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Dramatic Reimbursement Changes Coming: SGR Is Out and MACRA Is In, but It Will Not Be Easy for Practices

December 2015, Vol 5, No 9
Dawn Holcombe, MBA, FACMPE, ACHE
President, DGH Consulting, South Windsor, CT
When the federal Sustainable Growth Rate (SGR) rollercoaster ended in repeal, physicians across the country sighed with relief. There would be no more waiting for Congress to modify the automatic double-digit reductions that the annual SGR calculations threatened. However, the reality of the new reimbursement adjustments looming from the legislation that replaced the SGR, now known as MACRA (Medicare Access and Children’s Health Insurance Program Reauthorization Act), is right around the corner. Physicians who manage patients who have Medicare coverage will need to select 1 of 2 possible reimbursement options under MACRA:
  • Alternative payment models (APMs)
  • Merit-based incentive payment system (MIPS).
Physicians who do not make a selection will be automatically moved by default into the MIPS option by Medicare. The MIPS option rolls together all the current incentive and performance programs for Medicare, including Meaningful Use, the Physician Quality Reporting System, and the Value-Based Modifier. Although these programs will continue with incentives and penalties earned through the current programs, physician performance in 2017 will be tracked under the MIPS option, and those penalties and bonuses will materialize in 2019 based on the 2017 results. Practices looking at the bonus opportunities will want to remember that Medicare has planned this program to be budget neutral. For every dollar paid in bonuses, equal dollars will be taken from other providers as penalties. Conversely, the size of any bonuses will be driven by how many penalties are exacted. There is also a small amount of money ($500 million) available coming from “new” money for extra 10% bonuses for “exceptional” practices. This will be a very public process. Physician Compare—the public website ( where Medicare posts comparative information for their members on every physician who provides services to patients with Medicare—will also post the Medicare rankings for physician performance under the MIPS program. If they have not already, physicians may want to get familiar with the website, as well as the data being reported on them ( Under the MIPS program, provider performance will be scored (using rules and parameters that are still to be defined by Medicare) for resource use, quality reporting, electronic health record meaningful use, and clinical improvement activities. The composite scores for a provider for each of those areas will be added to a maximum of 100. At that point, Medicare will have defined a threshold level for composite scores. Practices that meet the Medicare-defined threshold score will not see their reimbursement increased or decreased. Practices that fall above the threshold (ie, high performers) will see a bonus ranging from a few percentage points up to a high of 27%. Those that fall below the threshold (ie, low performers) will see their reimbursement for all services decrease, ranging from a few percentage points to a low of 9%. The challenge for physicians is that we are waiting for Medicare to fill in many undefined elements for this program that will significantly affect our reimbursement levels. For the most part, that information is supposed to come in 2016. Medicare is required under the MACRA legislation to publish a final plan for the MIPS and APM measures by May 1, 2016. The first list of actual measures is supposed to be published by November 1, 2016. Because performance will be measured on 2017 activity, oncologists will want to use 2016 to prepare their operations, staff, and reporting capabilities to focus on performance in the categories defined by Medicare. What would it mean if a physician were to choose the APM? Currently, Medicare has embarked on a number of performance and APMs. We expect that at least 100 practices will start experiencing and participating in the Centers for Medicare & Medicaid Services Oncology Care Model program in 2016, which hopefully will start to prepare them for the APM program. Medicare performance programs to date have offered rewards and penalties, but often have been voluntary. Practices have also been able to choose whether they want to participate in a 1-sided or 2-sided risk model. The Medicare APMs from 2019 on will carry 2-sided risk (guaranteeing rewards and penalties for participating practices). Medicare plans for the APMs to become a significant share of provider revenue: 25% in 2019 to 2020, 50% in 2021 to 2022, and then 75% from 2023 on. Medicare is still in the process of defining the parameters of the MIPS and APM programs, but the bottom line for practices is that this is not going to be a voluntary situation for physicians. Practices will have the option of choosing between the 2 programs, and those that do not make a choice will be placed in the MIPS program. The budget neutrality of the MIPS program means that there are definitely going to be a high number of practices that receive penalties. These practices may work diligently to perform in all of the elements, but if their composite score (as calculated by Medicare) falls below the threshold that Medicare sets, they will see their reimbursement drop, guaranteed, starting in 2019. Medicare is on a determined path. It was recently announced that the goal is for 50% of Medicare payments to be made through payment models that are alternative to the fee-for-service model by 2018, 1 year before the MIPS and APM programs, as defined by MACRA, kick in. Experience with these Medicare changes may leave practices better armed to address similar programs through private payers. Private payers are watching Medicare plans closely and are likely to mirror the design of those projects, if not the payments and percentages. We are already facing a new world with penalties from the current Medicare programs. Our reality is not going to change, but programs such as this will require constant attention and leadership in oncology practices. The year 2016 will be transformative. The spotlight is on us starting with our 2017 performance. Together we can tackle these issues and provide guidance for our practices and cancer centers.

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