Did the government get Medicare payment right?

MACRA. Well, here we go again. We know part of the story, but not the whole story. Yet. MACRA is the basic model for Medicare physician payment reform, but right now it is a piece of Swiss cheese. CMS is still writing regulations to fill in the holes. This policy only begins affecting payments to physicians in 2019, but because there has always been a lag between data used and payment based on that data, we think payment in 2019 will be based on performance in 2017 (yes, next year). We will discuss MIPS here and APM’s next time (what do these stand for again?). MACRA gets rid of all the other stuff that our payment has been based on (PQRS, MU, Value-based Payment Modifier – VPM).

MIPS is Merit-based Incentive Payment System. A composite score will be applied based on performance in 4 areas:

  2019 2020 2021
Quality (modeled on existing PQRS) 50% 45% 30%
Resource Use (modeled on existing VPM) 10% 15% 30%
Meaningful Use (modeled on existing meaningful use) 25% 25% 25%
Clinical Practice Improvement Activities* 15% 15% 15%

*Undefined details, but related to access, population management, care coordination, beneficiary engagement

Each Physician’s MIPS score will be compared to a performance threshold (whatever that means), to determine how Medicare will adjust payments each year. Upward or downward payment adjustments will be made on individual claims. But, MIPS is a budget-neutral proposition, so positive adjustments are paid for by money collected from negative adjustments. Here is the methodology:


  2019 2020 2021 2022 (& beyond)
Pos adjustment +4%

(12% for top performers)


(15% for top performers)


(21% for top performers)


(27% for top performers)

Neg adjustment -4% -5% -7% -9%

Now, let’s do the math based on this table. If this program is revenue neutral to the CMS, what does the top performer percentages mean? It has to mean that there will be more physicians incurring penalties than physicians getting bonuses. The caveat is that the calculations have not been published and therefore not finalized. There is also a valid concern that penalties based on practice patterns 2 years earlier are not very effective in changing behavior in the current year. I will need to update you when we get more information. Next time, we will explain APM’s – the opt-out-of-MIPS option.