The new Medicare physician reimbursement system: Building the Quality Payment Program

For nearly 20 years, Medicare has paid physicians in the same manner. The Medicare Access and CHIP (Children’s Health Insurance Program) Reauthorization Act (MACRA) of 2015 called for major changes in the physician payment system that will begin to take effect in 2017. This new payment system—the Quality Payment Program (QPP)—continues to advance a policy goal of basing payment on value rather than on volume.

The specifics of how this new payment system will be implemented began to come to light on April 27, when the Centers for Medicare & Medicaid Services (CMS) released the proposed rule. The American College of Surgeons (ACS) Division of Advocacy and Health Policy staff carefully analyzed the proposed regulation and provided detailed feedback to the CMS in late June.* Because the final Medicare regulations will be issued in late October or early November, this article is intended to provide surgeons with the initial background on the QPP and how it is likely to affect surgical practices and the business side of the surgeon’s office.

Figure 1. MACRA at a glance

Figure 1 QPP proposed regulation

  • 982-page regulation
  • Published April 27, 2016
  • ACS feedback provided to CMS June 27, 2016
  • 2 tracks:
    • MIPS
    • APMs
Four components of MIPS

  • Quality (formerly PQRS)
  • Resource use (formerly VBM)
  • ACI (formerly EHR meaningful use)
  • CPIA

Pathways to participation

Surgeons, and all physicians, have two pathways to participate in the QPP—participate in the Merit-based Incentive Payment System (MIPS) or in the advanced Alternative Payment Models (APMs). At present, limited options are available for surgeons to participate in APMs; thus, most surgeons will be in the MIPS program.

MIPS participation

The MIPS program consists of four components: quality, resource use, advancing care information (ACI), and clinical practice improvement activities (CPIA). Each physician will receive a composite score, which will be a total of the scores from each of the four components. This score will be benchmarked against or compared with other physicians’ scores to determine whether the individual physician receives a payment penalty of as much as 4 percent or payment increase of up to 12 percent. (These percentages will change after the first year.)

Although the names of the programs have changed, most surgeons are familiar with three of the components.

Quality component

The quality component of MIPS replaces the Physician Quality Reporting System (PQRS). Fortunately, CMS is proposing some changes that surgeons will likely welcome.

In contrast to the previous PQRS requirement that physicians report nine quality measures, the MIPS quality component requires providers to report only six measures. One of these six measures must be an “outcome” measure and another must be a “cross-cutting” measure. Although the reporting threshold for the percentage of patients for which reports will be required is proposed to increase substantially, the ACS and other physician organizations will be advocating that the required percentage published in the final rule be close to the 50 percent level found in current programs.

A surgeon who has been participating in the PQRS program is well positioned to successfully meet the quality component requirements. A good first step for a surgeon who has not been participating in PQRS is to start using the ACS Surgeon Specific Registry (SSR).The SSR allows surgeons to more easily participate in the PQRS and the new quality component of MIPS.

Resource use component

The resource use component replaces the value-based modifier (VBM). Surgeons will not have to fulfill any reporting requirements for the resource use component. Medicare will complete the calculations based on the claims submitted by surgeons. Beginning in 2018, CMS also plans to take into account such factors as patient condition and attribution of costs as appropriate to the relationship of the physician to the patient.

ACI component

The ACI component modifies and replaces the Electronic Health Record (EHR) Incentive Program.

The proposed overall score for this component is derived from two separate scores:

  • Base score (50 percent)
  • Performance score (up to an additional 50 percent)

The threshold for achieving the base score continues to be defined as “all or nothing.” Only after meeting the requirements for the base score is a physician eligible to receive the additional performance score credit, which will be based on the level of performance on a subset of the same measures required to achieve the base score.

ACI scores in 2017 are expected to be based on criteria similar to those in the 2016 requirements for the EHR Incentive Program.

CPIA component

The fourth component of MIPS is the CPIA component. This is a new component with no analogous previous program requirement. As such, this facet of MIPS is continuously evolving.

In the first year of MIPS assessment (2017), achieving full credit for the CPIA component should pose a nominal additional administrative burden, as reporting will be by simple attestation. Physicians will choose from a list of activities (the proposed rule comprises 94 possible activities) assigned two different weighted values. To receive full credit for the CPIA component, most providers will need to attest that they have participated in a minimum of three and a maximum of six of the 94 activities, depending on the weight of the activities selected, for 90 days.

As noted earlier in this article, MIPS participants will be assigned a composite performance score based on their performance in all four components. For 2017, the first year for assessment under the QPP, 50 percent of the score will be based on performance in the quality component, 10 percent will be based on the resource use component, 25 percent will be based on the ACI component, and 15 percent will be based on CPIA.

Figure 2. MIPS: Composite Performance Score
Year 1: Weight by Category

MIPS: Composite Performance Score Year 1: Weight by Category

Participation in Alternative Payment Models

As noted at the beginning of this article, surgeons have two options for participating in the QPP—the MIPS and the APMs. Physicians may participate in an APM that provides greater flexibility in care delivery but which carries a greater risk of financial loss if care costs exceed what is expected. Both routes have advantages and risks, but over time, there will be growing financial pressure for physicians to move to APMs.

To date, Medicare has released two APMs related to surgical care—a cardiac care bundle and a hip replacement bundle. However, very few additional options are available to surgeons who want to participate in approved Advanced APMs. MACRA encourages physician-led development of new models and has created a new Physician-Focused Payment Model Technical Advisory Committee tasked with providing feedback on APMs developed and submitted by stakeholders. The ACS has contracted with Brandeis University, Waltham, MA, and the Center for Surgery and Public Health at the Brigham and Women’s Hospital, Boston, MA, to develop surgical APMs.

Nonparticipation in the QPP

Physicians who choose not to participate in the QPP will receive a 4 percent cut in their Medicare payments in 2019. Note the 4 percent cut increases in subsequent years, up to 9 percent in 2022. This maximum 4 percent cut in 2019 is less severe than the 10 percent cut that physicians were receiving for not participating in the PQRS, the EHR Incentive Program, and the VBM.

More to come

Key points that health care professionals should bear in mind are as follows:

  • The final regulation on the QPP is expected to be released in late October or early November. While the information outlined in this article is not expected to change, a substantial number of details will be included in the final regulation that surgeons will need to understand.
  • The proposed regulations would have the data collection for 2017 begin on January 1. The College and other physician organizations have urged CMS to begin the 2017 data collection on July 1, 2017, to give physicians more time to understand this complex new program before beginning active participation.

As CMS rolls out the QPP, the ACS will be providing numerous resources to help Fellows understand and participate in the Medicare payment program. These resources will be available on the College’s website, at the ACS Clinical Congress, at ACS chapter meetings, and elsewhere.

*Hoyt DB. Medicare Program; Merit-based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models. ACS comment letter. June 27, 2016. Available at: Accessed August 31, 2016.

American College of Surgeons. Quality Programs; Surgeon Specific Registry. Available at: Accessed August 16, 2016.

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