Forum Focus – Physician payment reform and the SGR fix

After 18 years and 17 “temporary” patches, Congress finally passed legislation – the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) – earlier this spring to permanently repeal and replace the Medicare physician sustainable growth rate (SGR). The SGR fix and its implications for physician payment were the subject of a recent Physician Leadership Forum webinar.

The SGR formula was replaced with specified payment updates. For the next four years, Centers for Medicare & Medicaid Services (CMS) will apply an annual update of 0.5 percent to the physician fee schedule. Beginning in 2019, payment rates will remain flat, and physicians and providers paid under the physician fee schedule must choose whether to be paid under a merit-based incentive payment system (MIPS) or through alternative payment models (APMs).

The MIPS will tie physician payment directly to performance measurement. MACRA sunsets the current-law physician quality reporting system, meaningful use and value-based modifier programs and incorporates the measures and processes for these programs into the MIPS. Professionals’ performance will be assessed in four specific areas: quality, resource use, clinical practice improvement activities and meaningful use of electronic health records (EHRs). That performance will then be used to determine a payment adjustment. The payment adjustment – in the form of bonuses for high performer and penalties for poor performers – will be assessed on a sliding scale and capped at +/- 4 percent in 2019; +/- 5 percent in 2020; +/- 7 percent in 2021; and +/- 9 percent in 2022 and subsequent years.

As an alternative, physicians and other professionals who receive a significant proportion of their payments through an entity that participates in a qualifying APM, such as the Medicare Shared Savings Program, will earn an additional 5 percent payment each year from 2019 through 2024. In addition, beginning in 2019, qualifying APM participants are exempt from the MIPS, as well as most EHR meaningful use requirements. A qualifying APM entity must require use of a certified EHR, bear more than nominal risk for financial loss, and tie payments to APM participants based on quality measures comparable to those used in the MIPs.

Bryan Gamble, MD, MS, FACS, president and CEO of the Florida Hospital Medical Group, discussed the work his medical group has done to manage the clinical and financial risk in alternative payment models. He discussed the different categories of payment and how a larger percentage of Medicare fee-for-service payments will be linked to quality and APMs. He said his group is focusing on the way they deliver care, following the Triple Aim of improving the health of the population, improving the quality of care they receive all while reducing costs.

Gamble described other factors driving change and dollars in the marketplace such as value-based payments and a movement from inpatient to ambulatory space. He especially underscored the increasing role of consumerism in health care. He said patients are looking for convenience in handling their health care needs. They’re interested in technology and connectivity. In the near term, he said compensation will be determined on a number of issues such as coding accuracy/audits, as well as Stark Law implications, fair market value, commercial reasonableness, and designated health services.

For more on this issue, see our webinar SGR Fix: Implications for Physician Payment.

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