According to CMS, more than 460,000 of the 1.25 million eligible Medicare providers did not meet deadlines to submit data for the Physician Quality Reporting System in 2013. The agency noted that about 70% of those who did not meet the deadlines see fewer than 100 Medicare patients annually. Nearly 40 percent of healthcare providers treating Medicare patients will have their payments docked 1.5% this year because they did not submit data on patients’ health to the government. However, nearly 642,000 providers did comply in 2013 and will earn a 0.5% boost in payments this year. For many small practices, the administrative burden was predicted to be significant, with analysts believing some groups will find incurring a penalty worth more than complying with government data requests.
All of this is especially important given the new MACRA legislation which puts forth a new formula for calculating payments to providers who treat Medicare patients. With the regulations and proposals from HHS forthcoming in the next year or two, there will be a window of time for physicians to help design the new programs.
One of the two new tracks, the Merit-Based Incentive Payment System (MIPS), consolidates and expands pay-for-performance incentives. The Physician Quality Reporting System, EHR Incentive Program, and the Physician Value-Based Modifier will become a part of a single payment adjustment to physician payments starting in 2019. MIPS scores are determined by the following four categories: (1) Quality (50% of total adjustment in 2019 shrinking to 30% of total adjustment in 2021); (2) Resource Use (10% of total adjustment in 2019 growing to 30% of total adjustment by 2021); (3) Clinical Improvement (15% of total adjustment); and (4) EHR Use (25% of total adjustment). The penalties and bonuses grow through 2022, at which time the range could be a 9 percent penalty and up to a 27 percent bonus. There will be winners and losers, however; because the system is designed to be budget neutral, negative adjustments across providers will equal positive adjustments.
Physicians can bypass MIPS if they participate in “Alternative Payment Models” (APMs) to opt out of MIPS. In addition, from 2019 to 2024, providers qualifying for the APM track will receive a 5% annual lump sum bonus. APM participation can be achieved by meeting thresholds for the percentage of revenue received through qualifying APMs. Providers who are below but close to the required level of APM revenue can be exempted from MIPS adjustments. The law defines qualifying APMs as those which require participating providers to take on “more than nominal” financial risk; report quality measures; and use certified EHR technology. By 2021-2022, half of all Medicare revenue or half of all-payer revenue along with 25% of Medicare revenue must be received through APMs.
ACOs will play a major role in the APM option, and according to estimates from the CMS actuary, one quarter of Medicare fee-for-service physician spending in 2015 was for beneficiaries served by an ACO. Another analysis found that 23.5 million Americans receive their care from an ACO. It is unlikely the ACO trend will diminish soon, given Secretary Burwell’s goal to transition 50 percent of Medicare fee-for-service payments to APMs by 2018.
Ultimately, all of the new laws and regulations are especially difficult on smaller practice groups. And if they do not perform according to the new government-created standards, they will be squeezed harder than ever. According to one consultant: “It used to be that physicians made enough money that they could let a lot of things slide. The margin is so much thinner now. You do have to micromanage the money. No one taught us to do that.”