2016 CMS Physician Fee Schedule’s Journey to MIPS

The Centers for Medicare and Medicaid Services’s (CMS) 2016 physician fee schedule reads more like an algorithm about how physicians will be paid in the future than a simple update of how much more money the agency will pay for services in the coming year.

While there is an overall increase of 0.5% for all providers, this first update since the repeal of the unsustainable Sustainable Growth Rate (SGR) formula, outlines how future payments will be made on a number of quality and performance metrics and the soon-to-be implemented MIPS (Merit-Based Incentive Payment System) payment scheme.

Quality Reporting and End of PQRS

The agency announced on October 30, 2015 that the new fee schedule reflects the agency’s intent to continue implementing the PQRS (Physician Quality Reporting System) by “finalizing requirements for the 2018 PQRS payment adjustment consistent with the requirements for the 2017 PQRS payment adjustment.”

In plain English, that means providers will be generally required to report nine measures covering three National Quality Strategy domains. If an individual physician or group practice does not satisfactorily report or satisfactorily participate in PQRS for 2016, a 2% negative payment adjustment will apply to covered professional services furnished by that individual physician or group practice during 2018.

CMS is adding and eliminating some PQRS measures so that there will be 281 measures in the PQRS measure set and 18 measures in the GPRO (Group Practice Reporting Option) Web Interface for 2016. Also, the agency is adding a reporting option that will allow group practices to report quality measure data using a Qualified Clinical Data Registry (QCDR).

The 2018 PQRS payment adjustment is the last adjustment that will be issued under the PQRS. Starting in 2019, adjustments to payment for quality reporting and other factors will be made under the previously reported MIPS payment system.

Physician Compare

The new update also includes the rule for phasing in public reporting on Physician Compare. The agency will continue to make all 2016 individual physician and group practice PQRS measures available for public reporting. All groups of two or more physicians who meet the specified sample size requirements and collect data via a CMS-specified certified Consumer Assessment of Healthcare Providers and Systems (CAHPS) vendor are available for public reporting. In addition, all Accountable Care Organization (ACO) measures, including CAHPS for ACOs, are available for public reporting.

Transition to MIPS

As the agency begins the phase-out of the Fee-for-Service(FFS) program it continues to apply a Value-Based Payment Modifier (Value Modifier) for differential payments to physicians based on the quality and cost of care they furnish to beneficiaries enrolled in the traditional Medicare Fee-for-Service program.

Under the Value Modifier, performance on quality and cost measures can translate into increased payment for physicians who provide “high quality, efficient” care and decreased payment for “low-performing” physicians who underperform. The Value Modifier is set to expire at the end of 2018, as MIPS begins in 2019. The agency hopes this year’s rule will help provide a smooth transition from the Value Modifier to MIPS.

Self-Referral Exceptions

The new rule establishes two new exceptions under the physician self-referral regulations to accommodate health care delivery and payment systems reform.

New first exception permits payment by hospitals, Federally Qualified Health Centers (FQHCs), and Rural Health Clinics (RHCs) to physicians for the purpose of compensating non-physician practitioners under certain conditions. It also establishes a new exception to permit timeshare arrangements for the use of office space, equipment, personnel, items, supplies, and other services. CMS believes these new exceptions will enhance access to care across all areas and will be particularly helpful in rural and underserved areas.

Physician-Owned Hospital Clarifications

The agency is also clarifying regulations related to physician-owned hospital (POH) restrictions. First, is a clarification on the range of actions which comply with website and advertising requirements for POHs. The agency also finalized conforming changes that better align the regulations to the statute so that the baseline and future calculations of a hospital’s physician ownership percentage includes all physicians rather than only those physicians who refer to the hospital. The physician ownership calculation change takes effect on January 1, 2017.

There is a torturous and long road to move to the MIPS payment model. You can start your trip here.