HHS Issues Proposal to Modernize How Medicare Pays Physicians for Quality – Legal Intelligencer Article

By: Vasilios J. Kalogredis
Special article to the Legal Intelligencer
Printed 6/7/2016

It is worthwhile to understand some of what is being considered to attempt the difficult task of linking reimbursement and quality.

In April 2015, President Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”). MACRA repealed the sustainable growth rate (SGR) methodology, which adjusted spending rates on physician services based upon growth in the gross domestic product to calculate physician Medicare fee schedules and establishes a two-option reimbursement methodology to compensate physicians under Medicare fee for service. That was one of its goals; the second was to implement a “value based” reimbursement under Medicare.

On April 27, 2016, the U.S. Department of Health and Human Service (“HHS”) issued a Notice of Proposed Rulemaking to implement key provisions of MACRA which would align and modernize how clinicians are reimbursed for the value and quality of care they provide. “The legislation Congress passed a little over a year ago was a milestone in our efforts to advance a health care system that rewards better care, smarter spending, and healthier people,” said HHS Secretary Sylvia M. Burwell. “We have more work to do, but we are committed to implementing this important legislation and creating a health care system that works better for doctors, patients, and taxpayers alike. We look forward to listening and learning from the public on our proposal for how to advance that goal.”

This is complex and is not yet in final form by any means. Nevertheless, it is worthwhile to understand some of what is being considered to attempt the difficult task of linking reimbursement and “quality.”

Currently, Medicare measures the value and quality of care provided by doctors and other clinicians through a jerrybuilt of programs such as, the Accountable Care Organizations, the Comprehensive Primary Care Initiative, and the Medicare Shared Savings Program. The proposed rule will streamline these various programs and implement changes through a single framework, to help physicians transition from payments based on volume to payments based on value, called the “Quality Payment Program.” The Quality Payment Program includes two paths: the Merit-based Incentive Payment System (“MIPS”) or Advanced Alternative Payment Models (“APMs”).

The first reimbursement methodology, MIPS consolidates three existing quality reporting programs: the Physician Quality Reporting System (PQRS), the Value-Based Payment Modifier (VBPM), and meaningful use (MU). The system also adds a new program, called clinical practice improvement activities (CPIA). Professionals employed as physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists are eligible for MIPS. MIPS provides Medicare reimbursement to physicians according to a modified resource-based relative value scale (“RBRVS”) formula which incorporates four incentive based categories: quality, meaningful use, improvement, and resource utilization. Under MIPS, a physician’s reimbursement rate is calculated based on his or her performance in these four areas. Beginning in 2019, physicians participating in MIPS will be eligible to receive positive or negative Medicare payment adjustments starting at 4% and gradually increasing to 9% by 2022.

A physician’s performance will be calculated based on the four MIPS categories – quality, meaningful use, improvement, and resource utilization. Medicare reimbursements will be budget neutral and follow a bell-shaped curve on a sliding scale. Physicians who score at the threshold will receive no payment adjustment. Physicians who score above or below the threshold will receive a positive or negative adjustment on Medicare claims for the following year.

The second reimbursement methodology under MACRA encourages physicians to participate in APMs such as: accountable care organizations, bundled payments, and patient-centered medical homes. To qualify for this reimbursement methodology, physicians must utilize one of the following programs: an innovative payment model expanded under the Center for Medicare & Medicaid Innovation (CMMI), with the exception of Health Care Innovation Award recipients, a Medicare Shared Savings Program (MSSP) accountable care organization (ACO), Medicare Health Care Quality Demonstration Program or Medicare Acute Care Episode Demonstration Program, or another demonstration program required by federal law. Additionally, the provider’s APM must use quality measures comparable to the MIPS measures, use certified electronic health record technology, and either assume more than a “normal financial risk” (undefined in the Act) or is a medical home expanded under CCMI.

A physician who is an APM qualifying participant will receive a 5% lump-sum bonus on Medicare payments for 2019 through 2024. This bonus will be in addition to the incentive paid through existing contracts with the qualified APM. Beginning in 2026, physicians utilizing an APM qualifying program will qualify for a .75% increase in payment each year.

The purpose of the proposed rule is to provide flexibility to participants in MIPS and to make it easy for physicians to move between the MIPS track and the AMP track of the Quality Payment Program. For example, MIPS participants who participate in AMPs would receive  credit towards scores in the clinical practice improvement activities (“CPIA”) categories. Certain AMP participants, who fall short of the payment or patient participation requirements for the incentive payments, but meet a lower threshold of participation, would be able to choose whether they would like to receive the MIPS payment adjustment. And whenever possible, the proposed rule aligns standards between the two paths of the QPP in order to make it easy for physicians to move between them.

Under the proposed rule, the Centers for Medicare & Medicaid Services (“CMS”) desires to streamline and strengthen value and quality-based payments for all physicians; rewarding participation in Advanced APMs that create the strongest incentives for high-quality, coordinated, and efficient care; and giving doctors and other clinicians flexibility regarding how they participate in the new payment system. The proposed rule incorporates input received from physicians, patients, care professionals, etc. to date. The U.S. Department of Health and Human Service will accept comments and feedback on the proposed rule until June 27, 2016.

Comments on the proposed rule may be submitted electronically through the CMS e-Regulation website at

For more information, including a fact sheet, please visit:

*Katherine E. LaDow, Esquire, an associate with Lamb McErlane P.C., contributed to this article.

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