Texas Tech University Health Sciences Center
The ABC’s of Medicare Payments

The ABC’s of Medicare Payments

Admittedly, we love our acronyms in health care, from the ACA to CMS. Today, I want to add two more to the mix: MACRA and MIPS. These acronyms are key to understanding how Medicare will now pay physicians, and other providers, through its physician fee schedule (PFS).

The first, MACRA, refers to the Medicare Access and CHIP (Children’s Health Insurance Program) Reauthorization Act. See what I mean about acronyms? MACRA has an acronym inside an acronym. MACRA was passed by Congress last year to replace the sustainable growth rate (SGR) mechanism to the PFS.  Don’t waste time trying to remember SGR, which was designed to counter health care’s spending growth by automatically reducing Medicare physician fees if spending exceeded a target, because it is gone (and never worked very well). Few, if any, bemoan its demise. MACRA is supposed to reward what it considers “high-performing providers” while supporting alternative payment models such as accountable care organizations and patient-centered medical homes.

The cuts to fees under SGR will be replaced with modest annual updates instead. Fees increased by 0.5 percent in June 2015 and will increase by 0.5 percent each year from 2016 through 2019, and then remain at that rate through 2025. However, high-performing providers and providers participating in alternative payment models can earn bonus payments. But, how does a provider become a high-performing provider?

That brings me to the second new acronym, MIPS, which stands for the merit-based incentive payment system that will be established in 2019. A high-performing provider is one who has a high MIPS score, which is an assessment of multiple performance metrics, including quality, resource use, clinical practice improvement activities and meaningful use of certified electronic health record technology.The MIPS score combines elements of what we formerly called the physician quality reporting system (PQRS), value based modifier (VBM) and meaningful use (MU).

Why is this happening? In my opinion, it has to do with the fact that the SGR was very unpopular, as well as the Centers for Medicare and Medicaid Services (CMS) trying to control rising costs and improve quality. You have undoubtedly heard of the movement from volume-based to value-based payment, which relates to CMS going away from fee-for-service, which many experts view as the root of all evil, for a payment program that assesses the performance of each eligible provider based on the performance aspects mentioned above.

If all of this is quite boring and gives you a headache, I understand. I chuckled when I read that the drafters of the new MACRA legislation recognized that this new payment system may not appeal to some physicians and wrote into the law a requirement that CMS report on the number of doctors dropping out of Medicare. This is probably a good idea.

Written by: Brent Magers, CEO