MACRA pay models: What you can expect

June 1, 2016

In a series of articles this year, Robert A. Dowling, MD, will examine what you need to know about the law, what the CMS proposed rule for implementation implies for the near and long-term future, and-when it is issued later this year-what the final rule means to your urology practice.

Dr. DowlingMore than 1 year ago, President Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). This legislation was the product of overwhelmingly bipartisan support and was lauded by many health care stakeholders because it repealed the unpopular sustainable growth rate (SGR) method for updating the Medicare physician fee schedule. As physicians well know, the SGR led to uncertainty, threats of major pay cuts, and annual corrections known as the "doc fix."

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MACRA is most notable for its sweeping changes to the way health care will be reimbursed in the future, and many have awaited details of its implementation. Those details began to emerge on April 27, 2016, when the Centers for Medicare & Medicaid Services (CMS) released its proposed rule for implementing MACRA.

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In a series of articles this year, I will examine what you need to know about the law, what the CMS proposed rule for implementation implies for the near and long-term future, and-when it is issued later this year-what the final rule means to your urology practice. (For more on the MACRA rollout, see "MIPS: A first look at how it will affect your practice," and "MACRA proposed rule brings new decisions")

Next: What MACRA does

 

What MACRA does

Here are the basics of the law: MACRA repealed the SGR updates to the Medicare Physician Fee Schedule and replaced it with a flat 0.5% annual fee increase until 2019; no further increases will occur until 2026. In 2019 and beyond, physician reimbursement will be tied to quality through participation in either the Merit-Based Incentive Payment System (MIPS) or an Advanced Alternative Payment Model (APM). Finally, in 2026, the Physician Fee Schedule will begin to increase again, but slightly faster for physicians in Advanced APMs than those in MIPS.

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Who is in MIPS versus an Advanced APM? According to the law, all eligible professionals will be subject to MIPS unless they meet one of three exceptions: They are in their first year of participation in Medicare; they do not exceed a low volume threshold of Medicare payments or patients; or they are a qualifying participant in an Advanced APM. In the proposed rule, CMS has suggested that the low volume threshold be less than or equal to $10,000 in Medicare payments or 100 Medicare patients.

It is important to understand that MIPS is the default pathway, and it is only by qualifying for an exception that a professional can be excluded from MIPS. Most urologists are not in their first year of Medicare participation, and most urologists would exceed the low volume thresholds being proposed by CMS. The proposed criteria for being a qualifying participant in an Advanced APM are constraining for many specialists, including urologists.

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Therefore, it is widely believed (including by CMS) that most physicians will be starting in MIPS in 2019. CMS will make this determination each year based upon the law and the criteria for “qualifying participant in an APM” when those criteria are finalized.

Next: Changes in reimbursement

 

Changes in reimbursement

How will Medicare professionals be reimbursed under MIPS? Physicians will continue to be paid according to the Physician Fee Schedule with the adjustments outlined above. In addition, MACRA retires and replaces three federal programs and their associated payment adjustments at the end of 2018: the Physician Quality Reporting System, the Value-Based Payment Modifier, and the EHR Incentive Program (meaningful use). MIPS will instead adjust Medicare payments to professionals based on a composite score (on a scale of 0-100) of weighted performance in four areas: Quality, Cost, Advancing Care Information, and Clinical Practice Improvement Activities. (The proposed details for scoring performance, measurement periods, data submission, exceptions, and more are outlined in the CMS proposed rule and will be the subject of a future article.)

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A threshold of median or mean performance will be determined for the collective provider population in MIPS, and MIPS providers will be compared to that threshold. Providers with a lower MIPS composite score during the measurement period will receive negative adjustments for a payment year, and those with higher scores will receive positive adjustments to their fee schedule payments. The maximum negative adjustment starts at –4% in 2019 and increases each year until it reaches –9% in 2026. There are allowances for superior performance and additional payments, but in aggregate the law requires that total negative adjustments equal total positive adjustments.

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That is, MIPS will redistribute payments in a budget-neutral fashion. Beginning in 2026, MIPS physicians will see an annual fee schedule increase of 0.25% in addition to any payment adjustments described above.

Next: How will Medicare professionals be reimbursed if they are excluded from MIPS by successfully participating in Advanced APMs?

 

How will Medicare professionals be reimbursed if they are excluded from MIPS by successfully participating in Advanced APMs? APMs and Advanced APMs are strictly defined in the proposed rule (the subject of a future article), and qualifying participation includes a minimum threshold of Medicare payments or patients passing through the Advanced APM. APMs will have quality metrics also.

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If professionals become “qualifying participants” in this manner, they will receive a 5% Medicare bonus payment on their Part B professional services in the respective payment year. They will receive no other payment adjustments until 2026, when qualifying participants will see an annual 0.75% annual fee schedule increase (larger than MIPS). Finally, these bonus payments and fee schedules are in addition to any other financial benefits or risks incurred by participating in the advanced payment model (such as receiving a portion of shared savings) itself.

In the proposed rule, CMS estimates that in 2019, 8,814 urologists will be subject to MIPS. Based on existing data and a midpoint sensitivity analysis, 40.5% of those will receive negative payment adjustments totaling $13 million, and 59.2% will receive positive payment adjustments totaling $31 million. Note that there are more winners than losers in MIPS by this estimate in urology and most specialties; notable exceptions include chiropractic, dentistry, plastic surgery, podiatry, and psychiatry. Finally, CMS estimates that in 2019, 1,754 urologists will be excluded from MIPS for one of the reasons mentioned above-including qualifying participation in an APM.

Bottom line: Medicare fee for service is not dead, but instead now virtually all physician fees in Medicare will be directly tied to participation in a quality-based reimbursement model through the popular law called MACRA. In the beginning, most physicians will probably be measured and their fees adjusted downward or upward in MIPS; as time goes on, CMS expects more participation in APMs and exclusion from MIPS. In subsequent articles, I will discuss the details of MIPS and APMs that you will need to understand to traverse the landscape of reimbursement reform.

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