“Doc Fix” shifts physicians into value based payment, highlights the importance of ICD-10

Ann ChenowethBackground
On April 16, President Obama signed into law H.R. 2 - Medicare Access and CHIP Reauthorization Act of 2015. The legislation permanently repeals the SGR and replaces it with a dual-mechanism approach that transitions physicians away from fee-for-service and towards merit-based and accountable care delivery. This act also sets new targets for the meaningful use of electronic health records (EHRs).

For physicians, this is a whole new world going forward. It is a world that incents their participation in alternative risk-based payment models and population health platforms. This change will be phased in over time. Volume-based payment cuts under the SGR will be replaced with a modest annual payment update of .5% through 2019. In 2019, physicians will choose how they will be paid from two adjustment mechanisms: The Merit-Based Incentive Payment System or the Alternative Payment Model.

Merit-Based Incentive Payment System (MIPS)
The MIPS methodology is a total performance assessment in which physician receive an annual composite score, ranging from 1 to 100, that will determine incentive payments when compared to an established threshold. Physician scores will be assessed based on how well they perform in the following four areas: quality, resource use, clinical practice improvement areas and meaningful use of EHRs.

Under MIPS, better overall performance results in higher reimbursement. Furthermore, physicians who perform in the upper quartile of the composite performance score will be rewarded with an additional incentive payment for their exceptional performance.

Alternative Payment Model System (APMS)
In order to incentivize providers to transition from fee-for-service to APMS, physicians participating in a qualified APMS will receive greater reimbursement than those who are not participating. The potential reimbursement structure is better and creates less regulatory burden on physicians than MIPS. 

For a physician to be eligible for payments under the APMS adjustment mechanism, they must participate in a qualified APMS entity that assumes financial risk and uses certified EHR standards and authorized quality measures. A qualified APMS includes any models previously or currently tested by the Centers for Medicare and Medicaid Innovation.

Initially, 25% of physician’s revenues must come from the APMS services in order to qualify. This gradually increases to 75%. In other words, the majority of a physician’s practice will ultimately be occurring under some risk-bearing financial model.

Driving physicians from fee-for-service to value-based, risk-bearing alternative payment models will be one of the substantive changes the industry will address over the next few years. As stated in the commentary, “Lost in Translation: SGR and ICD-10” published by the Coalition for ICD-10, to be committed to value-based payment makes the transition to ICD-10 more important than ever before. The ability to accurately document “the patient’s story” and precisely code and report their diagnoses and procedures (which ICD-9 cannot do) is critical to measuring and paying for value – and keeping our patient populations as healthy as possible.

As Senior Director of Industry Relations for 3M Health Information Systems, Ann Chenoweth creates and builds high-value partnerships that benefit the healthcare industry, association members as well as 3M customers.