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Medicare Advantage as an advanced payment model is in MACRA's distant future

Medicare Advantage takes on capitated risk, so why don't these plans qualify as an advanced alternative payment model?

Susan Morse, Senior Editor

Medicare Advantage is leading the way in value-based payment for plans serving a growing senior citizen population, so why, insurers have asked, doesn't it count towards the advanced alternative payment model under the Medicare Access and CHIP Reauthorization Act?

Medicare Advantage takes on risk by being paid a capitated amount. However, the Centers for Medicare and Medicaid Services has said MA does not qualify, at least right now, as an APM, the more advanced of two payment models under MACRA.

"Medicare Advantage plans themselves are receiving capitated payments, so they're clearly taking risk," said Mark Hamelburg, senior vice president of federal programs for America's Health Insurance Plans.  "In turn, they have risk arrangements with providers."

The problem is with the MACRA law, which replaced the fee-for-service sustainable growth rate formula formerly used to pay physicians.

[Also: CMS imposes temporary ban on automatic Medicare Advantage enrollment]

In passing MACRA in 2015, Congress set the year of 2019 to see if physicians had enough of their business in risk-based arrangements. CMS has made 2019 the first year for APMs to take effect.

That means CMS will not consider Medicare Advantage as an APM until at least 2019.

"The reading of the law, we can't (consider it) until the third year," said Patrick Conway, CMS acting principal deputy administrator and chief medical officer, speaking at a recent AHIP conference on Medicare.

Starting in 2019, if physicians have a certain percentage of their business in alternative payment models, they qualify for a bonus under the statute, according to Hamelburg. However, CMS's strict interpretation of the law favors 2021 as the year Medicare Advantage would qualify as a bonus under the alternative payment model, he said.

AHIP has already voiced its dissatisfaction with CMS's decision to currently not allow Medicare Advantage as an advanced APM, in a June letter asking CMS Acting Administrator Andy Slavitt to reconsider.

[Also: AHIP urges more flexibility in new value-based Medicare Advantage model]

CMS administrators, speaking at the AHIP conference in October, did not address MA as a qualifier for MACRA, except for Conway's statement about waiting three years, but did voice support that MA plans are doing so well.

But there's a downside to success. A healthy share of Medicare Advantage plans have gotten four- and five-star ratings, which leaves little room for quality growth, according to Sean Cavanaugh, deputy administrator and director for CMS.

"If everyone is above average, how do we encourage ongoing quality improvement?" Cavanaugh said.

Conway said the agency wants to work with insurers to determine measures that might be more meaningful. He also said Medicare Advantage and traditional Medicare need to be more aligned.

Through MACRA, all physician payments will be tied to quality for the first time.

[Also: Enrollment in 4 or 5-star Medicare Advantage plans rising, new star ratings show]

The measurement period starts Jan. 1, 2017, with payments starting in 2019.

Payers must be ready, according to Harry Merkin, vice president of product marketing for HealthEdge. Organizations that don't participate face a negative 4 percent penalty,

"You've got to be ready on January 1, you will have providers jumping in," Merkin told payers at AHIP. "You've got to be able to adjust the way services delivered are reimbursed. You must have the technology infrastructure in place to handle it."

"MACRA is going to drive the tipping point we've all been waiting for, to drive markets to value versus volume," said Andrew Davis, segment leader for Medicare within Medica. "Two, this is going to be extraordinarily difficult to implement. Three, everyone needs to be at the table to make this happen."

Twitter: @SusanJMorse

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