Have they concocted the perfect formula? Last week, the Centers for Medicare & Medicaid Services (CMS) took the next step toward creating a new methodology for physician payment under Medicare Part B in a Proposed Rule on which comments are due June 27, 2016. Following instructions from Congress in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), CMS proposes to combine existing and newly developed measures into a Merit-Based Incentive Payment System (MIPS), which will tie payment for physicians and other eligible clinicians to the quality and efficiency of care that each clinician delivers, starting January 1, 2019. The Proposed Rule also would implement the incentive for clinicians to participate in eligible Alternative Payment Models (APMs), which is designed to promote innovative approaches to tying payment to efficient and high-quality care. The whole scheme will be known as the “Quality Payment Program.”

When does the MIPS take effect?

MACRA required CMS to apply the MIPS payment adjustment starting with Medicare payments for items and services provided on or after January 1, 2019, and that is exactly what CMS proposes to do. But clinicians will need to worry about performance under the MIPS even sooner, because the payment adjustments that CMS makes in 2019 will be based on each clinician’s performance in 2017. Meanwhile, the existing quality payment adjustments under the Physician Quality Reporting System (PQRS) and Value-Based Payment Modifier (VBPM), as well as the incentive for meaningful use of electronic health records (EHRs), will sunset after 2018 and will be replaced completely by the MIPS adjustment.

Who is eligible to receive a payment adjustment under the MIPS?

For the first year, the Proposed Rule would apply a MIPS adjustment to “eligible clinicians,” which includes physicians and other specified categories of health care professionals, as well as groups that include eligible clinicians. However, eligible clinicians would be exempt from the adjustment for a given year if they:

  • Enrolled in Medicare during the performance year (for example, clinicians who enroll in 2017 would not be subject to the adjustment in 2019)
  • Qualify for the APM incentive for that year (see below) and do not report MIPS data.
  • Did not provide enough services to the Medicare patients to meet the low-volume threshold (more than $10,000 in Medicare billed charges or care for more than 100 Part B-enrolled Medicare beneficiaries).

How will the MIPS adjustment be calculated?

The devil is in the details, and the Proposed Rule begins to sketch out those details using the basic structure that Congress created in MACRA. Payment adjustments will be based on each clinician’s composite score, which is made up of scores in these four weighted categories:

  • Quality (50%) – This score would be based on performance on six quality measures selected by the clinician, which must include a cross-cutting measure and an outcomes-based measure (if available) or other high priority measure; CMS also proposes that clinicians may report based on a set of specialty-specific quality measures. This reduces the reporting burden from the nine quality measures currently required under the PQRS.
  • Cost or “Resource Use” (10%) – This score would be based on two measures currently used for the VBPM (total per capita cost for all Medicare fee-for-service beneficiaries and Medicare spending per beneficiary), as well as about forty episode-based cost measures for high-cost conditions and procedures. These measures are based on claims data, so no reporting is required.
  • Clinical Practice Improvement Activities (15%) – This score would be based on whether the clinician participated in a certain number of these activities for at least ninety days during the performance year; activities include things like providing 24/7 access to clinicians, engaging in proactive management of target patient populations such as diabetics, participating in care coordination initiatives, and collecting and following up on patient satisfaction surveys.
  • Advancing Care Information (25%) – This score would be based on two equal parts. Only half of the score would be based on meaningful use of certified EHR, using measures adapted from the EHR incentive program. This would be a major change from the current EHR incentive program, which provides an “all or nothing” incentive based on meaningful use. Under MIPS, in contrast, the other half of the score is based on performance on measures other than meaningful use, such as patient electronic access, coordination of care through patient engagement, and participation in health information exchanges (HIEs) and public health/clinical data registries.

The Proposed Rule includes detailed information and examples on how each of the scores would be calculated, including benchmarks, bonus points, and other adjustments. For example, CMS proposes alternative requirements to fulfill the goals of these categories for “non-patient-facing” clinicians (those with 25 or fewer billed patient-facing encounters during a performance year).

Ultimately, each provider’s composite score would be compared to a benchmark score to determine if the provider will get a positive, negative, or neutral adjustment. For the first year, the benchmark score would be based on cost, quality, and EHR use data from existing systems like PQRS and the EHR incentive program. Depending on how well or poorly the clinician does in comparison to the benchmark, his or her Medicare payments would be increased or reduced by up to 4% (as adjusted for budget neutrality). The maximum adjustment grows to 5% in 2020, 7% in 2021, and 9% in 2022 and after. Clinicians who achieve “exceptional performance” (for the first year, those in the top 25% of all possible composite scores) would get an additional payment bump (0.5% to 10% in the first year). All clinicians would get a feedback report to tell them how to improve, and would have their MIPS score published on CMS’s Physician Compare website.

How do APMs fit in?

Instead of trying their luck in the MIPS, eligible clinicians instead could earn a payment bonus of 5% (and avoid a payment cut under the MIPS) if they sufficiently participate in an eligible Alternative Payment Model. However, CMS proposes a relatively narrow definition of an eligible APM. Under MACRA, a provider gets credit for participating in an APM only if (1) the APM requires use of certified EHR, (2) the APM pays for professional services based on quality measures similar to the MIPS quality performance category, and (3) either the APM is a CMS “medical home” or entities participating in the APM bear more than “nominal risk” for losses. In particular, CMS proposes a complex three-part assessment of whether entities bear more than a nominal risk for losses, which is designed to test whether the entity would actually be motivated by the risk to drive for better performance.

These requirements are quite stringent and would exclude a number of prominent APMs, such as the Bundled Payments for Care Improvement (BPCI) Initiative, although CMS proposed that other APMs, such as the Comprehensive Primary Care Plus model, would be included. CMS predicts that fewer than 90,000 clinicians will participate in eligible APMs, while between 687,000 and 746,000 clinicians will be subject to the MIPS.

Takeaways for the First Year

Keep it simple

  • CMS proposes to significantly simplify reporting requirements under the MIPS compared to the legacy systems like the PQRS and the EHR meaningful use incentive program.
  • At the same time, CMS made an effort to allow clinicians to tailor the MIPS to their own practice, for example, by providing new reporting options based on different clinician specialties, offering a list of more than ninety activities to help earn a high Clinical Practice Improvement Activities score, and incorporating other performance measures into the Advancing Care Information category along with meaningful use of EHR.

Quality is Half the Battle

  • Half of the composite score would be based on the clinician’s performance on quality measures. This would be a change from the VBPM, which weighs quality and cost more or less equally.
  • The greater emphasis on quality would not last long. CMS proposes to lower the weight of the quality score to 45% for 2020 and 30% for all future years, as required by MACRA. The weight of the cost score would rise accordingly, from 10% for the first year to 15% for 2020 and 30% for all future years.

Quality Measures - Second Verse, Same as the First

  • The Proposed Rule includes the specific quality measures that would be used in calculating a clinician’s score under the MIPS for the first year.
  • The list of proposed measures will look familiar: under MACRA, quality measures in place for this year’s PQRS must be included automatically in the MIPS quality measures unless specifically removed by CMS. (29 are proposed for removal for 2017.) CMS also proposes eighteen new measures that were not previously included in the PQRS.
  • CMS also would continue its annual call for measures, so anyone can suggest a potential quality measure for CMS to include the following year – and the measure need not be endorsed by the National Quality Forum (NQF).
  • By November 1 of each year, including this year, CMS would publish a final list of the quality measures for the following year.

Will It Make A Difference?

  • Late last year, CMS announced that the vast majority of eligible professionals who met the minimum reporting requirements for the VBPM received a 0% adjustment, meaning they were paid exactly the same amount they would have been in the absence of the VBPM program.
  • However, the highest quality, lowest cost clinicians (128 groups nationwide) received bonuses of 16% or 32%. And clinicians who failed to report their quality measures received automatic 2% cuts to their Medicare payments.
  • It remains to be seen whether the benefits and costs of the MIPS will be distributed more evenly among clinicians. CMS comments that the amount of the MIPS payment adjustments for a given year will be determined by the distribution of scores across all clinicians compared to the benchmark. For example, the more clinicians who fall below the benchmark, the greater the bonuses will be for those clinicians who perform well.