Now that the SGR is gone... part II

Last week we began a summary of additional parts of the SGR bill. The summary continues below.

Between now and 2019, CMS has been directed to work with physician specialty organizations and other stakeholders, to develop Alternative Payment Models (APM’s). Broadly, these will be payment models built on the fee-for-service payment architecture but incorporate concepts of value and quality into the final payment. The Advisory Council (AC) and the American College of Allergy, Asthma and Immunology (ACAAI) are working on the development of these Alternative Payment Models (APMs) for allergy care.

CMS and their stakeholder partners will also use this time to develop more bundled payment opportunities – where providers will be paid a predetermined amount of money based upon the primary diagnosis of the patient and the expected level of physician involvement. The goal here is to pay providers for treating and managing the patient rather than paying the provider for the accumulated value of the services rendered. While the initial focus for bundled payments is episodes of care involving a hospital admission, we believe it likely that services provided entirely in the ambulatory arena, like most allergy services, will also be the subject of bundled payments at some point in the future. More about this in the upcoming months.

Beginning in 2019, the conversion factor will be frozen for five years. There will be no automatic updates. Instead, providers will have to “earn” their annual updates through participation in one of a number of to-be-developed Alternative Payment Models (APM) or, through participation in a new program called Merit-based Incentive Payment System (MIPS) (this is a very important concept of which you need to be aware; you will probably be participating in MIPS – so pay attention here).

MIPS will essentially be combining the existing PQRS, EHR meaningful use and value-based payment programs into a single, new update initiative that will allow providers to obtain increases (or be subject to decreases) – depending on how well a provider scores on these initiatives compared to his/her peers.

Some providers may not want to participate in either MIPS or APM and the law gives the Secretary of Health and Human Services the authority to exempt providers. How easy or extensive that process will be remains to be seen. The operating assumption is, however, that remaining in traditional fee-for-service will be very unattractive financially due to the freeze; the expectation is that the vast majority of providers will voluntarily move to either an APM or MIPS.

The theory behind this shift in payment models is that, by incentivizing the providers to better manage the patient, particularly patients with chronic diseases (asthma, diabetes, COPD, etc.) the rate of hospitalization and ER utilization for these patients can be dramatically reduced and Medicare will save money. Of course in 1997, in theory, the SGR was supposed to incentivize physicians to modify their practice styles to fit the “new” updating process and we all know how that turned out...

While the repeal of the SGR brings to a close a rather tumultuous period in the Medicare program’s history, it also represents the beginning of a new phase. Much work lies ahead, not only in identifying appropriate clinical measures, but also assessing the operational and administrative challenges that the new payments models will create.

Advocacy Issue: 
Billing, Coding & Payments