Last year, Congress passed legislation to permanently eliminate the Sustainable Growth Rate (SGR) formula, created in 1997 and designed to hold Medicare Part B or outpatient spending under control. Allowing the SGR to go into effect would have severely cut physician reimbursements in recent years, but Congress passed legislation each year to temporarily avert these cuts (also known annually as the “doc fix”). In search of a permanent solution, the passage of bipartisan legislation permanently repealing the SGR in 2015 was hailed as a way to ensure more certainty around the future of Medicare payments for physicians.
This legislation (H.R. 2, 114th Congress), sponsored by Rep. Michael C. Burgess (R-Texas) and entitled “Medicare Access and CHIP Reauthorization Act of 2015,” or MACRA, does much more than simply remove the SGR’s threat of broader Medicare payment cuts. The law changes the ways physicians are reimbursed by Medicare and continues to shift our healthcare system away from volume-based reimbursements and toward a value-based payment system.
What Is MIPS?
MACRA creates two value-based payment tracks for physicians. The first, the Merit-Based Incentive Payment System (MIPS), is closer to the old fee-for-service model of reimbursement. However, MIPS takes into account both volume and quality (i.e., payment is adjusted based on physician-quality scores). These physician-specific scores broaden the scope of quality measurement by including new measures related to resource utilization, electronic health record (EHR) use, and clinical improvement practices, along with the traditional clinical quality markers.
Under MIPS, the current Physician Quality Reporting System (PQRS), EHR Incentive Program, and Physician Value-Based Modifier all will be integrated into this single-payment adjustment.
The range of potential payment adjustments based on a physician’s MIPS score grows each year through 2022 (in 2022, adjustments can range from +9% to -9%). The program is budget neutral, which means that increases in payments to high-scoring providers will be offset by decreases in payments to low-scoring providers. For 2019 to 2024, there also will be an additional payment adjustment given to the highest MIPS performers for exceptional performance.
A benefit of MIPS is that it will streamline the various quality-reporting programs currently in place into one single program and does not ask physicians to assume any additional financial risk related to outcomes when taking care of patients. However, the particulars of how the MIPS score will be calculated are yet to be determined, and much of the utility and palatability of this score will depend on the chosen metrics. The goal of these metrics should be that they are meaningful, valid, and attributable to specific providers.
What Are APMs?
The other payment option MACRA provides for physicians allows them to opt out of MIPS and participate in the Alternative Payment Models (APMs) track. To incentivize physicians to take part in this riskier track, providers taking part in APMs will receive some extra money for their participation: a 5% annual lump sum bonus on reimbursement payments. To clarify, qualifying APMs are those where providers take on “more than nominal” financial risk, report on their quality measures, and use certified EHR technology.
To qualify as a participant in an APM (for example, the Medicare Shared Savings Program), providers must hit a threshold for percentage of total revenue received or percentage of patients from qualifying APMs. This threshold will increase over time. For example, from 2019 to 2020, providers must obtain at least 25% of their Medicare revenue or patients via APMs, whereas in 2023, 75% of their Medicare revenue or patients will need to come from APMs.
Providers will benefit from the increased reimbursement offered if they participate in APMs. There also is funding allocated in MACRA to help develop quality measures, with a call for physician leads to develop quality standards. This payment model, however, does come with increased financial risk for the provider contingent on patient outcomes. In addition, it may be difficult for all providers to hit the thresholds for participation.