How payments, penalties will change post-SGR

AMA Wire
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With the repeal of the sustainable growth rate (SGR) formula comes a new, consolidated quality reporting program for Medicare. Learn how bonus payments and financial penalties you may face will be affected under the merit-based incentive payment system (MIPS).

The Medicare Access and CHIP Reauthorization Act (MACRA), the law that eliminated the SGR, has a variety of provisions, including medical liability protections and incentives for physicians who participate in alternative payment models. This first post in a series that examines what physicians need to know about MACRA looks at a major provision that deals with alignment of quality reporting and value purchasing programs.

These pay-for-performance programs—the Physician Quality Reporting System (PQRS), the value-based payment modifier and the meaningful use electronic health record incentive program—currently require physicians to separately report various metrics for each program. The competing programs would leave many physicians facing a tsunami of regulatory penalties.

Under the MIPS, physicians will have the chance to earn bonuses if they score above average performance thresholds and avoid penalties if they meet those thresholds. The MIPS also will give physicians the chance to score better and receive more credit for more quality improvement efforts—including a new category of clinical practice improvement activities—than under current programs.

Adjustment factors for performance assessment under the MIPS will be according to a “sliding scale”—versus the current “all or nothing” approaches used in PQRS and meaningful use. Credit will be provided to those who partially meet the performance metrics and for improvement as well as achievement.

Solo and small practices can join together in “virtual groups” and combine their MIPS reporting. The composite MIPS score will generally reflect four categories, which when fully implemented, will be weighted in these ways:

  • PQRS and quality: 30 percent
  • Value-based payment modifier and resource use: 30 percent
  • Meaningful use: 25 percent
  • Clinical practice improvement: 15 percent

CMS could adjust these percentages for physicians with limited measures and activities that are relevant to their practice. Starting in 2016, group practices also will be allowed to use qualified clinical data registries for PQRS and MIPS reporting. 

Penalties before MACRA

Under the current three quality reporting programs, physicians face maximum total penalties that increase each year:

  • 2015: 4.5 percent
  • 2016: 6 percent
  • 2017: 9 percent
  • 2018: 10 percent

By 2019 and beyond, physicians’ penalties could be 11 percent or more.

Bonuses and penalties under MACRA

The three quality reporting programs continue through 2018, and then the MIPS will take effect in 2019. That same year, the secretary of the U.S. Department of Health and Human Services must inform physicians of their upcoming MIPS payment adjustment, whether it is a penalty or a bonus.

Here’s how MIPS penalties and bonuses play out through 2022:

  • 2019: Maximum penalties and bonuses are 4 percent.
  • 2020: Maximum penalties and bonuses are 5 percent.
  • 2021: Maximum penalties and bonuses are 7 percent.
  • 2022 and after: Maximum penalties and bonuses are 9 percent.

MIPS bonuses and penalties must balance out, and bonuses for the very best performers could be adjusted to go even higher—up to three times these amounts. Physicians also may earn “exceptional performance” bonuses of up to 10 percent from 2019 through 2024.

Learn more about MACRA, and access FAQs (log in) about the new legislation. While MIPS will offer more flexibility, lower total penalties, and more opportunities for bonuses, it is only as good as the existing quality reporting programs. The AMA continues its advocacy to improve the current programs.

Watch AMA Wire® for future posts on the many facets of MACRA and how they’ll affect how physicians practice in years to come.

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Oct 14, 2016
A final rule released today by CMS details the final regulations for implementation of MACRA, the historic Medicare reform law that repealed SGR formula last year.