Market insight from year-end 2020 SFCRs: Sample of life insurers based in Luxembourg
Gross written premiums in our sample of Luxembourg-based life insurers decreased 20% in 2020.
You can access the full text of the MACRA draft rule at the Federal Register.
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) represents a tectonic shift in how providers are reimbursed for the services they provide to Medicare fee-for-service (FFS) beneficiaries. MACRA shifts away from the financial certainty of fee-for-service reimbursement, adjusting provider reimbursement based on performance on quality measures, IT utilization, performance of clinical improvement activities, use of resources relative to peers, and participation in “Alternative Payment Models” (APMs). This is a major piece of legislation that will reshape the way in which healthcare is paid for. Furthermore, with MACRA implementation starting on January 1, 2017, providers need to understand how this soon-to-be implemented law will impact their reimbursement.
MACRA will have a major impact on the way most providers will be reimbursed for the care provided under Medicare Part B.
|MIPS||Partial qualified provider||Qualified provider|
The MIPS adjustment will vary by year, starting at -4% to +4% in 2019, and increasing to -9% to +9% in 2022 onward (actual positive MIPS adjustment will vary to target budget neutrality). While the adjustment is designed to be cost-neutral (and some providers will benefit from the MIPS adjustment) certainly the prospect of a downward adjustment to fees makes the certainty of QP status and the associated bonus all the more attractive. Providers who are not yet in a position to take on the two-sided risk that is a precursor to QP status will want to achieve a positive outcome by focusing on increasing their MIPS adjustment.
There are a number of significant factors that need to be carefully considered when choosing to pursue QP status (as opposed to being subject to the MIPS adjustment), including the total financial risk in an Advanced APM and potentially higher net reimbursement under MIPS.
We expect that many providers participating in an Advanced APM will want the QP status (and the accompanying 5% bonus). To be classified as a Qualified Provider, two conditions must be met:
1) The eligible clinician must be associated with an Advanced APM. For now, this is limited to a small list of Centers for Medicare and Medicaid Services (CMS) programs that involve two-sided financial risk (among other requirements). It is worth noting that the aggregate financial risk in these Advanced APM arrangements is greater than the risk associated with the MIPS adjustment.
2) The Advanced APM must have a certain percentage of reimbursement or patient counts be associated with the attributed members of the Advanced APM. For example, for a Medicare accountable care organization (ACO), the numerator of this ratio might be the Part B reimbursement for attributed members, while the denominator is the Part B reimbursement for all attribution-eligible members.
For 2019, the claim dollar threshold for QP status is 25%, while the patient count threshold is 20%. However, these thresholds increase precipitously in later years. Both because there are relatively few Advanced APMs and the additional criteria for QP status are challenging, we expect that there will be relatively few Qualified Providers, especially in the early years of MACRA implementation. Furthermore, because Advanced APMs will be trying to meet the twin objectives of achieving shared savings and maintaining QP status, we expect these entities will carefully prune their networks to include providers whose practice patterns promote both organizational goals. Therefore, we expect that providers will be invited to join an Advanced APM rather than being able to elect to be included. While there may be a rush toward Advanced APMs, given the limited amount of CMS-approved APMs, organizations will need to carefully evaluate if they can understand the two-sided risk. Indeed, the 5% bonus3 would not offset the potential losses in these arrangements.
The MIPS adjustment will adjust an eligible clinician’s fee schedule by a percentage value. The MIPS adjustment will vary by year, starting at +/-4% in 2019, and increasing to +/-9% in 2022 onward. The MIPS adjustment is designed to be cost-neutral. Beyond the cost-neutral MIPS adjustment, CMS will include a $500M “exceptional performance adjustment”4 for providers in the top three-quarters of those that receive a positive MIPS adjustment. This adjustment could represent up to an additional 10% on top of the existing MIPS adjustment for top performers.
Figure 2: MIPS adjustment
The MIPS adjustment is based on a provider’s Composite Performance Score (CPS), which is based on the average of four categories.
There are several actionable ways to improve the CPS, increasing the chances of a positive MIPS adjustment (and possibly an additional payment).