Event Information

The U.S. government spends billions of dollars each year on computer hardware, software and file servers that may no longer be necessary. Currently, the public sector makes relatively little use of cloud computing, even though studies suggest substantial government savings from a migration to more Internet-based computing with shared resources.

On July 21, the Center for Technology Innovation at Brookings hosted a policy forum on steps to enhance public sector adoption of cloud computing innovations. Brookings Vice President Darrell West moderated a panel of experts, including David McClure of the General Services Administration, Dawn Leaf of the National Institute for Standards and Technology, and Katie Ratte of the Federal Trade Commission. West released a paper detailing the policy changes required to improve the efficiency and effectiveness of federal computing.

Audio

• Moving to the Cloud: How the Public Sector Can Leverage the Power of Cloud Computing

Transcript

• Uncorrected Transcript (.pdf)
• Download Dawn Leaf's PowerPoint Presentation (.pdf)
• Download David McClure's PowerPoint Presentation (.pdf)

Event Materials

• 20100721_cloud_computing
• 0721_cloud_computing_leaf
• 0721_cloud_computing_mcclure

“Missed connections” is the personals ads category for people whose encounters are too fleeting to form any union – a lost-and-found for relationships.  I gave that title to my paper on the conversation between the United States and for Europe on data, privacy, and surveillance because I thought it provides an apt metaphor for the hopes and frustrations on both sides of that conversation.

The United States and Europe are linked by common values and overlapping heritage, an enduring security alliance, and the world’s largest trading relationship.  Europe has become the largest crossroad of the Internet and the transatlantic backbone is the global Internet’s highest capacity route.

[I]

But differences in approaches to the regulation of the privacy of personal information threaten to disrupt the vast flow of information between Europe and the U.S.  These differences have been exacerbated by the Edward Snowden disclosures, especially stories about the PRISM program and eavesdropping on Chancellor Angela Merkel’s cell phone.  The reaction has been profound enough to give momentum to calls for suspension of the “Safe Harbor” agreement that facilitates transfers of data between the U.S. Europe; and Chancellor Merkel, the European Parliament, and other EU leaders who have called for some form of European Internet that would keep data on European citizens inside EU borders.  So it can seem like the U.S. and EU are gazing at each other from trains headed in opposite directions.

My paper went to press before last week’s European Court of Justice ruling that Google must block search results showing that a Spanish citizen had property attached for debt several years ago.  What is most startling about the decision is this information was accurate and had been published in a Spanish newspaper by government mandate but – for these reasons – the newspaper was not obligated to remove the information from its website; nevertheless, Google could be required to remove links to that website from search results in Spain. That is quite different from the way the right to privacy has been applied in America.  The decision’s discussion of search as “profiling” bears out what the paper says about European attitudes toward Google and U.S. Internet companies.  So the decision heightens the differences between the U.S. and Europe.

Nonetheless, it does not have to be so desperate.  In my paper, I look at the issues that have divided the United States and Europe when it comes to data and the things they have in common, the issues currently in play, and some ways the United States can help to steer the conversation in the right direction.

[I] "Europe Emerges as Global Internet Hub," Telegeography, September 18, 2013.

Cloud computing is becoming omnipresent in the private sector as companies latch on to this innovation as a way to manage scalability, improve flexibility, and reduce cost. Analysts at IDC predict that, over the next six years, nearly 90 percent of new spending on Internet and communications technology will be on cloud-based platforms. Apple, Google, Amazon, Microsoft, and hundreds of smaller companies are positioning themselves to dominate the estimated $5 trillion worldwide market. While few companies will provide numbers, it is estimated that Amazon and Google may run as many as 10 million servers while Microsoft runs close to one million. In short, it is an innovation that makes a mockery out of Moore’s law.

But, like all innovations, cloud computing has potential pitfalls. Public sector organizations in particular have had difficulty taking advantage of new technologies. The Heritage Foundation keeps a list over 50 examples of government ineptitude including $34 billion in fraudulent Homeland Security contracts, National Institutes of Health renting a lab that it neither needs nor can use for $1.3 million per month, and the Department of Agriculture wasting $2.5 billion in stimulus money on broadband internet. Technological ineptitude received special attention with the failed launch of the Healthcare.gov, the release of classified data from Edward Snowden, and the costly FBI virtual case file debacle.

Cloud computing is far more than just a simple technology change and requires a close examination of governance, sourcing, and security. We sought to understand how well state government is prepared to address the challenges of cloud computing.

The Approach

We have gathered and started to do a content analysis of the IT strategic plans for each state. For each plan, we performed a content analysis, which is looking for certain phrases or text within the IT strategic plan in order to have a structured way to understand the data. Details for our approach can be seen in our previous blog post.

How States Are Implementing the Cloud

We were not surprised to see a number of states preparing to study or embark on cloud computing.

While some states don’t mention it (e.g. Alabama), most states are eagerly exploring it. For example, North Dakota’s plan talks about cloud computing as an integral part of the future and seven of its thirteen major IT initiatives are centered on preparation for transitioning to the cloud “where and when it makes sense”.

Vermont puts itself squarely in the studying period. The plan describes that, “While the risks of enterprise-wide and cloud-based IT must be carefully managed, trends continue to just larger-scale operations.” Wisconsin also clearly lays out its view on cloud computing, writing that, “Flexibility and responsiveness (also) guide Wisconsin’s approach toward adoption of cloud services” and suggests that its version of a private cloud “…offers advanced security and service availability tailored for business needs.” West Virginia provides an equally balanced approach by requiring that only services with an acceptably low risk and cost-effective footprint will be moved to the cloud.

In short, all of the states that are considering cloud computing are taking a thoughtful and balanced approach.

The Good

One of the most critical aspects of cloud computing is security and, without question, states understand the importance of good security. A good example of this is Colorado who designates security as one of its four “wildly important goals” and sets the target of “10 percent reduction in information security risk for Colorado agencies by close of FY15”.

South Carolina echoed the same theme by asserting that security and confidentiality are “overriding priorities at every stage of development and deployment.” Connecticut’s plans explain the need to “continuously improve the security and safeguards over agency data and information technology assets”.

The Bad

Despite the interest in cloud computing, we were only able to find a single state (Georgia) that explicitly links governance to security and, to us, by extension to cloud computing. In Georgia’s plan, they start with the idea that “strong security programs start with strong governance” and then explicitly describe necessary changes in governance to improve security.

We were, however, impressed with the seriousness that New York, North Carolina and Massachusetts took governance but it was difficult to find many other states that did.

The Ugly

Unfortunately the results on sourcing were dismal. While a few states (e.g. Kansas, Ohio, and Massachusetts) specifically discuss partnerships, most states seemed to ignore the sourcing aspect of cloud computing. The most ominous note comes from Alabama where they make a statement that innovation in the state is being stifled by a lack of strong personnel.

While we have great enthusiasm for government to address cloud computing, some of the non-technical issues are lagging in the discussion. Good government requires that these items be addressed in order to realize the promise of cloud computing.

Introduction: Despite the launch of indirect, “proximity” talks between Palestinians and Israelis, Palestinian President Mahmoud Abbas continues to resist a resumption of direct negotiations with Israel absent a full settlement freeze. As chairman of the Palestine Liberation Organization (PLO) and president of the Palestinian Authority (PA), Abbas also insists that any new negotiations pick up where previous talks left off in December 2008 and that the parties spell out ahead of time a clear “endgame,” including a timetable for concluding negotiations. While these may seem like unreasonable preconditions, Palestinian reluctance to dive headfirst into yet another round of negotiations is rooted in some genuine, hard-learned lessons drawn from nearly two decades of repeated failures both at the negotiating table and on the ground.

Not only have negotiations failed to bring Palestinians closer to their national aspirations but the peace process itself has presided over (and in some ways facilitated) a deepening of Israel’s occupation and an unprecedented schism within the Palestinian polity. Such failures have cost the Palestinian leadership dearly in terms of both its domestic legitimacy and its international credibility. While it remains committed to a negotiated settlement with Israel based on a two-state solution, the PLO/PA leadership has been forced to rethink previous approaches to the peace process and to negotiations, as much for its own survival as out of a desire for peace.

Haunted by past failures, Palestinian negotiators are now guided, to varying degrees, by six overlapping and sometimes conflicting lessons:

1. Realities on the ground must move in parallel with negotiations at the table.

2. Don’t engage in negotiations for their own sake.

3. Agreements are meaningless without implementation.

4. Incrementalism does not work.

5. Avoid being blamed at all costs.

6. Don’t go it alone.

Downloads

• Download Full Paper - English

This summer, the world has watched as an al Qaeda offshoot, the Islamic State group, launched a militant offensive into Iraq, seizing large swaths of land. This Center for Middle East Policy’s Middle East Memo, Kurdistan Rising: To Acknowledge or Ignore the Unraveling of Iraq, examines how the fall of Iraq’s key city of Mosul has changed matters for Kurds in Iraq, and the necessity for American policymakers to take stock of the reality of the Kurdistan Region in this “post-Mosul” world.

Highlights: 

• A look at the Kurds of Iraq, their history and how the United States has largely spurned a partnership with them. Having been autonomous in Iraq since 1991, the Kurds heeded the aspirations of the United States in 2003 to assist in the removal of the Baath regime of Saddam Hussein, and played by the rules of the game established in the post-2003 period, albeit unwillingly at times. However, they have consistently refused to follow a path that would result in relinquishing the powers they enjoy. They have even taken steps to extend their autonomy to the point of having economic sovereignty within a federal Iraq, thus bringing them into serious dispute with Baghdad and the government of Nouri al-Maliki and earning the rebuke of the United States.

• An examination of how, since 2011, failed U.S. and European policies aimed at healing Iraq’s sectarian and ethnic fissures have contributed to the current situation. By so strongly embracing the concept of Iraq’s integrity as crucial to American interests in the region, key allies and partners have been marginalized along the way.

• Policy recommendations for the United States and its western allies, given that the Kurdistan region now stands on the threshold of restructuring Iraq according to its federal or confederal design, or exercising its full right to self-determination and seceding from Iraq. By ignoring the realities of Kurdish strength in Iraq, U.S. and European powers run the risk of losing influence in the only part of Iraq that can be called a success story, and antagonizing what could be a key ally in an increasingly unpredictable Middle East.

Downloads

• Kurdistan Rising: To Acknowledge or Ignore the Unraveling of Iraq

Researchers have long known that the rich live longer than the poor. Evidence now suggests that the life expectancy gap is increasing, at least here the United States, which raises troubling questions about the fairness of current efforts to protect Social Security.

There's nothing particularly mysterious about the life expectancy gap. People in ill health, who are at risk of dying relatively young, face limits on the kind and amount of work they can do. By contrast, the rich can afford to live in better and safer neighborhoods, can eat more nutritious diets and can obtain access to first-rate healthcare. People who have higher incomes, moreover, tend to have more schooling, which means they may also have better information about the benefits of exercise and good diet.

Although none of the above should come as a surprise, it's still disturbing that, just as income inequality is growing, so is life-span inequality. Over the last three decades, Americans with a high perch in the income distribution have enjoyed outsized gains.

Using two large-scale surveys, my Brookings colleagues and I calculated the average mid-career earnings of each interviewed family; then we estimated the statistical relationship between respondents' age at death and their incomes when they were in their 40s. We found a startling spreading out of mortality differences between older people at the top and bottom of the income distribution.

For example, we estimated that a woman who turned 50 in 1970 and whose mid-career income placed her in the bottom one-tenth of earners had a life expectancy of about 80.4. A woman born in the same year but with income in the top tenth of earners had a life expectancy of 84.1. The gap in life expectancy was about 3½ years. For women who reached age 50 two decades later, in 1990, we found no improvement at all in the life expectancy of low earners. Among women in the top tenth of earners, however, life expectancy rose 6.4 years, from 84.1 to 90.5. In those two decades, the gap in life expectancy between women in the bottom tenth and the top tenth of earners increased from a little over 3½ years to more than 10 years.

Our findings for men were similar. The gap in life expectancy between men in the bottom tenth and top tenth of the income distribution increased from 5 years to 12 years over the same two decades.

Rising longevity inequality has important implications for reforming Social Security. Currently, the program takes in too little money to pay for all benefits promised after 2030. A common proposal to eliminate the funding shortfall is to increase the full retirement age, currently 66. Increasing the age for full benefits by one year has the effect of lowering workers' monthly checks by 6% to 7.5%, depending on the age when a worker first claims a pension.

For affluent workers, any benefit cut will be partially offset by gains in life expectancy. Additional years of life after age 65 increase the number years these workers collect pensions. Workers at the bottom of the wage distribution, however, are not living much longer, so the percentage cut in their lifetime pensions will be about the same as the percentage reduction in their monthly benefit check.

Our results and other researchers' findings suggest that low-income workers have not shared in the improvements in life expectancy that have contributed to Social Security's funding problem.

It therefore seems unfair to preserve Social Security by cutting future benefits across the board. Any reform in the program to keep it affordable should make special provision to protect the benefits of low-wage workers.

Editor's note: This piece originally appeared in The Los Angeles Times. 

Open any magazine aimed at the upper middle class and you’ll find lots of ads about retirement planning: financial firms fighting over which one will ‘advise’ you and get you to invest your money with them.

But, for most people, that isn’t the most important part of retirement planning. In fact, most people don’t have significant retirement savings, so arguing about who or how to invest them is irrelevant. Their “financial planning” is more likely to be about whether and when to pay the credit card bill.

So what kind of retirement planning really matters? There are lots of answers, but here are two of the most important: How long you work and when you apply for Social Security. For most people, these matter far more than whether your savings are invested in stocks or bonds.

Working Longer Requires More than Wishful Thinking. One of the great blessings of modern medicine is that people are living longer. But one of the consequences of that blessing is that unless people work longer and/or save more while they’re working, they’re more likely to run out of money in retirement than ever before. (The decline of traditional pensions, which paid lifetime income benefits, hasn’t helped either.) Most folks know this and are responding. According to a recent survey, 65 percent of baby boomers expect to work past 65.

But those expectations may not be met. Currently, about half of workers stop working before age 65: some are wealthy enough; more often they’re just not healthy enough.

Flexible retirement is more slogan than fact. Moreover, the job market isn’t as flexible as some may hope. Yes, an increasing percentage of seniors are working at least occasionally (~35 percent of men over 60, ~25 percent of women), but that doesn’t mean they’re doing their dream job on their chosen schedule. Increasingly, most of those who do work past 65 work full-time. Twenty years ago about 60 percent of workers over the age of 65 worked part-time; today about 60 percent work full-time.

It’s not clear why part-time work has declined, but one reason may be that employers still haven’t adjusted to the idea. A recent Transamerica Survey found that 66 percent of age 55+ US workers expect they will enter retirement flexibly -- but only 25 percent report that their employer offers the opportunity to move from full-time to part-time. However, the best way for employers to change is for their employees to ask (or have a union that does).

Retirement planning involves more than wishful thinking. If you want a flexible or a phased retirement, you need to know what your options really are – and the time to find out is long before you’re on the verge of retirement.

Defer Applying for Social Security? The other step that matters for most people is when they choose to apply for Social Security. Many apply as soon as they legally can do so, generally at age 62. For most people, that’s a mistake, because it means they will get reduced payments for the rest of their lives. Most others claim their Social Security benefits by the time they reach the “normal retirement age”, which for baby boomers is 66 years. (The normal retirement age is gradually being raised; for those born after 1959 it’s age 67.) For many people, that’s a mistake, too, because your lifetime benefit increases each year that you delay from 62 up to age 70.

How much more will your Social Security be if you start taking it at 70 instead of claiming benefits at the earliest possible age? A lot. For baby boomers, waiting till 70 increases the annual benefit by about 8% or each year of delay. That means instead of taking an annual payment at 62 of $10,000 a year, waiting 8 years means your annual payment will rise to $17,600 – inflation indexed for life. (If you keep working after age 62, then the math can be even more compelling, because Social Security is based on your highest 35 years of earnings.) If you are married, delaying also increases payments to your spouse after you die.

Of course, lots of folks have justifications for taking the lower payment at 62. Some say, “I won’t live long enough to make up the difference” – but in fact most people do live that long and many live longer. Others say, “I need the money to pay my bills.” But if you have savings or home equity, it’s worth using those first and taking Social Security later.

So the next time someone approaches you about moving your 401k money over to them, consider the option they won’t tell you about: spending it first and deferring Social Security. After all, Social Security gives you a guaranteed 8% return for waiting – and an 8% guaranteed return is hard to beat. (But they probably won’t tell you that, either.)

Editor's note: This piece originally appeared in Inside Sources.

The American people deserve to have a federal government that is both responsive and effective. That simply isn’t the case for more than 1 million people who are awaiting the adjudication of their applications for disability benefits from the Social Security Administration.

Washington can and must do better. This gridlock harms applicants either by depriving them of much-needed support or effectively barring them from work while their cases are resolved because having any significant earnings would immediately render them ineligible. This is unacceptable.

Within the next month, the Government Accountability Office, the nonpartisan congressional watchdog, will launch a study on the issue. More policymakers should follow GAO’s lead. A solution to this problem is long overdue. Here’s how the government can do it.

Congress does not need to look far for an example of how to reduce the SSA backlog. In 2013, the Veterans Administration cut its 600,000-case backlog by 84 percent and reduced waiting times by nearly two-thirds, all within two years. It’s an impressive result.

Why have federal officials dealt aggressively and effectively with that backlog, but not the one at SSA? One obvious answer is that the American people and their representatives recognize a debt to those who served in the armed forces. Allowing veterans to languish while a sluggish bureaucracy dithers is unconscionable. Public and congressional outrage helped light a fire under the bureaucracy. Administrators improved services the old-fashioned way — more staff time. VA employees had to work at least 20 hours overtime per month.

Things are a bit more complicated at SSA, unfortunately. Roughly three quarters of applicants for disability benefits have their cases decided within about nine months and, if denied, decide not to appeal. But those whose applications are denied are legally entitled to ask for a hearing before an administrative law judge — and that is where the real bottleneck begins.

There are too few ALJs to hear the cases. Even in the best of times, maintaining an adequate cadre of ALJs is difficult because normal attrition means that SSA has to hire at least 100 ALJs a year to stay even. When unemployment increases, however, so does the number of applications for disability benefits. After exhausting unemployment benefits, people who believe they are impaired often turn to the disability programs. So, when the Great Recession hit, SSA knew it had to hire many more ALJs. It tried to do so, but SSA cannot act without the help of the Office of Personnel Management, which must provide lists of qualified candidates before agencies can hire them. SSA employs 85 percent of all ALJs and for several years has paid OPM approximately $2 million annually to administer the requisite tests and interviews to establish a register of qualified candidates. Nonetheless, OPM has persistently refused to employ legally trained people to vet ALJ candidates or to update registers. And when SSA sought to ramp up ALJ hiring to cope with the recession challenge, OPM was slow to respond.

In 2009, for example, OPM promised to supply a new register containing names of ALJ candidates. Five years passed before it actually delivered the new list of names. For a time, the number of ALJs deciding cases actually fell. The situation got so bad that the president’s January 2015 budget created a work group headed by the Office of Management and Budget and the Administrative Conference of the United States to try to break the logjam. OPM promised a list for 2015, but insisted it could not change procedures. Not trusting OPM to mend its ways, Congress in October 2015 enacted legislation that explicitly required OPM to administer a new round of tests within the succeeding six months.

These stopgap measures are inadequate to the challenge. Both applicants and taxpayers deserve prompt adjudication of the merits of claims. The million-person backlog and the two-year average waits are bad enough. Many applicants wait far longer. Meanwhile, they are strongly discouraged from working, as anything more than minimal earnings will cause their applications automatically to be denied. Throughout this waiting period, applicants have no means of self-support. Any skills applicants retain atrophy.

The shortage of ALJs is not the only problem. The quality and consistency of adjudication by some ALJs has been called into question. For example, differences in approval rates are so large that differences among applicants cannot plausibly explain them. Some ALJs have processed so many cases that they could not possibly have applied proper standards. In recognition of both problems, SSA has increased oversight and beefed up training. The numbers have improved. But large and troubling variations in workloads and approval rates persist.

For now, political polarization blocks agreement on whether and how to modify eligibility rules and improve incentives to encourage work by those able to work. But there is bipartisan agreement that dragging out the application process benefits no one. While completely eliminating hearing delays is impossible, adequate administrative funding and more, better trained hearing officers would help reduce them. Even if OPM’s past record were better than it is, OPM is now a beleaguered agency, struggling to cope with the fallout from a security breach that jeopardizes the security of the nation and the privacy of millions of current and past federal employees and federal contractors. Mending this breach and establishing new procedures will — and should — be OPM’s top priority.

That’s why, for the sake of everyone concerned, responsibility for screening candidates for administrative law judge positions should be moved, at least temporarily, to another agency, such as the Administrative Conference of the United States. Shortening the period that applicants for disability benefits now spend waiting for a final answer is an achievable goal that can and should be addressed. Our nation’s disabled and its taxpayers deserve better.

Editor's note: This piece originally appeared in Politico.

Editor’s Note: This analysis is part of The Leonard D. Schaeffer Initiative for Innovation in Health Policy, which is a partnership between the Center for Health Policy at Brookings and the USC Schaeffer Center for Health Policy and Economics. The Initiative aims to inform the national health care debate with rigorous, evidence-based analysis leading to practical recommendations using the collaborative strengths of USC and Brookings.

The passage of the Medicare Access and CHIP Reauthorization Act (MACRA) just over a year ago signaled a strong and unique bipartisan agreement to move towards value-based care, but until recently, many of the details surrounding how it would be implemented remained unknown. But last week, the Centers for Medicare and Medicaid Studies (CMS) released roughly 1,000 pages that shed more light on how physician payment will hopefully dramatically change for the better.

Some Historical Context

Prior to MACRA, how doctors were paid for providing care to Medicare patients was subject to a reimbursement formula known as the Sustainable Growth Rate (SGR). Established in 1997 to control the rate of increase in spending on physician services, the SGR pegged total spending among all Medicare-participating physicians to an overall budget target. Yet in this “tragedy of the commons,” no one physician benefitted from her good stewardship of health care resources. Total physician spending often exceeded the overall budget target, triggering reimbursement rate cuts. However, lawmakers chose to push them off into the future through what were called “doc fixes,” deferring the rate cuts temporarily. The pending cut rose to over 21 percent before MACRA’s passage as a result of compounding doc fixes.

Moving Forward with MACRA

When it was signed into law on April 16, 2015, MACRA ended the SGR, its cuts, and many previous payment incentive programs. In their place, MACRA established two overarching payment incentive schemes for providers to choose from:

1. the Merit-Based Incentive Payment System (MIPS) program, which supplants three previous payment incentives and makes positive or negative adjustments to a physician’s payment based on her performance; or


2. the Alternative Payment Model (APM) program, which awards a 5 percent bonus through 2024—with higher annual payment updates thereafter—for having a minimum percentage of Medicare and/or all-payer revenue through eligible APMs. Base physician fee rates for all Medicare providers would be updated 0.5 percent for each of the first four years, followed by no increases until 2026, when base fees would increase at different rates depending on the payment incentive program in which a physician participates.

MIPS addresses providers’ longstanding complaints that reporting that reporting under the existing programs—the Physician Quality Reporting System, the Value-Based Modifier, and Meaningful Use — is duplicative and cumbersome. Under the new MIPS program, physicians report to the government payer directly (CMS) and receive a bonus or penalty based on performance on measures of quality, resource use, meaningful use of electronic health records, and clinical practice improvement activities. The bonus or penalty physicians may see starts at 4 percent of the fee schedule in 2019 (based on their performance two years prior—in this case 2017) and increases successively to 5 percent in 2020, 7 percent in 2021, and 9 percent from 2022 onward. From 2026 onward, MIPS providers would receive an annual increase of 0.25 percent on their base fee schedules rates.

In contrast, the APM incentive program awards qualifying physicians a fixed, annual bonus of 5 percent of their reimbursement from 2019- – 2024, and provides that their fee schedule rates grow 0.5 percentage points faster than those of MIPS in 2026 and beyond, in recognition of the risk they assume in these contracts.

Yet, according to MACRA, not all APMs are created equal. APMs eligible for this track must use quality measures similar to those of MIPS, ensure electronic health records are used, and either be an approved patient-centered medical home (PCMH) or require that the participating entity “bears more than nominal financial risk” for excessive costs. Then, in order to receive the APM track bonus, physicians must have a minimum of 25 percent of their revenue from Medicare come through eligible APMs in 2019, with the minimum increasing through 2023 up to 75 percent. In 2021, a new all-payer Advanced APM option becomes available, allowing providers in APM contracts with other payers to participate in the Advanced APM incentive. To do so, they must meet the same minimum thresholds—50 percent in 2021, 75 percent in 2023—but through all provider contracts, not solely Medicare revenue, while still meeting a significantly lower Medicare-specific threshold. By creating an all-payer option, CMS hopes to enable greater provider participation by allowing all payer revenue to count toward the same minimum threshold. Under the all-payer model in 2021, for example, providers must have no less than 25 percent of Medicare revenue through Advanced APMs and 50 percent of all revenue through Advanced APMs.

MACRA Implementation Details Revealed

The newly released proposed rule provides answers to significant questions that had been left unanswered in the law surrounding the specifics of implementation of MIPS and the APM incentives. At long last, providers are gleaning insight into how CMS intends to implement MIPS and the APM track. Given the fast-approaching MIPS performance period in January 2017, here are three key highlights providers need to know:

1. Qualifying for the APM incentive track—and getting out of MIPS—will be difficult. In order to qualify for the bonus-awarding Advanced APM designation, APMs must meet the “nominal financial risk” criteria, which will be measured in three ways: an APM’s marginal rate sharing for losses, minimum loss ratio (the threshold above which providers would begin sharing in losses), and total potential risk as a percent of expected costs. Clinicians must further have a minimum share of revenue that comes in through the designated APMs.


2. Providers will have fewer opportunities to see and improve their performance on MIPS. Despite calls from provider groups for more frequent reporting and feedback periods, MIPS reporting periods will be annual, not quarterly. This is true for performance feedback from CMS, as well, though they may explore more frequent feedback cycles in the future. Quarterly reporting and feedback periods could have made the incentive programs more “actionable” for providers, alerting them to their performance closer to the time the services were rendered and providing more opportunities to improve performance.


3. MIPS allows greater flexibility than previous programs. Put simply, MIPS is the performance incentive program clinicians will participate in if not on the Advanced APM track. While compelling participation, the proposed MIPS implementation also responds to stakeholder concerns that earlier performance incentive programs were onerous and sometimes irrelevant—MIPS reduces the number of measures required in some categories and allows physicians to select from a set of measures to report on based on relevancy to their practice.

With last week’s release of the proposed rule, the Leonard D. Schaeffer Initiative for Innovation in Health Policy is kicking off a series of work products that will focus dually on further MACRA implementation issues and on translating complex policy into providers’ experience. In the blogs and publications to follow, we will dive into greater detail and discussion of the pieces of MACRA implementation highlighted here, as well as many other emerging physician payment reform issues, as the law’s implementation unfolds.