See 81 Fed. Reg. 28,161. The rule implements portions of the Medicare Access and CHIP Reauthorization Act of 2015 (commonly referred to as MACRA), including the replacement for the sustainable growth rate (SGR) formula that governed Medicare payments for physicians’ services for nearly two decades. The rule will affect how—and how much—eligible clinicians are reimbursed.
The proposed rule—which weighs in at 962 pages—can be read here.
Until now, Medicare payment rates were set at artificially low levels established by the SGR. As a result, Congress regularly overrode the SGR to prevent massive cuts in Medicare payments. With the passage of MACRA, Congress repealed the SGR and tasked CMS with designing and implementing its replacement. This proposed rule is the result.
CMS proposes to replace the SGR with the Quality Payment Program (QPP), which is composed of two “paths” to payment: (1) the Merit-based Incentive Payment System (MIPS), and (2) Advanced Alternative Payment Models (Advanced APMs). MIPS will serve as the default path, consolidating currently existing performance payment adjustments into a unified quality payment system based on four performance categories: quality, cost, clinical practice improvement activities, and advancing care information.
Physicians and other clinicians whose practices meet certain additional criteria will be eligible for payments under Advanced APMs. These criteria include being a member of a group accepting a certain level of financial risk, having quality performance standards comparable to MIPS, and using certified electronic health records technology. Notably, under the proposed rule, Next Generation Accountable Care Organizations (Next Generation ACOs) are deemed to be Advanced APMs. Next Generation ACOs differ from other ACOs in that, with the former, the provider group assumes a higher level of financial risk and reward. Additional Advanced APMs include Comprehensive Primary Care Plus (CPC+), Comprehensive End Stage Renal Disease Care Model, and the Medicare Shared Savings Program—Track 2 and Track 3. This list is expected to grow in the coming years.
The financial consequences of this bifurcated approach are substantial: beginning in 2019, payments for Medicare Part B services to physicians participating in Advanced APMs will increase by 0.75 percent each year to account for inflation, while the rates for such services performed by physicians who choose MIPS will increase by only 0.25 percent annually. Additionally, physicians choosing to participate in Advanced APMs will receive a 5 percent bonus on Medicare Part B services.
Under MIPS, a physician’s base rate of Medicare Part B payment will be adjusted annually either up or down based on a composite performance score. In 2019, the maximum payment adjustment amount starts at 4 percent upwards or downwards and  increases incrementally to 9 percent in 2022 and beyond. CMS will give an additional payment adjustment to the highest MIPS performers for exceptional performance from 2019 until 2024. Thus, the proposed rule provides significant incentives to participate in Advanced APMs. However, whether such participation is in the best interest of physicians, other clinicians, and their patients will vary depending on the attendant facts and circumstances.
The proposed rule is open for comment until June 27, 2016. The rule is scheduled to be finalized by November 1, 2016, with implementation scheduled to begin on January 1, 2017. Physicians and other clinicians are well-advised to evaluate their operations and performance in preparation for the rule.
For more information on MACRA, CMS’s proposed rule, and clinician payment models—or if you would like assistance in submitting a formal comment on the proposed rule—please contact Barron Bogatto at bbogatto@jw.com., Virginia Mimmack at vmimmack@jw.com, or Susan Koch at skoch@jw.com.