How Physicians Can Win in the New Healthcare Environment
Doctors need to act now – or risk losing ground
Changes to Medicare will soon have a major impact on physicians’ bottom lines. The Centers for Medicare and Medicaid Services (CMS) is fast-tracking its shift to value-based payments, with the introduction of new regulations, reporting requirements and financial consequences.
As a result, physicians could experience a substantial difference in their Medicare Part B payments. Whether that change is positive or negative, though, depends upon their preparedness. For most private-practice physicians, the situation demands immediate attention. That’s because each year’s reported data will affect payments two years later. Moreover, Medicare is switching from an incentive-based system to one with mounting penalties. Independent practices are especially vulnerable due to the complexity of these changes. Even solo practitioners will be affected.
The Good News:
Doctors can take incremental steps to address these changes. But it’s vital to move forward now.
The sooner you act, the better you’ll protect your practice and your livelihood. Regardless of size, it’s generally more cost-efficient for private practices to outsource the management of this multifaceted transition.
The Healthcare Cost Crisis
- The United States will spend nearly 20% of its gross domestic product (GDP) on healthcare by 20216, according to an analysis from CMS1
- An estimated 20-30% of today’s healthcare spending is wasteful2
- America ranks first in healthcare spending — at $3 trillion annually3 — but life expectancy places 43rd worldwide4
- Employee and employer insurance costs continue to rise with a 5.5% increase expected in 20185
How did we get here?
The government and other stakeholders have realized that healthcare spending is on an unsustainable path. Costs continue to rise significantly (though at a slower pace), quality often lags, and excessive waste persists. To solve this growing crisis, the federal government is leading a shift from “volume” to “value.” It’s changing the old system that rewarded quantity of care to one that centers on quality of care. The Medicare Access & CHIP Reauthorization Act (MACRA) of 2015 provides the overarching framework for this transition. Commercial payers are adopting similar models. In fact, the transformation started approximately ten years ago with the introduction of the Physician Quality Reporting System (PQRS), followed by Meaningful Use (MU) incentives. In 2010, the Affordable Care Act established the Value-Based Payment Modifier (VBM or VM) – an adjustment to physician fee schedules that ties payment to quality. CMS began phase-in of the VBM in 2015, based on 2013 reporting.
In 2017, CMS launched the Merit-Based Incentive Payment System (MIPS), a more complex program that incorporates the VBM and other value measures. While change is never easy, doctors must adapt in order to survive. Like it or not, this new reality is here to stay: it has strong bipartisan support, the industry is already heavily invested, and the technology now exists to enable it. Moreover, greater transparency is coming for both price and quality—as increased data collection, market competition and consumer demand converge.
For physicians, it’s sink-or-swim time. The waters of this paradigm shift continue to rise each year. Virtually all doctors will be affected by these changes, which include substantial penalties for those who underperform on quality and cost measures in comparison to their peers. On the plus side, physicians who perform well under the new rules will receive additional reimbursement from Medicare. And commercial payers are starting to create similar opportunities.
If you’re just starting to address these changes, prioritize the Merit-Based Incentive Payment System (MIPS). But first, it’s helpful to understand MIPS’s predecessor—the Value-Based Payment Modifier (VBM)—which has been wrapped into MIPS. VBM had its final reporting period in 2016, and 2018 is its final payment year. Reporting has now shifted to the more complex, higher-stakes MIPS.
VBM: A Quick Review
CMS began using the VBM in the 2015 payment year, starting with groups of 100-plus eligible professionals (EPs), and expanding to smaller practices and solo practitioners by 2017. The amount of potential payment adjustments was linked to the size of the group: larger practices could have greater swings than smaller practices. As with MIPS, the adjustments are required to be budget-neutral; in other words, the national totals for penalties and incentives must cancel each other out. For the 2016 reporting year (2018 payment year), payment adjustments will range from -2% to +6.6%.7
The Physician Quality Reporting System requires physicians and other eligible professionals (EPs) to report quality data in order to avoid Medicare payment penalties.
The Value-Based Payment Modifier applies additional payment incentives and penalties based on a combination of PQRS performance data and Medicare cost data. VBM may also consider claims-based outcomes measures and patient surveys (CAHPS – Consumer Assessment of Health Providers and Systems).
Meaningful Use is providers’ use of certified electronic health record (EHR) technology in ways that measurably improve quality and value.
MIPS: Getting Started
The Merit-Based Incentive Payment System (MIPS) is a new algorithm that encompasses the previous models—MU,* PQRS and VBM—and adds “Clinical Practice Improvement” activities. Created under MACRA, MIPS replaces Medicare’s troubled physician reimbursement model, known as the Sustainable Growth Rate (SGR) formula. (*MU has been replaced by Advancing Care Information (ACI),
which includes measures related to patient engagement, patient electronic access, and use of certified electronic health record technology.)
This table shows the four components of MIPS and their relative weights:
MIPS reporting started in 2017, with payment effects first hitting in 2019. The impact can be exponential: In MIPS’s first year, adjustments to a practice’s Medicare payments can range from -4% to about +19%. By 2020, those figures could span from -9% to +27% or more. (The scaling factor “X,” shown in the table below, is capped at 3.0. Therefore, the maximum base incentive for the 2020 performance year could, in theory, be +9% * 3.0 = 27%.)
Exemptions and Additions
If you do little Medicare billing, you may be exempt from MIPS. CMS has expanded the low-volume threshold to exclude providers with less than $90,000 in Medicare Part B charges or less than 200 Part B beneficiaries annually. However, small practices—those with 1 to 10 physicians—can band together virtually (regardless of their geographic locations or clinical specialties) to report on MIPS measures. As a group, they are assessed and scored collectively. In addition, non-physician EPs will be subject to the VBM component of MIPS starting in 2018. These include physician assistants, nurse practitioners, clinical
nurse specialists, certified registered nurse anesthetists and anesthesiologist assistants.
MIPS can have an enormous effect on a practice—growing or shrinking its Medicare reimbursements substantially.
The “Clinical Practice Improvement” component of MIPS includes such activities as:
- Being an NCQA-designated patient-centered medical home
- Providing expanded practice access, such as same-day appointments
- Conducting population health management activities
- Providing care coordination, including patient engagement activity
- Providing self-management training to patients
Tips for succeeding under MIPS
With MIPS under way, there’s no time to waste. Physicians must dedicate themselves to being “quality champions” and make sure they have the data to prove it, in order to receive rewards and avoid penalties under MIPS. Doctors need to score high on quality measures while keeping the overall cost of care low. If you’ve participated in VBM, you have a head start. Understanding how you’re measured under VBM will help you address MIPS requirements.
The following strategies can help you achieve these goals:
- Focus on patient attribution. CMS attributes each patient annually to a physician based on the majority of primary care utilization. Yet, if your patient sees other doctors, the quality and cost of that care – good or bad – will be attributed to you. Make sure to communicate with these other physicians to improve care coordination and avoid duplicate services.
- Improve patient access. Ensuring your patients receive the right care in the right place at the right time is critical to keeping costs down. Provide a way for patients to reach your practice 24/7 – by phone, online portal or mobile app, for instance – to help avoid unnecessary emergency-room visits and other inefficiencies. Reach out to complex patients to proactively manage their care.
- Enhance PQRS participation. All non-exempt physicians must report MIPS data or face Medicare penalties. However, each practice chooses which quality measures to report on (within certain parameters) – and can emphasize measures that reflect the highest levels of quality. For example, if 98% of your diabetic patients had their annual foot exam this year, you’ll want to report on that measure. To best make such determinations, physicians must have an electronic health record (EHR) and use it meaningfully. In essence, the EHR must be able to capture the appropriate data and report it back. For that to happen, the EHR must contain the right fields, and doctors must be trained to enter the data properly.
- Track performance. Practices can assess quality in several ways. Your EHR should be able to run reports on quality. You can also obtain Quality and Resource Use Reports (QRUR) from CMS; these provide feedback on quality, which can help you estimate how you will fare under MIPS and where you need to improve. A well-qualified enablement partner can provide additional tools, analysis and advice to monitor and improve quality.
- Reduce overall costs. Although costs cannot be tracked because this data is not available across providers, practices can help minimize costs of care. Key strategies include providing enhanced patient access (as previously noted), engaging patients in their own care, enhancing workflows to increase efficiency, making referrals to like-minded (value-driven) physicians, and becoming clinically integrated – such as by joining a clinically integrated network (CIN) or accountable care organization (ACO). CINs are described in more detail later.
- Button down your data. CMS requires practices to provide data, and they may audit your practice. Determine how you will document quality. Make sure you can prove the information you report.
- Stay informed. MIPS quality measures will be updated annually, and the program’s requirements are subject to change.
Unique Insight into Costs
Unlike other enablement partners, Continuum has access to physician cost data through its collaboration with CMS and commercial payers. This data allows Continuum to provide physicians with high-quality, lower-cost provider options. MIPS requires investments of time and resources. The right enablement partner can do the heavy lifting – freeing doctors to be doctors, and ensuring the practice’s continued success.
New MIPS Challenges & Improvements
CMS will continue to revise and update MIPS. For instance, providers must now report a full year of data, and the completeness requirements have increased. CMS also plans to remove measures considered “topped out” or “too easy” over a four-year period, and it has reduced the possible earned points for these measures. On the plus side, CMS has added 21 new Clinical Practice Improvement Activities to choose from. And it’s considering new, “episode-based” cost measures for 2019, which could present a new opportunity to providers.
For more on recent changes to MIPS, download our white paper titled Value-Based Care in Uncertain Times: Navigating the Quality Payment Program. Go to: https://www.continuumhealth.net/insights/white-papers/
An Alternative to MIPS
Beginning in 2019, physicians can avoid MIPS by participating in an advanced alternative-payment model (advanced APM), such as certain ACOs, medical homes or bundled payment models. Advanced APM participants could earn higher payments in exchange for greater financial risk, compared to MIPS participants. In fact, MACRA’s long-term objective is to shift more clinicians to Advanced APMs and away from the MIPS program. In the meantime, MIPS participation can help prepare practices for that step.
For more information on advanced APMs, download our white paper titled “The New Gold Standard in Quality Payments: Alternative Payment Models.”
As stated earlier, private-practice physicians must align with other providers in order to survive and thrive in the new healthcare environment. However, many are wondering how they can do this while remaining independent. One leading solution is to form a clinically integrated network (CIN), which enables physicians to join together to improve quality, reduce overall costs, and earn more revenue through MIPS. CINs can also facilitate larger payments from commercial insurers, as more payers follow CMS’s lead and adopt value-based reimbursement programs. (Similarly, doctors can form an accountable care organization [ACO]—a type of CIN specifically designed for Medicare.)
An enablement partner can help design, set up and manage the CIN, providing the necessary personnel support, technology and expertise for a successful network.
A Better Future
Medicare’s transition to value-based reimbursement will ultimately drive a higher quality, more sustainable healthcare system. While the changes can be daunting, physicians need to recognize these shifts and embrace them—for the benefit of their patients, society and themselves. Doctors must understand how their performance will be judged and apply this knowledge.
Physicians who adapt will also benefit from the greater levels of transparency coming to the medical profession. In fact, if you see Medicare patients, some of your quality data may already be online at medicare.gov/physiciancompare. Greater access to such information will further reward quality and raise the bar for the entire medical profession.
About Continuum Health
As a physician enablement company, Continuum Health delivers managed solutions to provider groups and aggregators, helping foster self-sufficiency by maximizing fee-for-service payments, transitioning them to value-based programs and preparing them for risk. Continuum also collaborates with payers to help drive value-based adoption among providers and improve the health outcomes of patients. The company optimizes performance through value-based care, practice management services, revenue cycle management, and specialty care solutions. Thousands of physicians, specialists and nurse practitioners caring for millions of patients depend on Continuum’s business and clinical experts to help achieve their goals.
1National Health Expenditure Projections, 2017–26: Despite Uncertainty, Fundamentals Primarily Drive Spending Growth Cuckler, Sisko, Poisal, et al.; Health Affairs 2018 37:3, 482-492
2http://www.dartmouthatlas.org/downloads/press/Skinner_Fisher_DA_05_10.pdf – page iii / https://khn.org/morning-breakout/iom-report/
6Medicare’s Quality Goals (graphic): https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/Draft-CMS-Quality-Measure-Development-Plan-MDP.pdf – page 13