This week's Senate vote approving a $200 billion Medicare reform package that includes the repeal of the Sustainable Growth Rate (SGR) for setting physician pay will not only redefine the physician payment model, it will also change the landscape for quality measurement.
The bipartisan Medicare Access and CHIP Reauthorization Act of 2015—which President Obama has pledged to sign into law—shifts Medicare payment from fee-for-service to pay-for-performance. In particular, the Act encourages participation in alternative payment models (APMs)—such as Accountable Care Organizations (ACOs), the Comprehensive Primary Care Initiative and bundled payments—by giving providers a lump sum reward of 5% per year for five years for APM participation, in addition to any other bonuses or shared savings.
The Act accelerates the industry’s shift to population-based delivery and payment models, as participation in APMs is defined not only by Medicare patients or revenue; it also can include participation in comparable private payer programs. Similarly, quality performance also may be based on data from any patient population or payer. Top-quartile performers may earn bonuses of up to 10% in addition to quality-related increases.
Under the legislation, CMS can restructure current reporting and incentive programs, including changing the weight given to different measures within the program. The new models will continue to emphasize patient experience, patient reported outcomes and other quality measures. Exact weights and requirements will be created as part of the traditional CMS rulemaking cycle, expected in summer 2016 to impact CY 2017 performance.
Because the Act encourages providers to participate in both public and private alternative payment models, such as medical home-focused programs, industry stakeholders will have additional opportunities and incentives to align public and private accountability programs.
The legislation has implications beyond the medical practice, including an extension of hospital disproportionate share payment cuts for a year and freeze of post-acute market basket updates at 1% for 2018. For hospitals, the currently planned 3.2 percentage point increase for 2018 will instead be implemented by gradually adjusting payment by 0.5 percentage points per year in 2018 through 2023.
When it becomes law, the Act will
• Repeal the Sustainable Growth Rate (SGR) and lock in a 0.5% payment update per year for 5 years in the Physician Fee Schedule.
• Establish the Merit-based Incentive Payment System (MIPS), which combines the major elements of PQRS, VBPM and EHR MU.
• Sunset PQRS, the Value Modifier and EHR Meaningful Use for eligible professionals with 2016 participation impacting 2018 payment (PQRS CAHPS requirements will continue under the MIPS program).
• Implement MIPS with payment risk of 4% in 2019, increasing to 9% in 2022 for providers with performance scores below a national median or mean threshold.
• Provide participants in APMs with 5% additional lump sum payments in 2019-2024
• Assesses MIPS performance based on measures in the following four domains: Quality (weighted at 50% for 2019 payment, shifting to 30% by 2021, with priority given to outcome measures, including patient including patient experience, patient reported outcomes, functional status measures, care coordination and appropriate use of services measures); Resource Use (weighted at 10% for 2019 payment, increasing to 30% by 2021); EHR MU (weighted at 25%); and Clinical Practice Improvement (weighted at 15%).
Providers and industry stakeholders will have an opportunity to comment on CMS quality measures to be proposed in January 2016.