Under original Medicare, health care providers are paid for their services based on a predetermined rate for each service set by the Centers for Medicare & Medicaid Services (“CMS”). In this “fee-for-service” payment model, health care providers are reimbursed according to their volume of services, without any regard for patient health outcomes, cost efficiency, or value provided. Arguably, the traditional system rewards over-utilization and has contributed to the escalating costs of health care in the United States. With the Medicare Access and CHIP Reauthorization Act (“MACRA”) enacted by Congress in 2015, the government is looking to change this by phasing out of the failing fee-for-service system. While MACRA’s intentions may be good, this new law is complex and compliance may prove to be costly, time-consuming, and burdensome. With this new law comes new risks, so an understanding of and compliance with MACRA is important for all health care providers.

MACRA restructured the Medicare Sustainable Growth Rate methodology with the Quality Payment Program (“QPP”), which went into effect in 2017 as a “transition” year. QPP seeks to do what traditional fee-for-service has overlooked—encourage and reward the delivery of high-quality patient care. Providers participate in one of two tracks: (1) the Merit-Based Incentive System (“MIPS”) or (2) the Advanced Alternative Payment Model (“Advanced APMs”). The MIPS track requires physicians to report data in weighted performance categories of quality, resource use, clinical practice improvement activities, and meaningful use of certified Electronic Health Record technology. Based on their evaluation and data, physicians are given a composite performance score and paid the traditional fee-for-service rate which is adjusted—either upwards, downwards, or neutral—based on the physician’s composite performance score. On the other hand, physicians who meet a threshold based on a portion of their revenue or patients covered under a qualifying advanced payment models are excluded from MIPS and receive a bonus payment through the Advanced APM track.

The majority of physicians will go through the MIPS track and should ensure that performance data being submitted is accurate. Otherwise, physicians may be in danger of having to defend against a claim brought by the government under the False Claims Act. Even if the false reporting was done by mistake, a physician may be subject to a claim for overpayment and assessed a penalty. In QPP’s new “pay for performance” formula, where bonus payments and higher adjusted rates will be paid to physicians without any budget constraints or limitations, the government will closely scrutinize payments being made. Although understanding and complying with the new payment structure may pose a hardship—particularly for smaller and solo practices—failure to comply with and accurately report performance data will surely prove to be more expensive.

CMS recently issued the 2018 Final Rule for MACRA’s Quality Payment Program and is soliciting comments until January 2, 2018. The 2018 Final Rule can be found in its entirety here.