News & Media

Current Medicare Incentive Programs to be Replaced by New Quality Initiatives - Physicians Must Act Now to Sustain and Grow Fee Schedule

Wednesday, July 22, 2015

Effective April 16, 2015, the Medicare Access and Children's Health Insurance Program Reauthorization Act of 2015 (MACRA), also known as the “doc fix,” permanently repealed the sustainable growth rate (SGR). The Act serves as a catalyst for transitioning practices to a value-based payment system.

Many physicians do not realize how quickly MACRA will affect them.

Current incentive programs that promote value in patient care, including Meaningful Use (MU), Physician Quality Reporting System (PQRS) and the Value Based Payment Modifier (VBM), end in 2018. Medicare Fee-for-Service (FFS) payments will continue with a .5 percent annual increase through 2019; then FFS payments will not increase again until 2026.

Going forward, physicians will need to pursue one of the incentive options the MACRA offers in order to positively impact cash flow. The Alternative Payment Model (APM) option offers a temporary 5 percent annual lump sum payment that ends in 2024. Participation in Patient-Centered-Medical Homes (PCMH) for both primary and specialty care, Medicare Shared Savings Programs (MSSP), and some demonstration programs qualify as an APM. MACRA is the other incentive option which offers a Merit-Based Incentives Payment System (MIPS). The MIPS builds upon the quality measures and concepts in PQRS, MU, and VBM. MIPS has a range of fee schedule adjustments, from 4 percent in 2019 to 9 percent in 2022, (adjustments can be plus or minus) depending on performance relative to the threshold. There is a possible 10 percent bonus for achieving the top 25th percentile in performance on quality measures.

Positive fee schedule adjustments in the MIPS option will hinge on meeting quality benchmarks, managing resource use, continuously improving clinical practice, and using a certified EHR for MU.

The PCMH model instills in a practice the fundamental capabilities to be successful in a value-based system. Having capabilities in patient access to care, team-based care, population management, care management, care coordination and quality improvement provide a good framework in delivering quality care. Continuing the PCMH model over time allows more in-depth work on advanced concepts such as continuous quality improvement, coordinating and managing patient care throughout the medical neighborhood, and developing expertise to activate patients to take responsibility for their own health.

Physicians skilled in advanced PCMH concepts will be well-positioned to earn positive fee schedule adjustments in the MIPS. Physicians who are new to PCMH may find the 5 percent of the APM option to be a safe choice. Physicians who have not embraced the PCMH or other APM options will experience no fee revenue increase from the Medicare Physician Fee Schedule (MPFS) for almost a decade.

Although the MIPS option does not begin until 2019, CMS typically employs a two-year “look back” period. The MACRA does not currently stipulate the “look back” period and future regulations will further define the time period. If a two year “look back” applies, what physicians have in place on January 1, 2017 will impact their 2019 MIPS incentive. Achieving PCMH prior to 2017 provides eligibility for the APM option and counts as credit for the MIPS option. Practices that have achieved PCMH by 2017 will be best positioned to leverage a broad range of incentive options. Based on Medical Advantage Group’s experience of coaching over 900 PCMH transformations with both the Blue Cross Blue Shield of Michigan and the National Committee for Quality Assurance models, transformation to a PCMH model typically takes one year. It is important that physicians with a significant Medicare population, who bill for Part B services, act now to engage in quality initiatives and position themselves for financial incentives that increase future practice revenue.