Leaders from the US Senate and House of Representatives have introduced bipartisan legislation in both the Senate and the House, which if enacted will repeal the Medicare sustainable growth rate (“SGR”) formula and replace it with a new physician payment system. The legislation repeals the SGR payment formula, provides for annual updates of 0.5 percent over five years, and transitions physician payments from volume-based to value, quality-based.

Medicare payment rates will be maintained through 2023, while providing professionals with the opportunity to receive additional payment adjustments. In 2024 and subsequent years, professionals participating in alternative payment models (“APMs”) that meet certain criteria would receive annual updates of one percent, while other professionals would receive annual updates of 0.5 percent. The bills provide for the establishment in 2018 of an incentive payment program, referred to as the Merit-Based Incentive Payment System (“MIPS”). This payment system will consolidate the three existing incentive programs (Physician Quality Reporting System, Value-Based Modifier, and Meaningful Use of EHRs) and provide financial incentives for professionals to participate in tests of APMs.

The MIPS will apply to physicians, dentists, podiatrists, chiropractors, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists beginning in 2018. Other professionals paid under the physician fee schedule may be included in the MIPS beginning in 2020, provided there are viable performance metrics available. The MIPS will assess the performance of eligible professionals in four categories:  quality, resource, EHR Meaningful Use, and clinical practice improvement activities.

Every year the Secretary, through notice and comment rulemaking, will publish a list of quality measures to be used in the forthcoming MIPS performance period. Updates and modifications to the list of quality measures will also occur through this process. Eligible professionals will select which measures on the final list to report and be assessed on. Professionals will receive a composite performance score of 0-100 based on their performance in each of the four performance categories listed above.

Each eligible professional’s composite score will be compared to a performance threshold. The performance threshold will be the mean or median of the composite performance scores for all MIPS eligible professionals during a period prior to the performance period.

Professionals will know what composite score they must achieve to obtain incentive payments and to avoid penalties at the beginning of each performance period. Professionals who receive a significant share of their revenues through an APM(s) that involves risk of financial losses and a quality measurement component will receive a five percent bonus each year from 2018 through 2023. MIPS will encourage care management for individuals with chronic care needs by establishing at least one payment code for care management services. The Secretary is required to publish utilization and payment data for professionals on the Physician Compare website.

View a summary of the legislation prepared by staffs of the Senate Finance Committee and the House Energy & Commerce and Ways & Means Committees.

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