Following up on the passage of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), the Department of Health and Human Services (HHS) recently issued a proposed rule to replace the Medicare sustainable growth rate (SGR) methodology which was repealed by MACRA. The proposed rule would implement the Merit-based Incentive Payment System (MIPS) to replace SGR and establish incentives for participation in Advanced Alternative Payment Models (Advanced APMs).
CMS intends to drive more physicians toward participation in APMs with the goal that, by the end of 2018, 50% of Medicare payments through APMs and 90% of fee-for-service payments will be tied to quality or value. MIPS applies only to certain physicians and other clinicians who provide services under Medicare Part B; however, in 2021 forward, those who participate in the Advanced APM models may report based on Medicare, Medicaid and commercial payor covered services. Participants in Advanced APMs would receive 5% lump sum bonuses and a .75% fee increase annually as compared to MIPS eligible clinicians who may experience downward payment adjustments and a maximum of .5% annual increase.
The rigorous qualifying criterion for Advanced APM treatment (only six of the current 25 APM models would qualify) will initially ensure that the overwhelming majority of physicians will fall under MIPS, and CMS expects that the majority of those physicians will fall under the minimum threshold established by the proposed rule. MIPS would establish payment adjustments based on a composite score of aggregated “performance categories”: (1) quality, (2) resource use, (3) clinical practice improvement activities (“CPIAs”), and (4) advancing care information (CEHRT use).
As a result of the rule’s budget neutrality, CMS anticipates that only a very small percentage of physicians will experience positive payment adjustments (of up to 22%) with the majority of clinicians at or below the threshold experiencing as much as a negative 4% adjustment. The proposed rule offers some relief for small practices and rural health clinics, federally qualified health centers (FQHCs) and critical access hospitals (CAHs). While there are clear advantages for physicians/groups already participating in or considering participation in an APM structure, the structure must reflect the specific risk criteria set out by CMS.