The Merit-Based Incentive Payment System remains as complex as its predecessor-the SGR.
In 1997, the sustainable growth rate seemed like a good idea. Enacted by Congress to increase physician payments when the growth rate of spending on physician services was below the GDP, the SGR formula also cut payments when physician spending growth exceeded the GDP and acted as a mechanism to effectively predict and control the growth rate of physician services costs.
Congress had reason to be optimistic about the success of the SGR because other payment reforms had worked well, such as the inpatient prospective payment system (using diagnosisrelated groups) for Medicare inpatient rates. The U.S. Department of Health and Human Services’ Office of the Inspector General reported that from 1985 to 1990, the payment rate to hospitals decreased by 52 percent; from 1990 to 1995, the payment rate decreased by 37 percent.
But healthcare leaders joined physicians in pushing for the repeal of the SGR in favor of quality-based payment models, saying the SGR was a flawed formula. President Obama signed the SGR repeal legislation in April 2015.
The SGR: A Failed Policy
The SGR formula seemed to function appropriately until 2002, when the base payment rate was cut 4.8 percent. Under the SGR, physician fee levels would continue to decrease, with a 21.2 percent reduction to Medicare’s physician payment formula set to take place in 2015 alone. The prospect of deep cuts to physician reimbursement naturally elicited a negative reaction from U.S. physicians, and each year, Congress scrambled to stave offthe payment cuts with legislation informally called the “doc fix.” With Congress’ passage last year of a bill that serves as a vehicle to repeal and replace the SGR, the doc fix has a final fix, but its implementation may well be even more complex, leaving questions surrounding Medicare physician payments unresolved.
MACRA-The Final Doc Fix
Although Congress has been criticized for passing very little legislation, this past April legislators passed the Medicare Access and CHIP Reauthorization Act of 2015. Some of the major provisions of MACRA include:
* Permanent repeal of the SGR formula
* Annual positive physician fee updates of 0.5 percent from July 2015-2019 instead of the SGR formula
* Maintaining fee-for-service as a payment option
* The end of the Physician Quality Reporting System in 2018, with the potential for certain aspects of the program to be incorporated under the new incentive program
* Modification of existing quality programs such as the PQRS, the Medicare EHR Incentive Program and the Physician Value-Based Payment Modifier program in 2019 into a new single Merit-Based Incentive Payment System-a program that assesses eligible professionals based on four performance categories and determines their payment adjustment accordingly
* Incentives to move into advanced alternative-payment methods such as accountable care organizations, including 5 percent bonus payments from 2019-2024 and exemption from some other reporting requirements
Under MACRA, Congress enacted policy that continues to trend toward value purchasing and that seeks input to inform the final shape of MIPS. However, the new program already has a general structure based on four performance categories:
* Resource use
* Clinical practice-improvement activities
* Meaningful use of EHRs
As in the past, this system includes physicians and other related eligible professionals, whose composite score is compared with a performance threshold that consists of the mean or median of the composite performance scores for all MIPS-eligible professionals within their specialty. Each year, eligible professionals whose composite performance scores land above the threshold will receive a graduated and positive payment adjustment. Similarly, those eligible professionals whose scores fall below the threshold will receive negative payment adjustments. The adjustments begin at up to 4 percent in 2019 and grow to 9 percent in 2022.
The Centers for Medicare & Medicaid Services is attempting to build on existing systems by using the methodologies and measures of the PQRS, the Physician Value- Based Payment Modifier program and the Medicare EHR Incentive Program. In addition, measures from qualified clinical data registries may be used; CMS is soliciting input on this from professional associations.
Because CMS is encouraging alternative- payment methods (such as ACOs and bundled payments), physicians who receive at least 25 percent of their Medicare revenue through alternative payments will be exempt from MIPS and receive a 5 percent bonus starting in 2019.
The initial response of provider associations has been muted, with most being pleased to see the SGR gone. However, the National Committee for Quality Assurance and the American Academy of Family Physicians both provided comprehensive comments to CMS on MIPS. Both groups identified the issue of some providers having a small numbers of patients in various clinical categories-skewing their results. In addition, AAFP suggested 19 new measures be included, such as those around open access scheduling, the ability to provide e-visits or other forms of telehealth services, patient portal usage, shared decision making, use of a patient advisory council, motivational interviewing, group visits, health coaching and conducting Medicare annual wellness visits.
As MIPS moves toward implementation, it is likely all professional associations will provide comprehensive input on new measures for each of the four performance categories.
Challenges and Implications
Physician compensation is a complex and frequently controversial topic in healthcare organizations, and MIPS will not resolve the challenges it poses. Because MIPS will now introduce many new metrics and publicly reported quality measures, it could be tempting to begin linking physician payment directly to MIPS metrics; this may actually happen in some small practices.
However, in larger systems the complexity of the new metrics and their relationship to all the supporting clinical systems makes both accountability and transparency difficult. A basic rule of compensation systems is that there should be a clear line of sight between a goal and a reward, but MIPS obscures this relationship.
In a report created for the Medicare Payment Advisory Commission, ACHE Member Daniel K. Zismer, PhD, professor and director, Masters in Healthcare Administration and Executive Studies Programs at the University of Minnesota (Minneapolis), and his colleagues interviewed 15 senior leaders of U.S. integrated health systems on reimbursement models and the alignment of incentives in physician compensation. The researchers found stability in provider compensation was a critical factor in retaining and recruiting physicians. To do this, it was necessary to “disconnect” how the organization was paid from how the physician was paid. Although quality outcomes are important, many physicians in integrated systems have other obligations such as caring for expanded panels of patients, managing midlevel practitioners and collaborating with colleagues to manage complex patients. Consequently, compensation must take into account payment for the many actual duties of physicians today.
A clear strategy in President Obama’s healthcare law is to encourage the formation of systems of care. To succeed under the MIPS, teams of highly skilled clinicians and process improvement personnel must work diligently to meet the MIPS performance goals. It is hoped that the experiences of these professionals and their lessons learned will shed light on the actions that best support success under the MIPS.
Daniel B. McLaughlin is director of the Center for Health and Medical Affairs at the University of St. Thomas, Minneapolis, and an ACHE Member (firstname.lastname@example.org).