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High Stakes Payment Reform Comes with High Hopes

Analysis  |  By Christopher Cheney  
   May 09, 2016

The most ambitious attempt in a generation to redesign the way physicians are paid for providing services to Medicare beneficiaries is a work in progress.

Physicians are far from the only healthcare providers facing high stakes in the proposed rule for Medicare's Merit-Based Incentive Payment System (MIPS) and associated regulations for alternative payment models (APMs).

MIPS and APMs are the heart and soul of the Medicare Access & CHIP Reauthorization Act (MACRA) of 2015 that Congress enacted last year to replace the widely reviled Sustainable Growth Rate (SGR) formula for physician reimbursement.

Officials at the American Hospital Association say the proposed rule for MACRA released on April 27 is just as important for health systems and hospitals as it is for physicians who receive reimbursement payments from Medicare.

"We have been watching this particular rule with a great deal of interest," says Akin Demehin, senior associate director for policy at AHA.

"It really comes down to the fact that hospitals currently employ somewhere in the neighborhood of 240,000 to 250,000 physicians, and we have contractual relationships with another 290,000 to 295,000. So hospitals and their physicians are partners in delivering care in their communities. This rule matters a great deal to hospitals as well as physicians."

Related: 3 Ways to Prep Physicians for MACRA's Unknowns

MACRA rules are going to play a key role in helping to guide all healthcare providers away from business models structured for fee-for-service medical care to value-based business models, says Melissa Jackson, who also serves as a senior associate director for policy at AHA.

"As we see the field shift away from volume-based care into more care that rewards high value, the incentives are for hospitals and physicians to work more closely together," she says.

"We're seeing shifts in the relationship—where even when physicians are not employed, hospitals and physicians are forming tighter affiliations. So, particularly with the incentives that are embedded in the new physician payment system under MACRA, and the emphasis on the alternative payments models and value-based payment, that helps align incentives across hospitals and physicians."

"Although this is physician payment, there's a growing sense among our members that 'us is them,' that this really impacts hospitals," adds Jackson.

Related: Physicians Stymied by MACRA's Unknowns

The 962-page proposed rule for MACRA provides details for implementation of MIPS and APMs. Highlights of the proposed rule include:

  • The first performance period for the new payment system is slated to start in 2017, with payment adjustments beginning in 2019. "This time frame is needed to allow data and claims to be submitted and data analysis to occur," the proposed rule says.

  • The categories of clinicians who would be eligible for Medicare reimbursement through MIPS are physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists.

  • Scoring of APMs would be based on four MIPS performance standards: quality, resource use, clinical performance improvement activities, and "advancing care information." CMS says the primary goal of the advancing care information standard is to replace the existing Meaningful Use program with a new approach that "increases flexibility, reduces burden, and improves patient outcomes."

  • Clinicians would only qualify for APM payment incentives if they participate in an "Advanced APM," which would have three main characteristics: the APM would be required to use CMS-certified electronic health record technology, payment would have to be based on quality measures similar to those used in the MIPS quality performance category, and the APM would have exposure to downside risk.

  • Clinicians participating in an Advanced APM would be exempt from MIPS, which has a separate payment incentive system.

  • The proposed rule sets criteria for Advanced APMs, but it only names a handful of existing CMS APM models that would qualify for Advanced APM status, including Track 2 and Track 3 of the Medicare Shared Savings Program (MSSP), Next Generation ACO, and Comprehensive Primary Care Plus (CPC+).

Christopher Cheney is the senior clinical care​ editor at HealthLeaders.

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