Question: Tony, many physician groups have praised the changes to MACRA's Merit-based Incentive Payment System (MIPS) included in the budget deal. Why are some doctors and hospital organizations breathing a sigh of relief?
Tony Panjamapirom: The vast majority of members we speak with are still struggling with the transition to MIPS, and the changes will help ease their transition over the next few years. Specifically, under the Budget Act, CMS no longer has to weigh the cost category at 30% in 2019—the agency now has the flexibility to weigh it between 10% and 30% through 2021.
That means clinicians will still be held accountable for costs under MIPS, but they'll have more time to get a handle on the kind of cost control CMS is coming to expect from them before it plays a more significant role in their bonus or penalty. The cost measures are not widely understood by providers, and this gives them more opportunity to fine-tune their understanding and approach.
In addition, under the Budget Act, CMS must continue to slowly increase the "performance threshold," the MIPS score above which clinicians will be eligible for bonuses and below which they will receive penalties. The 2018 performance threshold is set at 15 points, and the agency previously would have had to make the performance threshold either the mean or median MIPS score (likely more than tripling the 2018 threshold). Now, CMS is required to gradually increase the threshold through 2021 to allow providers to gradually improve their performance over time while avoiding penalties.
Q: Hunter, how do you see these MIPS changes impacting more progressive medical groups, who were best positioned to do well under MIPS?
Hunter Sinclair: While decreased likelihood of MIPS penalties and lower weight on cost is good news for some, it also means there will be fewer dollars available to reward top performers for the investments they've already made. By adding three more transition years, Congress has all but guaranteed limited upside for organizations still in MIPS. Even in the few days since the bill passed, I've seen increased interest from clinicians in pursuing the downside risk/Advanced Alternative Payment Model (APM) track of MACRA as well as strategies to increase adoption of Medicare Advantage.
In addition, the new Budget Act cut the increase to the Medicare Physician Fee Schedule in 2019 from 0.5% to 0.25%—which will affect clinician pay for several years to come, since CMS will freeze payment rates under MACRA from 2020 to 2025. That could could further squeeze reimbursement for clinicians at a time of tight margins.
Q: Yulan, taking a step back, how should these latest changes to MACRA affect providers' Medicare risk strategies?
Yulan Egan: While these changes could signify a marked change in the pace of MACRA implementation, they don't represent a fundamental change in direction. The underlying incentives encouraging providers to evaluate Advanced APM models—namely, the 5% APM bonus on physician payment between 2019 and 2024 and the larger annual payment updates available in 2026 and beyond—remain in place. Furthermore, it is crucial for health system executives to remember that MACRA is only one element to consider when setting an intentional Medicare risk strategy. Just as the 5% bonus alone is insufficient justification for entering into downside risk, neither should tweaks to the weighting of the cost category or performance thresholds under MIPS be reasons to reverse course on a set strategy.
In fact, these changes may make the Advanced APM track only more attractive to a sub-segment of providers—specifically, to high-performers and those who have already made substantial investments to maximize performance under MIPS and under the cost category specifically. As Hunter noted, these changes could result in fewer dollars for top performers under MIPS. And at the very least, the discretion CMS now has to position 2019, 2020, and 2021 as additional transition years will make MIPS performance more difficult to project.
At the same time, the larger market and demographic forces encouraging providers to consider alternative payment models continue unabated. Downward reimbursement pressures, increasing reliance on government-funded coverage, and continued scrutiny on health care spending are prompting many providers to question the long-term viability of fee-for-service payment models. With Medicare providing the clearest transition path to risk, it is imperative for every organization to at least evaluate participation in Medicare's growing range of APMs.
Tomorrow: Get straight on MACRA
Join us on March 27 as we set the record straight on some complicated aspects of MIPS.