Awareness : Newsletter Articles

Medicare Finalizes New Physician Payment System

The Centers for Medicare & Medicaid Services (CMS) released a final rule implementing a new Medicare physician payment system, which replaces the sustainable growth rate (SGR)  formula and marks the most significant change to Medicare physician reimbursement in 20 years.

Beginning in 2017, physician practices can choose between two payment options:

  1. Merit-Based Incentive Payment System (MIPS) and;
  2. Risk-based alternative payment models (APMs)

At the outset, there are relatively few APM opportunities, and CMS estimates that more than 90% of physicians will participate in MIPS, making it the default method.

MIPS increases or decreases physician Medicare reimbursement rates based on performance on measures in four categories:

  • quality,
  • cost,
  • EHR use, and;
  • clinical practice improvement activities (CPIA)

Payments in 2019 will be adjusted based on 2017 performance, and the cost category will not be counted in 2017.  The year 2017 will be a transition year and physician practices will have four options for engaging in MIPS:

  1. Report all required measures for at least 90 consecutive days and be eligible for a bonus payment;
  2. Report more than one quality measure, more than one improvement activity, and the required EHR measures for at least 90 consecutive days and be eligible for a small bonus payment;
  3. Report one quality measure, one improvement activity, or the required EHR measures and avoid a penalty; or
  4. Do nothing and receive a 4% payment penalty in 2019.