Everything to Know about SGR Repeal & MIPS Implementation

May 20, 2015
Value Based Care

Congress has finally passed legislation to permanently repeal the SGR formula that was being used to calculate the Medicare Physician Fee Schedule (MPFS). After years of temporary patches to the SGR to prevent double digit cuts to the Medicare physician schedule, Congress has implemented a new system that will be used to calculate the annual MPFS. What do these changes mean for you?

Conversion Factor

The SGR conversion factor has been replaced with the following conversion factors:

January 1-June 30, 2015: 0.0% conversion factor
July 1-Dcember 31, 2015: 0.5% conversion factor
2016-2019: 0.5% conversion factor for each year
2020-2025: 0.0% conversion factor for each year
2026 and beyond: The conversion factor applied will be based on which quality track a physician has chosen:
Merit Based Incentive Payment System (MIPS): 0.25%
Alternative Payment Model (APM): 0.75%
Obviously many factors go into the formula used to calculate the Medicare Physician Fee Schedule, including relative work units, geographic price indices, etc. This legislation stabilized the conversion factor to prevent an overall negative update to the MPFS; however, the other factors may still result in annual positive/negative updates to Medicare reimbursement.

Quality Tracks

With this legislation, Congress has established a framework that will use two different tracks, the Merit-Based Incentive Payment System (MIPS) or the Alternative Payment Model (APM), to tie your Medicare reimbursement to Quality/Cost Containment. While the MIPS and APM acronyms might be new, they represent a continuation in the direction that CMS has been headed for several years: Quality Purchasing (as evidenced in the EHR Meaningful Use, PQRS, Value Based Purchasing, etc) and Innovation (ACOs, Medical Homes, bundled payment initiatives).

Before delving into the specifics of each track, please be aware that the MIPS and APM tracks will not take effect until 2019. The current quality programs in place for CMS will continue operating between 2015 and 2018: EHR Meaningful Use, Physician Quality Reporting System (PQRS) and Value Based Purchasing.

Then, starting in 2019, eligible physicians will have to choose one of the Quality Tracks, MIPS or APM, and their Medicare reimbursement will be adjudicated according to the track that they have chosen.

Merit-Based Incentive Payment System (MIPS)

For physicians that select the MIPS track, a methodology will be used to assess their total performance for Medicare beneficiaries. Each MIPS eligible physician will receive a composite quality score for each performance period.

1) Payment Adjustment (either positive or negative):

a) Annual Maximum Adjustment:
2019: -4% to +12%
2020: -4% to +15%
2021: -7% to +21%

2022 and beyond: -9% to +27%
b) The MIPS Payment Adjustments are scheduled to be budget neutral; therefore, the positive and negative adjustments are supposed to balance one another.
2) How is the MIPS Composite Score Tabulated?:

a) 30%: Quality; such as the current PQRS Measures
b) 30%: Resource Use: CMS will use this category to analyze the relative cost of treatment for Medicare beneficiaries.
c) Resource use represents the greatest deviation from current CMS initiatives as CMS will be developing “Care Episode” and “Patient Condition” methodologies to compare similar patients/care episodes and measure the cost of care provided to beneficiaries.
d) 15%: Clinical Practice Improvement Activities, such as expanded practice access (after-hour access); population management; care coordination, etc.
e) 25%: Meaningful Use of Certified EHR Technology

Alternative Payment Model (APM)

Healthcare reform established the CMS Centers of Innovation, who have been running the innovative delivery systems for Medicare, including the Medicare Shared Savings ACOs, the Pioneer ACOs, Bundled Payment Initiatives, etc. Congress is re-committing to the continued development of these models by establishing a APM track for physician reimbursement.

1) Payment Adjustment: An eligible professional who is participating in a Qualified APM will be paid an amount equal to 5% of their aggregate payment amounts for such covered services during the previous year.

2) How Will CMS Determine What is a Qualifying APM?

a) Eligible APMs are payment models that:
i) Require participants to use certified EHR technology.
ii) Provides for payment based on quality measures.
iii) Bears financial risk for monetary losses.

iv) Is a Medical Home expanded under the CMS Innovation model.
b) In addition to the above requirements regarding the APM payment model structure, the legislation requires that to qualify for the APM Financial Incentive, the eligible professional must have a set percentage of their payments be attributable to the services that they provide in the APM:

i) 2019 & 2020: At least 25% of payment from Medicare were attributable to services furnished through the APM.
ii) 2021 and 2022: Starting in 2021, physicians can combine Medicare and all-payer APMs. At least 50% of payments have to be attributable to services furnished through APMs, including at least 25% for Medicare.
iii) 2023 and beyond: In 2023, physicians can continue combining Medicare and all-payer APMs. At least 75% of payments have to be attributable to services furnished through APMs, including at least 25% for Medicare.

CMS acknowledges that many of the current models developed under the CMS Centers for Innovation have focused on larger groups of primary care physicians; therefore, this legislation mandates that CMS develop and test APM models that will that focus on specialist services/groups with 15 or fewer eligible professionals/Title XIX (Medicaid/CHIP).

Synopsis

While the SGR repeal legislation outlined the broad programs that will be incorporated into the Medicare Physician Fee Schedule (MPFS), much is still uncertain as CMS still has to determine how they will put the MIPS and APM tracks into operation. With the current programs remaining in place through 12/31/2018, it is unlikely that we will receive definitive guidance on how these tracks will work prior to 2017.

We will continue monitor CMS’s development of the MIPS and APM tracks to share with our members. If you have any questions, please contact our office. Thank you.