Although 2019 may seem like a long way away, it isn’t too soon to start thinking about and preparing for the Merit-based Incentive Payment System (MIPS) or its (seemingly preferable) alternative, participation in an alternative payment model (APM) such as an ACO, a medical home, or a bundled payment program.
In April, Congress permanently repealed Medicare’s sustainable growth rate (SGR) formula for controlling physician payment. In yet another sign that we are in the midst of the biggest healthcare transformation in a generation, the 18-year-old SGR formula will be replaced by a far-reaching package of payment reforms. Here we will focus on the MIPS and its alternative, an APM, which involves assuming risk for financial loss or gain and measuring and reporting on quality.
The MIPS replaces three existing quality measurement programs that, to greater and lesser degrees, physicians have struggled with:
- Physician Quality Reporting System (PQRS);
- Value-based payment modifier; and
- Meaningful use of electronic health records.
MIPS will not totally eliminate these programs but will instead incorporate yet-to-be-defined elements of them and, presumably, though it is yet unclear, add new elements. For 2015-2018, the current payment system will remain intact. For 2019, physicians will have a choice. Either they must participate in MIPS, which will likely be complex and involve some administrative burden, or derive at least 25% of their practice revenue from an APM.
For those participating in MIPS, physician payment rates will be subject to an up or down adjustment based on performance in four categories: quality, meaningful use of EHRs, resource use, and clinical practice improvement.
There is an opportunity to avoid MIPS altogether, however. One of the most notable elements of the SGR fix is its push for physicians to participate in APMs such as ACOs, medical homes, bundled payment arrangements, and other payment models now being evaluated by the CMS Innovation Center. Physicians who gain a substantial portion—this means 25% in 2019 and 2020, and likely more thereafter—of their revenue through APMs like these will have the dual benefit of being exempt from MIPS participation and receiving a 5% annual bonus through 2024. After that, physicians in APMs will receive annual fee increases of 0.75%, while all other physicians will receive only a 0.25% increase.1
Strategic Thinking for Hospitalists: Enter an APM
If you’re asking yourself where you want your hospitalist practice to be in three years, I would suggest the answer is “in an alternative payment model of one kind or another.”
If you are an employed practice, strategic planning will involve assessing the APMs your hospital or health system is participating in and planning how your hospitalist practice can become a formal member of the arrangement.
If you are a freestanding practice, you should become a student of the APM policy coming from the CMS Innovation Center, and determine the best “insertion point” for your practice, such that you gain at least a quarter of your revenue through an APM within three years.
- Steinbrook R. The repeal of Medicare’s sustainable growth rate for physician payment. JAMA. 2015;313(20):2025-2026.