Qualified entity rule finalized, privacy concerns mandate de-identification process

Providers that have been approved as qualified entities will be able to use combined data and information received from CMS to conduct non-public analyses. Entities may also sell the analyses or the data itself to authorized users, as long as compliance with the Health Insurance Portability and Accountability Act (HIPAA) is ensured. CMS’ Final rule implementing section 105 of the Medicare Access and CHIP Reauthorization Act (MACRA) published in the Federal Register July 7, 2016.


CMS stated that the purpose of the Proposed rule (81 FR 5397) was to allow the use of claims data to improve care delivery (see CMS walks through the data access door opened by MACRA and ACA, Health Law Daily, February 1, 2016). The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), Section 10332, established the qualified entity program, which required CMS to combine Medicare Parts A and B data with Part D drug-event data, as well as other non-Medicare data, to evaluate provider and supplier performance. MACRA expanded this program, allowing the data to be used more effectively.


Qualified entities must disclose patient-identifiable data in accordance with a required qualified entity data use agreement (QE DUA). If this agreement is violated by either the disclosing entity or the authorized user, they will be subject to assessment. Qualified entities making data available to other parties will be subject to annual reporting requirements. The QE DUA permits authorized users to re-disclose data in the way a covered entity would be allowed to disclose protected health information (PHI) for treatment activities. A qualified entity may not provide or sell an analysis to an issuer for a geographic area in which that issue does not provide coverage.

Comments and changes

The final version largely incorporates the Proposed rule, with a few changes or clarifications based on comments. The agency considers combined data as a set of CMS claims data combined with a subset of claims data from other sources. Commenters requested that CMS alter this definition to allow clinical data to be included. In response, CMS stated that it did not have the statutory authority to modify the definition of combined data, but agreed that clinical data may have value and highlighted that qualified entities are not prevented from merging other data to develop an analysis. CMS declined to require qualified entities to publicly report the claims data received and any other data it intends to use for the analysis, since the analysis will remain between qualified entities and authorized users.

CMS proposed a general bar on the disclosure of patient-identifiable data to authorized users, along with a requirement that any claims data provided to an authorized user be de-identified according to HIPAA rules. An exception was proposed to allow a qualified entity to provide identifiable information as long as the authorized user is a provider that has a patient relationship with every identifiable patient. CMS noted that some limited data sets include indirect identifiers, and that these are still subject to HIPAA. CMS believes that authorized users can conduct most types of analysis with de-identified data, or they can ask the qualified entity to conduct a specific analysis on their behalf.

HHS provides funding for training small practices in Quality Payment Program

HHS will provide $20 million in funding that will be used to train Medicare clinicians in small practices on the Quality Payment Program. These funds will be primarily directed toward clinicians practicing in underserved areas, including rural areas and health professional shortage areas. This amount of funding will be provided annually for the next five years.

Quality Payment Program

The proposed Quality Payment Program would implement the changes created by Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which reformed clinician payment for serving Medicare patients. The proposal streamlined various value and quality programs into two paths. Under the program, physicians would be able to choose from the Merit-based Incentive Payment System (MIPS) and the Advanced Alternative Payment Models (APMs) (see Physician reporting streamlined, less burdensome under flexible Quality Payment Program, Health Law Daily, April 28, 2016).

Under MIPS, physicians would submit information about four performance categories. Then, a composite performance score is generated and compared against a threshold. This threshold determines the payment adjustment. Under APMs, physicians would receive a lump sum payment that could grow annually.

Small practices

Secretary Burwell emphasized the administration’s commitment to providing resources to small and rural practices that will allow them to provide quality care. Organizations must show that they are able to provide training to individual clinicians or small group practices of no more than 15 clinicians to become eligible for funding. The training would include creating a strategy for Quality Payment Program participation, such as adding electronic health record (EHR) capability, joining an APM, and evaluating practice workflow.

Proposed MIPS rule requires new vocabulary for physician payments

When CMS published the advance release of a Proposed rule to implement the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (P.L. 114-10), it changed existing and created new terms and acronyms to describe aspects of the Merit-based Incentive Payment System (MIPS) and the Alternative Payment Model (APM) incentive under the physician fee schedule (PFS). As providers and health lawyers prepare to adjust to MACRA’s changes, they should also train themselves to be conversant in this new language.

New language

MACRA created a number of new terms, most of which are used in the Proposed rule. A few of the terms MACRA created have been changed in the Proposed rule; see Obsolete terms, below.

APM: For the purposes of the APM incentive, MACRA defines an APM as a model under section 1115A of the Social Security Act (the Act) (excluding a health care innovation award), the Shared Savings Program under section 1899 of the Act, a demonstration under section 1866C of the Act, or a demonstration required by federal law.

Other Payer APMs: The Proposed rule uses this term to refer to arrangements in which eligible clinicians may participate through other payers.

APM Entity: Under the Proposed rule, an APM Entity is an entity that participates in an APM through a contract with a payer.

Qualifying APM Participant (QP) / Partial Qualifying APM Participant (Partial QP): These terms, defined in Act secs. 1833(z)(2) and 1848(q)(1)(C)(iii) do not report on MIPS applicable measures and activities that are required under MIPS. QP and Partial QP status is determined based on participation in Advanced APMs during a corresponding QP Performance Period.

MIPS eligible clinician:  The Proposed rule uses this term to replace MACRA’s wording of MIPS eligible professional (EP), defined at Act sec. 1848(q)(1)(C). MIPS eligible clinicians will include physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and groups that include such clinicians. This definition does not include QPs and Partial QPs.


Obsolete terms

Sustainable growth rate (SGR): MACRA ended the SGR, which came from a 1997 law aiming to control Medicare costs. The SGR has been rendered ineffective for more than a decade due to Congressional “doc fixes.”

Physician Quality Reporting System (PQRS); Physician Value-based Payment Modifier (VM); Medicare Electronic Health Record Incentive Program for Eligible Professionals, also known as the Meaningful Use program: These three programs will sunset after 2018, while some elements of each will be incorporated into MIPS, which begins in 2019.

MIPS EPs: The Proposed rule would define MIPS program participants as “MIPS eligible clinicians” rather than “MIPS EPs.” The agency believes that eligible clinicians is a more flexible, inclusive term than EP.

“All-or-nothing” scoring: The PQRS required EPs to meet all program criteria or receive a negative adjustment. The Proposed rule instead would give MIPS eligible clinicians partial credit, rewarding them partially for the measures they do meet.

For Wolters Kluwer’s analysis of the Proposed rule, see Physician reporting streamlined, less burdensome under flexible Quality Payment Program, Health Law Daily, April 28, 2016.

Hearing addresses physicians’ MACRA preparations

Lawmakers and physician leaders discussed the steps physicians are taking to prepare for Medicare changes under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (P.L. 114-10) at an April 19, 2016, hearing held by the House Committee on Energy and Commerce, Subcommittee on Health. The hearing addressed the promise of the new law, the necessary preparations physicians must take to benefit from the legislation, and points of caution that should be areas of focus for CMS as the agency works on regulations the agency is expected to release this spring.


The physician leaders who testified at the hearing celebrated the patient oriented nature of the legislation. They also applauded the way MACRA seeks to move Medicare forward through the elimination of the sustainable growth rate (SGR), the streamlining of programs through the Merit-Based Incentive Payment System (MIPS), and the reliance on alternative payment models (APMs). Barbara McAneny, testifying on behalf of the American Medical Association (AMA), noted that in addition to resetting and improving quality reporting, “MIPS has the ability to streamline measures, reduce reporting burden, create flexibility to report on clinically relevant measures, encourage participation, and overall improve care.”


Despite the benefits of the transitions under MACRA, Jeffrey Bailet, President of the Aurora Health Care Medical Group, testified as to the need for regulators “to proceed cautiously” during the transition. Bailet warned that as CMS takes on the dramatic transition from fee-for-service towards MIPS and APMs, the agency needs to be aware there is a learning curve for many providers, which comes alongside new financial risk. As a result, Bailet recommended that the MIPs and APM regulations “providing an incremental approach that includes flexibility and rational exposure to financial risk.”


Robert McLean, testifying on behalf of the American College of Physicians, raised concerns regarding physician burnout and relayed anecdotes of physician complaints regarding other laws and regulations like those related to electronic health records, prior-authorizations, and payment penalties. While McLean acknowledged the importance of the goals of the “triple-aim”—(1) improvement of the patient experience; (2) improving health populations; and (3) reducing per capita costs—he testified that the triple-aim should become the quadruple-aim with a fourth goal related to physician burnout. Specifically, he recommended that stakeholders focus on a fourth goal of “improving the work life of health care clinicians and their staff.” To achieve the goal, McLean recommended less burdensome reporting and the development of pathways for patient-centered medical homes.


To prepare primary care physicians, Robert Wergin, Board Chair of the American Academy of Family Physicians (AAFP), testified that the AAFP has developed a comprehensive, multi-year member education, and communications effort called “MACRA Ready.” The effort includes regularly updated educational resources, tools, resources, videos, and assessments. Although Wergin acknowledged that without a Proposed rule it is difficult to identify what exactly CMS will do under MACRA, he noted that the AAFP would like CMS to address flaws that undervalue primary care, ensure the existence of APMs for primary care physicians, avoid over complex regulation, and grant greater flexibility in the initial MACRA performance year because January 1, 2017, is an unrealistic date to begin measuring performance because the regulations are not yet finalized.