Two track value-based reimbursement system designed to incentivize high quality of care

Plast Reconstr Surg. Author manuscript; available in PMC 2018 Jul 1.

Published in final edited form as:

PMCID: PMC5487279

NIHMSID: NIHMS852488

Abstract

In 2015, the U.S. Congress passed the Medicare Access and CHIP (Children’s Health Insurance Program) Reauthorization Act (MACRA), which effectively repealed the Centers for Medicare and Medicaid Services (CMS) sustainable growth rate (SGR) formula and established the CMS Quality Payment Program (QPP). MACRA represents an unparalleled acceleration toward value-based payment models and a departure from traditional volume-driven fee-for-service reimbursement. The QPP includes two paths for provider participation: the merit-based incentive payment system (MIPS) and advanced alternative payment models (APMs). The MIPS pathway replaces existing quality reporting programs and adds several new measures to create a composite performance score for each provider (or provider group) that will be used to adjust reimbursed payment. The advanced APM pathway is available to providers who participate in qualifying APMs and is associated with an initial 5% payment incentive. The first performance period for MIPS opens January 1, 2017 and closes December 31, 2017 and is associated with payment adjustments in January 2019. CMS estimates that the majority of providers will begin participation in 2017 through the MIPS pathway, but aims to have 50% of payments tied to quality or value through APMs by 2018. In this article, we describe key components of MACRA to providers navigating through the QPP and discuss how plastic surgeons may optimize their performance in this new value-based payment program.

Keywords: MACRA, Medicare, Value-Based Payment, MIPS, APM

The United States healthcare system is currently experiencing profound change. Intense pressure to improve the quality of patient care and control costs have caused a rapid shift away from traditional volume driven fee-for-service reimbursement toward value-based payment reforms. In 2015, the Medicare Access CHIP (Children’s Health Insurance Program) Reauthorization Act (MACRA) was signed into law, which requires any physician who treats more than 100 Medicare patients and bills Medicare for more than $30,000 per year to participate in the Quality Payment Program (QPP) or face automatic reimbursement penalties.1,2 This broadly bipartisan legislation was intended to align physician payments with better value of care, either by improving quality and/or decreasing costs.

Beginning in 2017, the Centers for Medicare and Medicaid Services (CMS) will begin to collect performance data for eligible providers with the ultimate goal of adjusting payment rates in 2019.2 Despite the broad scope and accelerated implementation timeline for this policy, the current MACRA guidelines leave many questions unanswered. How will the final rule impact primary versus specialty care? How will the reorganization of healthcare delivery through accountable care organizations (ACOs) and bundled episode of care payments impact the future of Surgery? How will independent surgical practices align themselves with alternative payment models (APMs)? How much influence will different payment reforms ultimately have on quality and spending for Medicare beneficiaries?

In the current period of MACRA transition, physicians of all specialties have a critical responsibility to improve the proposal and lend clarity of interpretation that maximizes value of care for our patients.3–4 Plastic surgery is unique to other specialties in many ways. The scope of plastic surgery practice does not include primary management chronic conditions or end of life care, which represent the central drivers of rising healthcare costs in the Medicare population. As such, plastic surgeons are unlikely to be the direct targets of value-based reimbursement reform in the near future. However, changes in the structure of healthcare delivery, such as the formation of large ACOs and bundled payment for surgical episodes of care, may impact referral patterns, treatment algorithms, and reimbursement for common plastic surgery procedures among Medicare beneficiaries, such as breast reconstruction. The purpose of this paper is to provide a necessary contextual framework for value-based payment reform and describe the impact of MACRA on the field of plastic surgery.

From Volume to Value: Drivers of Value-Based Reform

From 2015 to 2025, the healthcare spending growth rate is projected to average 5.8%, outpacing the national GDP by 1.3 percentage points.5 By 2025 national healthcare expenditures are estimated to reach $5.6 trillion, consuming 20.1% of the U.S. total economy.5 In addition to general increases in healthcare costs, the proportion of total healthcare expenditures paid for by federal, state, and local governments is projected to increase to 47 percent by 2025, almost 3 percentage points greater than 2014.5 This increase in government healthcare spending combined with a growing population over age 65 relative to the taxpaying workforce has placed the federal Medicare program under tremendous financial strain triggering critical reform of the volume-driven fee-for-service reimbursement system.

For decades, policymakers, payers, and health services researchers have recognized that traditional fee-for-service payment rewards high volume practice. This volume-driven reimbursement system does not always correspond with high-quality care and is not sustainable in the current economic environment. Fee-for-service providers are rewarded for high volume of care and thus perversely incentivized to deliver more services to maximize reimbursement, leading to unnecessary healthcare expenditures and potentially poor quality of care. In the early 2000’s several landmark publications highlighted gaps in patient safety and quality of care delivery in the United States.6–8 Despite the United States’ relatively large proportion of spending on healthcare, our outcomes are considered substandard compared to other developed countries that spend far less on health care (9–11% for much of Europe).9 These concerns regarding increased healthcare expenditures and poor quality of patient care have driven the revolution in measuring the value of care (value = quality ÷ cost) and value-based payment reform.10–12

Legislative and Payment Reform Background

One of the first attempts by Medicare to control physician healthcare expenditures was implementation of the resource based relative value unit (RBRVU) system in 1992, which set payment for individual provider services using current procedural terminology (CPT) codes (Figure 1).13–14 This was followed in 1997 by the Balanced Budget Act which implemented the sustainable growth rate (SGR) formula in an attempt to ensure that the growth of healthcare expenditures for Medicare beneficiaries did not exceed growth in GDP.15–16 The SGR directly linked Medicare reimbursement updates to national economic performance, but did not monitor the quality of care delivered to patients or restructure the volume-driven fee-for-service system.15–16

Timeline of Events Leading to Current MACRA Legislation

This figure presents a timeline of critical legislative events and health services research leading to MACRA approval and the development of the QPP.

During periods of national economic recession, the SGR resulted in negative reimbursement adjustments, despite rising healthcare costs, generating negative margins for many Medicare providers that potentially influenced their interactions with patients. This phenomenon led to formative research studying the impact of reimbursement strategies on provider behavior and how changes in provider behavior affect patient safety and quality of care.17 Results from these reports generated several quality-related reimbursement reforms in the early 2000s, beginning with individual pay-for-performance measures. The pay-for-performance model aimed to reward providers by offering financial incentives to practitioners who delivered high quality care to their patients, by introducing the concept of provider accountability to achieve maximum reimbursement.

To implement pay-for-performance measures, CMS developed three quality reporting programs: 1) the Physician Quality Reporting System, 2) the Electronic Health Record Incentive Program-Meaningful Use, and 3) the Value-Based Payment Modifier program.4 The physician quality reporting system was initially developed in 2006 under the Tax Relief and Healthcare Act, as a voluntary “pay-for-reporting” program to encourage providers to report quality measures to CMS.18 However, over time through various additional legislature, participation in the PQRS has become mandatory among eligible providers to avoid negative payment penalties.18

In 2009, the meaningful use program was created as part of the Health Information Technology for Economic and Clinical Health Act under the American Recovery and Reinvestment Act. This program was designed to spur the adoption of electronic health record software within the health care industry. Similar to the patient quality reporting system, the meaningful use program was also initially implemented as an incentive-only program with plans for staged transition for use as a payment adjustor.19

In 2010, the Patient Protection and Affordable Care Act was signed into law.20 In addition to legislative aims to reduce the number of uninsured Americans, this policy also included many provisions to develop value-based methods for healthcare delivery and payment.21–22 Among these value-based purchasing efforts were the implementation of the value-based payment modifier program, the development of the physician compare website, and a platform for testing new value-based methods of healthcare delivery and payment.21–22 The value-based payment modifier program uses patient quality reporting system information to assign additional payment adjustments to physicians based on the quality of care delivered compared to cost during a given performance period.23 The physician compare website publicly reports quality information on physicians enrolled in the Medicare program.24 Finally, the provision to test alternative healthcare delivery and payment models, such as bundled episodes of care and shared-savings ACOs, marked the transition away from volume-driven fee-for-service reimbursement.

Although each of the original CMS quality reporting programs (patient quality reporting system, meaningful use, and value-based payment modifier) facilitated data collection to inform value-based payment model design and testing, they also created a complicated and fragmented system of quality reporting that made it difficult for providers to adapt and succeed. Provider frustrations regarding quality reporting requirements were further intensified by financial stress associated with the annual SGR adjustment. During the economic recession of the mid-2000s, the annual SGR calculation called for repeated negative payment adjustment, which was deferred by Congress only to compound over time, leading to an untenable 21% projected cut in Medicare reimbursement for 2015.4 Thus, in an effort to combat provider frustration and stabilize negative reimbursement, Congress passed the MACRA of 2015, which repealed the SGR formula and replaced the previous quality reporting programs with two payment paradigms under the QPP: the Merit-Based Incentive Payment System (MIPS) and advanced Alternative Payment Models (APMs).1–2,4

Navigating the QPP Under MACRA

On October 14, 2016, CMS released the final rule for MACRA, which established and defined critical aspects of the new QPP.24 Beginning in 2017, eligible providers who choose to participate in the QPP will be required to submit performance data for payment adjustments in 2019.2,25 Eligible providers may participate in the QPP through either the MIPS program or an advanced APM, depending on their practice setup. If an eligible provider chooses not participate in the QPP in 2017, they will still receive fee-for-service reimbursement for Part B payments, but beginning in 2019, those payments will be reduced the maximum MIPS adjustment of 4%.26 To assist plastic surgeons in preparing for participation in the QPP, the American Society of Plastic Surgeons (ASPS), the American College of Surgeons (ACS), the American Hospital Association, and many other organizations have created websites and resources dedicated to assisting providers in their transition to the QPP under MACRA. Table 1 provides a glossary of key terms and acronyms used among these resources and Table 2 provides a list of websites most useful for the plastic surgery community. The following section provides an outline of key facts for plastic surgeons navigating the QPP.

Table 1

Glossary of Key Terms and Acronyms in Value-Based Payment Reform

Table 2

List of Key MACRA Resources for Plastic Surgeons

Determining Provider Eligibility for Participation in the QPP

Any Medicare Part B eligible clinician who bills more than $30,000 per year in Medicare charges and provides care for more than 100 Medicare Part B fee-for-service patients in a given year is required to participate in the QPP.2 Eligible clinicians include physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists.2,25

Choosing a Path: MIPS vs. Advanced APMs

A key feature of the new QPP is provider choice in selecting a method for performance assessment and payment adjustment. Currently, there are two paths for physician participation in the QPP: MIPS and advanced APMs (Figure 2).2 Beginning in 2017, the majority of eligible providers who elect to participate in the QPP will be placed in the MIPS pathway. Participants may be excluded from MIPS for the following three reasons: 1) if they do not qualify for participation in the QPP because they fall below the low-volume threshold of $30,000 in Medicare charges or 100 Medicare patients per year, 2) if they are newly enrolled Medicare clinicians in their first year of billing, or 3) if they participate in a qualifying advanced APM.

QPP Paths: MIPS vs. Advanced APMs

There are two paths for physician participation in the QPP under MACRA: MIPS and advanced APMs. CMS estimates that 83–90% of providers will participate in the MIPS pathway for the first performance period, beginning in January 2017.29 Providers may participate in MIPS as individuals or in groups. Provider groups in the MIPS pathway may participate via an APM that does not meet the criteria for advanced APM status, or as an independent provider group.

APMs are defined by CMS as payment approaches developed in partnership with the clinician community that provide incentives to clinicians to provide high-quality and cost-efficient care (Figure 3).2,25,27–28 These include accountable care organizations, bundled episode of care initiatives, patient-centered medical homes, and other novel healthcare delivery organizations designed to improve care coordination and facility high-value care.2,25,27–28 Currently, there are many different types of APMs (Figure 3).27–29 However, not all APMs qualify for participation in the advanced APM track, and CMS will determine eligibility on a yearly basis.29 For the 2017 performance year, CMS anticipates that only six types of advanced APMs will qualify for MIPS exclusion.29 Among these, the only models available for most surgical specialties are the accountable care organization models (tracks 2 and 3). However, in 2018, the list of qualifying advanced APMs is expected to expand inclusion to other accountable care organizations and bundled payment models, making the advanced APM path more accessible to surgeons.29

Types of Alternative Payment Models

For the 2017 performance year the following APMs will qualify for advanced status and become eligible for MIPS exclusion: the comprehensive ESRD care model, the oncology care model, the Medicare shared savings program (ACO tracks 2 and 3), the next generation ACO model, and the comprehensive primary care plus model. In 2018, CMS anticipates expanding advanced status to include other ACO models and bundled payments for episodes of care.27–29

Details for Participants in the MIPS Pathway

The first performance period for MIPS opens January 1, 2017 and closes December 31, 2017 with a data submission deadline of March 31, 2018.2,25 Eligible providers who choose to participate in the MIPS pathway, may do so either as an individual or as a group of providers through one of two mechanisms: 1) two or more clinicians who reassign their billing rights to a single group, or 2) as part of a MIPS-APM entity (providers who participate in APMs that do not qualify as an advanced APM).25 If clinicians participate as a group, their performance will be assessed as a group and they must register as a group on the CMS website by June 30, 2017.25

MIPS maintains traditional fee-for-service reimbursement and adjusts provider payment (increase or decrease) based on a provider specific composite score derived from four performance categories: 1) quality, 2) cost, 3) improvement activities, and 4) advancing care information.2,4,25 For the 2017 performance year, the weight for each of the four categories in MIPS score calculation is as follows: quality (60%), advancing care information (25%), and improvement activities (15%). Cost information will not be counted until 2018 for payment adjustment in 2020.25,30 Based on this composite MIPS performance score, clinicians will receive negative, neutral, or positive payment adjustments from 4% in 2019 to 9% in 2022 (Table 3).2,4,29–31 Providers may submit data anytime from January 1, 2017 to October 2, 2017 to qualify for participation and receive payment adjustments in January 2019.25,29

Table 3

MIPS Payment Schedule

Although CMS has not yet determined exactly how the MIPS composite score will be calculated, they have outlined the reporting requirements for each category. For the quality category, that replaces the physician quality reporting system, providers must select up to 6 measures (including one outcome measures) that best fits their practice.29–30 The cost category will replace the value-based payment modifier and will be calculated directly from claims without any data submission required.29–30 Advancing care information will replace the meaningful use program and allows providers to select up to 9 measures for a minimum of 90 days to receive credit. Providers may also receive bonus credit if they report public health and clinical data registry measures or use certified electronic health record technology to complete improvement activities.29–30 The improvement activities category is a new category intended to encourage better care coordination, beneficiary engagement, and patient safety. To receive credit for this category, providers must attest that they completed up to 4 improvement activities for a minimum of 90 days.

Finally, a key feature of the MIPS program is the option for providers to pace their transition into the QPP (Table 4). Non-participants who do not submit any 2017 data will receive a negative 4% payment adjustment.26,29–30 Test participants who submit a minimum amount of 2017 data (one quality measure, one performance measure, or five required advancing care measures) may avoid a negative payment adjustment but will not be eligible to receive a positive adjustment.26,29–30 Partial participants who submit more than the minimum test participation measures for at least 90 days are eligible to receive some positive payment adjustment depending on how well they performed.26,29–30 Finally, full participants who submit complete MIPS data for the entire year will be eligible to potentially receive the maximum positive payment adjustment of 4% in 2019.26,29–30

Table 4

Categories of MIPS Participation for the 2017 Transitional Year

Details for Participants in the Advanced APM Pathway

Although the majority of eligible providers will enter the QPP in 2017 through the MIPS pathway, the U.S. Secretary of the Health and Human Services announced that CMS aims to have 50% of its payments tied to quality or value through APMs by 2018.32 MACRA legislation and the QPP strongly incentive APM participation by allowing providers exemption from the MIPS path and offering a 5% payment incentive in 2019 (for APM participation in 2017).2 In order for providers to qualify for the advanced APM path, they must receive 25% of Medicare Part B payments or see 20% of Medicare fee-for-service patients through an advanced APM.2,25,29 Payment requirements for participation in an advanced APM are expected to increase to 75% and beneficiary requirements are expected to increase to 50% by 2022.29 Eligible providers who participate in advanced APMs but do not meet these criteria can receive neutral payment status (neither positive or negative adjustment) or choose to participate in the MIPS pathway.4

Discussion and Future Directions for Plastic Surgery

Plastic surgery is a relatively small and unique field. Although we do not often provide life-saving treatment or primarily manage disease processes, our reconstructive procedures provide critical services to many other specialties by facilitating the delivery of high-value and sometimes life-saving care. Many plastic surgeons with higher cosmetic volume or younger patient populations may not see enough Medicare Part B fee-for-service patients to qualify for participation in the QPP. In addition, reimbursement reform may cause many plastic surgeons to opt-out of Medicare. However, the impact of MACRA on the organizational structure of healthcare and translation of value-based payment reform to the private insurance sector will inevitably impact all plastic surgeons that perform reconstructive procedures or practice in a hospital setting.

For the first performance period of the QPP beginning January 2017, approximately 83–90% of eligible providers will not qualify for participation in an advanced APM, and therefore must participate in the MIPS program.29 Although CMS aims to have 50% of its payments tied to advanced APMs by 2018, many plastic surgeons will not qualify for participation in an advanced APM because many plastic surgeons are not employed by large ACO organizations and bundled episode of care payments do not currently apply to plastic surgery procedures.32 However, even if plastic surgeons do not qualify for direct participation in the advanced APM path under the QPP, the rapid expansion of these models to other specialties that refer to plastic surgeons will be critical in determining how solo and small group plastic surgery practices must organize their care. ACOs and bundled payment initiatives involve a fundamental change in the organization of healthcare according to specific patient populations or conditions. Proliferation of these APMs will cause providers from different specialties to form clinical care teams or integrated practice units with designated referral patterns to manage specific populations or conditions. Plastic surgeons will need to align themselves with these entities and clearly identify and quantify their added value in order to negotiate their share of reimbursed payment in these models.

During this transitional era of value-based payment reform it is incumbent upon all plastic surgeons to educate themselves regarding current legislation guidelines and inform future reimbursement policies. Although value-based payment reforms are currently limited to Medicare providers, commercial payers will likely follow suit in the near future. Plastic surgery will need to invest substantial resources in research programs, outcome registries, and educational training programs to help practicing surgeons adapt to constantly evolving payment reform under the QPP and to prepare for future payment reform among private insurance companies. Plastic surgery will also need to support operational and health services research that best reflects the value of the care we provide to patients and other providers in the context of the overall health system.

Acknowledgments

Research reported in this publication was supported by the National Institute of Arthritis and Musculoskeletal and Skin Diseases of the National Institutes of Health under Award Number 2 K24-AR053120-06, the Robert Wood Johnson Clinical Scholars Program, and the U.S. Department of Veterans Affairs. The content is solely the responsibility of the authors and does not necessarily represent the official views of the National Institutes of Health, the Robert Wood Johnson Foundation, or the U.S. Department of Veterans Affairs.

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