Medicare's current quality reporting programs are being consolidated and streamlined into 1 merit-based incentive payment system, referred to as "MIPS." This consolidation will reduce the aggregate level of financial penalties physicians otherwise could have faced, and it also provides a greater potential for bonus payments.

Modification of the Fee-for-Service system

Establishment of the MIPS program provides an opportunity to revise, rework and improve the existing Medicare programs focused on quality, costs and use of electronic health records to improve their relevance to real-world medical practice and reduce administrative burdens for physicians.

Under this payment system, physicians will no longer face the threat of double-digit cuts each year, as they did under the now-repealed sustainable growth rate. There will be greater certainty in annual payment updates.

MIPS components include:

  • Quality—replaces Physician Quality Reporting System (PQRS) program
  • Cost—replaces value-based modifier (VBM) program
  • Advancing Care Information (ACI)—replaces Meaningful Use (MU) program
  • Improvement activities (new component)—View finalized improvement activities from the final rule issued by the Centers for Medicare & Medicaid Services.

LINK 1: Final rule issued by the Centers for Medicare & Medicaid Services

PDF 1: 2017 Medicare QPP FAQ: CMS Targeted Review Process

Update to the ACI

Following years of advocacy by the AMA, the Centers for Medicare and Medicaid Services (CMS) has removed the computerized physician order entry (CPOE) and clinical decision support (CDS) measures from the Medicare MU program and the ACI component of the Quality Payment Program (QPP).  However, the Medicaid MU program continues to include CPOE and CDS measures.

While CPOE and CDS functionality will still be included in EHRs, CMS will no longer require a certain number of orders, that a physician enter the orders, and that physicians implement a certain number of CDS tools. This means that as of Jan. 1, 2017, physician practices are free to develop policies around CPOE and CDS in ways that blend with their workflows and improve care.

Fee-for-Service penalty risks, bonuses and updates compared

Without the passage of MACRA, physicians could have been subjected to negative payment adjustments of 11% or more in 2019 as a result of the Meaningful Use (MU), Physician Quality Reporting System (PQRS) and value-based modifier (VBM) reporting programs—with even greater penalties in future years. In contrast, under MACRA, the largest penalty a physician can experience in 2019 is 4%.

TABLE 1: MACRA

TABLE 2: Prior Law

TABLE 3: Footnotes

What to do next for QPP

PDF 2: 2018 MIPS Strategic Scoring Guide

PDF 3: Cost Measures FAQ

LINK 2: What to do next for QPP

Medicare's current quality reporting programs are being consolidated and streamlined into 1 merit-based incentive payment system, referred to as "MIPS." This consolidation will reduce the aggregate level of financial penalties physicians otherwise could have faced, and it also provides a greater potential for bonus payments.

Modification of the Fee-for-Service system

Establishment of the MIPS program provides an opportunity to revise, rework and improve the existing Medicare programs focused on quality, costs and use of electronic health records to improve their relevance to real-world medical practice and reduce administrative burdens for physicians.

Under this payment system, physicians will no longer face the threat of double-digit cuts each year, as they did under the now-repealed sustainable growth rate. There will be greater certainty in annual payment updates.

MIPS components include:

  • Quality—replaces Physician Quality Reporting System (PQRS) program
  • Cost—replaces value-based modifier (VBM) program
  • Advancing Care Information (ACI)—replaces Meaningful Use (MU) program
  • Improvement activities (new component)—View finalized improvement activities from the final rule issued by the Centers for Medicare & Medicaid Services.

LINK 1: Final rule issued by the Centers for Medicare & Medicaid Services

PDF 1: 2017 Medicare QPP FAQ: CMS Targeted Review Process

Update to the ACI

Following years of advocacy by the AMA, the Centers for Medicare and Medicaid Services (CMS) has removed the computerized physician order entry (CPOE) and clinical decision support (CDS) measures from the Medicare MU program and the ACI component of the Quality Payment Program (QPP).  However, the Medicaid MU program continues to include CPOE and CDS measures.

While CPOE and CDS functionality will still be included in EHRs, CMS will no longer require a certain number of orders, that a physician enter the orders, and that physicians implement a certain number of CDS tools. This means that as of Jan. 1, 2017, physician practices are free to develop policies around CPOE and CDS in ways that blend with their workflows and improve care.

Fee-for-Service penalty risks, bonuses and updates compared

Without the passage of MACRA, physicians could have been subjected to negative payment adjustments of 11% or more in 2019 as a result of the Meaningful Use (MU), Physician Quality Reporting System (PQRS) and value-based modifier (VBM) reporting programs—with even greater penalties in future years. In contrast, under MACRA, the largest penalty a physician can experience in 2019 is 4%.

TABLE 1: MACRA

TABLE 2: Prior Law

TABLE 3: Footnotes

What to do next for QPP

PDF 2: 2018 MIPS Strategic Scoring Guide

PDF 3: Cost Measures FAQ

LINK 2: What to do next for QPP

PDF 1: CMS Targeted Review Process

Dispute MIPS payment adjustments under QPP

PDF 3: Cost Measures

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TABLE 1: MACRA

Year Max MIPS Penalties Max MIPS Bonuses Annual Updates
2017 No change No change 0.5%
2018 No change No change 0.5%
2019 - 4% 4% or more 0.5%
2020 - 5% 5% or more 0%
2021 - 7% 7% or more 0%
2022 - 9% 9% or more 0%

TABLE 2: Prior Law

Year P4P Penalties Max Combined P4P Penalties* Max VBM Bonuses Annual Updates
2017 MU - 3% PQRS - 2% VBM - 4% or more - 9% Unknown (VBM) Unknown
2018 MU - 4% PQRS - 2% VBM - 4% or more - 10% or more Unknown (VBM) Unknown
2019 MU - 5% PQRS - 2% VBM - 4% or more - 11% or more Unknown (VBM) Unknown
2020 MU - 5% PQRS - 2% VBM - 4% or more - 11% or more Unknown (VBM) Unknown
2021 MU - 5% PQRS - 2% VBM - 4% or more - 11% or more Unknown (VBM) Unknown
2022 MU - 5% PQRS - 2% VBM - 4% or more - 11% or more Unknown (VBM) Unknown

TABLE 3: Footnotes

Additional notes
* The severity of penalties and size of potential bonuses under prior law is "unknown" because annual regulations pertaining to the VBM were no longer issued following MACRA'S passage. However, Medicare law on the VBM included no ceiling or floors; and in the first three years it was applied, CMS doubled the size of the potential cuts each year. Incentives for the MU and PQRS Medicare programs were no longer available in 2017.
+ Annual payment updates under the previous SGR system are also unknown since congressional intervention was required to stop cuts called for by the flawed formula.
++ Depending on budget neutrality calculations, MIPS bonuses may be as much as three times as high as the statutory percentage (e.g., 27 percent in 2022). Money is also available to provide 10 percent added bonuses for "exceptional performance."

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