SGR Replacement: Opt for Merit-Based Incentive Pay or Join Alternative Payment Model

In spring 2015, a multiyear advocacy effort to motivate Congress to repeal and replace the dated, flawed physician payment system—known as the Sustainable Growth Rate—succeeded with passage of a new law: the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Having worked in close collaboration with other medical societies and with Congress to advance this ASN advocacy priority, the society is now focusing efforts on working in partnership with the Centers for Medicare & Medicaid Services (CMS) as the agency implements the law.

In contrast to the old payment system, which called for substantial cuts to physician reimbursement on an annual basis, MACRA establishes predictable, positive payment updates through 2019. More important, the law was designed to transition physician reimbursement away from a fee-for-service model—paying for quantity of care—to a value-based model that pays for quality of care. Physicians will have choices regarding how they participate in the new reimbursement system, opting either to participate in the “Merit-Based Incentive Payment System,” (MIPS) or to participate in an “Alternative Payment Model,” (APM).

Merit-based incentive payment system

Taking effect in 2019, MIPS will consolidate three existing Medicare programs: the Physician Quality Reporting System, the Value-Based Modifier, and the EHR Meaningful Use program. The single MIPS program will evaluate similar aspects of care as do the three programs that will sunset, assessing physicians in four categories:

  • Clinical practice improvement activities
  • EHR adoption and use
  • Quality
  • Resource use

CMS will combine physicians’ performance in each category to calculate a total performance score that can adjust reimbursement levels up or down. The maximum effect the total performance score can have on reimbursement is set at +/- 4% for the 2019 payment year and increases to +/- 9% for the 2022 payment year and in subsequent payment years.

Based on prior experience with CMS programs such as Meaningful Use and the Quality Incentive Program, there is typically a two-year lag from “performance year” to payment year, which means that the payment adjustments physicians see when the program takes effect in 2019 will actually be based on their performance in 2017. ASN urges CMS to ensure that physicians have as much notice as possible regarding the standards and expectations of the MIPS program prior to 2017 so they can prepare accordingly.

Alternative payment models (APMs)

MACRA also calls on CMS to facilitate the creation of Alternative Payment Models (APMs). Physicians who participate in APMs are not only exempted from participation in the MIPS program, but can also earn a 5% annual bonus update designed to help them establish the infrastructure for their new care delivery models. Participants must receive at least 25 percent of their Medicare revenue through an APM in 2019–2020 to quality for the bonus. This threshold will increase to 50 percent in 2021–2022, and to 75 percent in 2023 and beyond.

Although the details of what constitutes or qualifies as an APM is still being defined by CMS, in partnership with stakeholders including ASN, there will likely be many different types of APMs. In general, APMs will aim to deliver more coordinated, comprehensive care that focuses on population health and value. The three basic principles that every APM must have are 1) receiving payment based on performance on quality measures (which must be comparable to the quality measures in the MIPS program), 2) bearing financial risk “in excess of a nominal amount” (CMS is still determining the definition of “nominal amount”) and 3) making use of certified EHR technology. It is clear that existing Accountable Care Organization programs, the Medicare Shared Savings Program, and the Health Care Quality Demonstration Program, will all count as APMs. “Demonstrations required by federal law,” can also count as APMs, and it’s possible that CMS will open the door to allow many other care delivery models to count as APMs in the future.

MACRA also calls for the creation of “physician focused payment models,” including models for specialists, and in the future these models may also quality as APMs. ASN is actively considering potential models for nephrologists and will continue to work with CMS to ensure the new payment and care delivery system models account for the unique needs of patients with kidney disease and the health professionals who serve them.