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Medicare’s new payment system gives physicians two options
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The Medicare Access and CHIP Reauthorization Act, signed into law on April 16, will make major changes in Medicare payments for physician services.
Things start out slowly: From July 2015 through 2018, Medicare payments for physician services will be updated 0.5% per year, and Medicare’s current incentive programs for physicians - the physician quality reporting system, the value-based payment modifier, and the meaningful use program - will continue.
Rosemary Maxwell
Starting in 2019, the Medicare Access and CHIP Reauthorization Act (MACRA) creates two physician payment options: a merit-based incentive payment system (MIPS) that consolidates the current incentive programs; and eligible alternative payment models (APMs), such as certain accountable care organizations and bundled payment models. See our previous post (add reference/link?) for a brief description of these options. Upcoming posts will delve deeper into each option.
Physicians will have to choose between these options: A physician cannot be a “MIPS-eligible physician” and a “qualifying APM participant” in the same year. Below we outline how the payment streams for these categories compare, which requires consideration of two time periods.
2019-2024
MIPS-eligible physicians:
- receive a zero update.
- receive a basic adjustment factor - positive or negative - that depends on the physician’s MIPS score, with the stakes increasing each year. The basic adjustment factor has an average of roughly zero every year, but ranges between 4% and -4% in 2019, 5% and -5% in 2020, 7% and -7% in 2021, and 9% and -9% in 2022 and later years; and
- may receive an additional adjustment factor if they are top performers (roughly the top 12.5%). The additional adjustment factor is paid from an annual $500 million pool and is capped at 10%.
Qualifying APM participants:
- receive a zero update; and
- receive an across-the-board 5% bonus.
2025 and later years
MIPS-eligible physicians:
- receive a zero update for 2025 and a 0.25% update in all later years; and
- receive a basic adjustment ranging from 9% to -9% (but the additional adjustments have ended).
Qualifying APM participants:
Details of these payment streams, to be decided by the CMS, will be important. But two key points can be made about the long-term post-2025 payment streams. First, on average, qualifying APM participants will receive marginally higher payment than MIPS-eligible physicians (due to the higher update for qualifying APM participants and the fact that MIPS adjustments will average out to zero after 2024). Second, the post-2025 updates for both categories are low. The CMS Office of the Actuary predicts that physician payments under MACRA will be “lower than scheduled under the current [now-repealed] SGR formula by 2048 and . . . continue to worsen thereafter,” making beneficiary access to physicians “a significant issue in the long term” without future legislative changes.
Rosemary Maxwell is a counsel at Arnold & Porter, LLP, and a member of the FDA and Healthcare practice group. She can be reached at Rosemary.Maxwell@aporter.com.