MACRA Virtual Groups May Lead to Compliance Issues

by | Last updated Dec 7, 2023 | Published on Oct 20, 2017 | Healthcare News

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Healthcare groups, hospitals, payers and other medical systems are being constantly inspired by the current healthcare reforms and new payment trends or compensation models. The Centers for Medicare and Medicaid Services (CMS) have been transitioning from a fee-for-service payment system toward a system based on high-quality care. This shift received a huge boost with the implementation of the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 (commonly known as MACRA, came into effect on January 1, 2017) that primarily links physician reimbursement to quality of care rather than the volume of services. Even though the long-term impact of this policy on healthcare domain is uncertain, it is important for healthcare providers and medical billing and coding companies to prepare their systems in order to accept the new format. It is expected that this focus on quality will considerably improve efficiency and patient outcomes while reducing total costs; it may also lead to serious compliance issues.

Many physicians may be considering joining a virtual group for performance year 2018 under the CMS Quality Payment program and MACRA. The MACRA “virtual groups” give solo practitioners and small-group practices a unique platform to participate in quality reporting. However, physicians joining a virtual group need to consider some of the exceptions under Stark and the Anti-Kickback Statute (AKS) for group practices don’t apply and therefore they need to be careful when making referrals. The Stark law prohibits a physician from referring Medicare patients for designated health services to an entity with which the physician (or immediate family member) has a financial relationship, unless an exception applies. The law also prohibits the designated health services entity from submitting claims to Medicare for those services resulting from a prohibited referral. The Anti-Kickback law prohibits offering, paying, soliciting or receiving anything of value to induce or reward referrals or generate Federal health care program business. Furthermore, compliance officers, in-house counselors and other professionals in the healthcare organizations need to understand how the new payment models for healthcare providers will change the way they position their organizations for success in this value-based world. The potential strategies for incentivizing physicians (in connection with value-based programs) should be planned carefully.

Virtual Groups – an Overview

The Centers for Medicare and Medicaid Services (CMS) on June 30, 2017 issued a proposed rule implementing MACRA for 2018. As per the proposed rule, healthcare providers can participate in the Merit Based Incentive Payment System (MIPS) track for one year either as an individual, in a group or in a virtual group. A virtual group reporting option that aims to support small and rural practices consists of a combination of Tax Identification Numbers (TINs). Other guidelines regarding virtual groups include –

  • The virtual group consists of a combination of two or more Tax Identification Numbers (TINs). This would include either –
    • Two separate TINs associated with a solo practitioner TIN and National Provider Identifier (TIN/NPI)
    • A group with 10 or fewer MIPS-eligible clinicians and another solo practitioner (TIN/NPI)
    • A group with 10 or fewer MIPS eligible clinicians
  • Healthcare practices can select their groups – The proposed requirements allow an individual MIPS eligible clinician or group (if there’s no more than 10 clinicians) to belong to a virtual group with at least one other individual MIPS eligible clinician or group.
  • Performance matters – If a healthcare practice elects to be part of a virtual group, they will be individually assessed with everyone else in the group. Their scores for quality and cost performance categories will be combined and applied to each clinician in the virtual group.

Generally, small physician practices choose the virtual group model because they can better pool their resources to participate in the MIPS. If a group elects to join a virtual group, all the eligible clinicians under its Tax Identification Numbers (TINs) would become part of the group. However, using the virtual group as a group practice for Stark referral purposes could possibly result in a Stark violation leading to costly penalties and False Claims Act exposure.

The term virtual group, by definition does not refer to group practices, as that term is specifically defined under Stark regulations and do not constitute a single legal identity. In short, physician participants in a virtual group with a financial relationship with such a group may not be eligible to make referrals for designated health services payable by Medicare to the virtual group under the “In-office Ancillary Services Exception” which can only be used by bona fide group practices. Similarly, for the same reason, virtual group member physicians may not meet Starks “physician services exception”.

In short, a virtual group is completely a voluntary program. For small physician practices, it’s very difficult to obtain significant statistics on many of the performance measures under MIPS. There are several administrative and operational challenges barriers for participating in virtual groups. One of the main challenges lies in identifying reliable clinicians or group practices to partner with. Clinicians need to be vigilant while choosing their partners. However, patient-centered specialty practices might be ideal partners as they focus on quality care. Additionally, physicians and small groups would be locked into a virtual group for the full performance year and hence they may not be able to sack an unreliable partner or exit to report their own MIPS data.

Rajeev Rajagopal

Rajeev Rajagopal, the President of OSI, has a wealth of experience as a healthcare business consultant in the United States. He has a keen understanding of current medical billing and coding standards.

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