has to help providers prepare. What was that website address?

Carolyn: It is It’s probably the best website that CMS has put out in years. It’s very, very informative. If you spend the time to look through it, you can get a lot of answers. But it will also help you just to understand what each component of MIPS means, what an APM is, what some of the reporting requirements are.

There’s also an education and tool section that will give you access to their recorded webinars and some of the transcripts and the slides, so you have an opportunity to really look back at what CMS has been doing and the philosophy behind the whole Quality Payment Program.

Mike: Jordan and Carolyn, thanks for spending some time with me and helping us all understand a little bit more about how MACRA implementation works!

Carolyn: Thank you.

Jordan: My pleasure.

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