| Charles A. Odonkor, MD |
RPC Liaison to the AAPM&R Quality Practice, Policy, and Research Committee
PGY3– Johns Hopkins University School of Medicine
Major changes in the health care landscape are happening at a rapid pace with the passing of several new policies and regulations. Residents in training need to be cognizant of these upcoming changes, which will inevitably affect our future practice.
First, let’s familiarize ourselves with some of the jargon:
SGR Formula: Sustainable Growth Rate Formula
This was a method used by the Centers for Medicare & Medicaid Services (CMS) to compute payments for physician services and to control how much money CMS spent on medical care. Since SGR was implemented in the 1990s, there has been a game of catch up and patchwork to fix the SGR to align with ongoing reality. The exponential increase in the complexity of care required that the SGR be updated frequently. The updates, however, lagged advances in care and there was a persistent threat to cutting reimbursements for medical services. The proposal to cut physician payment was an effort to address the unsustainable medical spending thought to be a driver of health care costs. The SGR formula mandated a cut of 21.2% in payments and it has taken about 17 acts by Congress to stall this process. Finally, on April 16, 2015, the SGR took its last breath when President Obama signed the MACRA into law, which repealed the SGR.
MACRA: Medicare Access and CHIP Reauthorization Act of 2015
Along with the repeal of the SGR, the enactment of MACRA earlier this year is intended to help safeguard Medicare payments for physician services. The goal is to promote quality of care over quantity and to stabilize the reimbursement system. Starting in July 2015 through the end of fiscal year 2019, MACRA purports to increase Medicare payments for physician services, however, there is a catch.
MACRA introduces major shifts in current models of health care delivery—a move away from fee-for-service payment models towards fee-for-performance—with stringent reporting requirements. Under the new system, the Merit-Based Incentive Payment Systems (MIPS), reimbursements follow a carrot and stick approach. MIPS replaces the prior Medicare fee for service requirements (the Electronic Health Record (EHR), Physician Quality Reporting System (PQRS) and Value Based Modifiers). From July 2015 to 2019, all practitioners will be graded on a 0-100 scale with monetary rewards of 0.5% per year based on points allocated to the ff categories: clinical practice improvement activities (15 points), meaningful use of EHR (25 points), PQRS (30-points) and health resources (30 points). Funding for this payment is expected to come in part from an estimated $15 billion in savings from post-acute care. Starting in 2020 through 2025, low ranking performers will be penalized (reductions in payments) and the revenues will be used to reward high-ranking individuals satisfying the target performance requirements.
The Secretary of the Department of Health and Human Services will set the performance thresholds based on all recorded MIPS scores. The fewer the number of people who score on the high performing end, the higher the incentives to be awarded for the those in the top quartile (based on an allotted bonus funding pool of $500 million per year). Between 2020 and 2025, there will be no payment increases. By 2026, the practitioners in accountable care organizations and alternative payment model systems will receive up to 0.75% annual updates in reimbursements. For post-acute care providers, reimbursements will be capped at 1% in fiscal year 2018 for home health, hospice, inpatient rehab, long-term care hospitals, and skilled nursing facilities. CMS will also start posting quality and utilization data on physician compare websites.
APMs: Alternative Payment Models
With the passage of MACRA, physicians face an uncertain future of penalties as outlined above. Alternative Payment Models (APMs) are a way to counter this punitive paradigm by offering a way for physicians (dubbed eligible professionals [EPs]) to qualify for incentives and benefits under MACRA through bonus payments starting in 2019. APMs are based on the same quality measures established by MIPS (many of which are tailored for primary care instead of specialties, like physiatry), accountable care organizations, and patient centered-medical homes. Lump sum incentive payments will go to the groups to which the EPs belong to as a way of encouraging collaboration and teamwork. Groups could be hospitals, physician or non-physician owned practices. Unfortunately, APMs are associated with a certain amount of financial risk such as start-up expenses, equipment and overhead costs, data analysis expenses, etc. CMS is yet to set the criteria for judging whether a proposed APM qualifies under MACRA; however, MACRA specifies that participating in CMS-authorized, patient-centered medical homes will allow physicians to qualify for APM bonuses without the financial risks.
Due to the fact that there are currently very few APMs, MACRA strongly encourages physicians to develop new payment models. Some options for physiatrists could potentially be through spine care, pediatric rehab, TBI, stroke care models, etc. Besides monetary incentives, another benefit for physicians participating in model development is that this qualifies them for the clinical practice improvement activity portion of MIPS (15 points). In addition, physicians may have other MIPS requirements waived. Participating APMs will receive a 5% percent lump-sum incentive payment effective from 2019 to 2024 (once they meet the threshold score set by the Department of Health and Human Services) to help offset any financial/monetary losses incurred in APM set up. By the end of 2016, it is anticipated that 30% of Medicare payments will be tied to APMs. This will increase to 50% of Medicare payments by the end of fiscal year 2018.
As future physiatrists, we must not only actively advocate for our specialty, but also remain engaged in health care policy practice management initiatives in the rapidly-changing milieu of health systems in the United St¬¬ates.
For more information, please visit the Academy’s quality and practice content, advocacy content, and also check out this video prepared by the Academy to educate membership on the upcoming changes.
You can also learn more about possible alternative payment and practice models for PM&R in your February issue of The Physiatrist.
Take Home Points:
- MACRA kicked out SGR. RIP SGR (1997 to 2015).
- MACRA was signed into law April 16, 2015 and introduces MIPS and APMs.
- MIPS will provide a scorecard to monitor all physicians’ performance, with associated penalties and rewards for low vs. high performers, respectively.
- True effective date of MIPS is 2017 with a focus on high quality and high value patient care. Although the monetary rewards and penalties do not start until 2019, they will be based on information reported starting in 2017.
- APMs provide a way for physicians to earn bonuses as part of a collaborative team approach to care.
- Trainees need to start learning how to engage in clinical practice improvement activities.