A 2016 survey from Deloitte found that half of physicians were unaware of important changes to the Medicare reimbursement policy that were set to begin on January 1, 2017, and thus questioned the readiness of hundreds of thousands of physicians expected to participate and meet certain performance criteria.1 For pathology, the Medicare reforms could have a $2 billion impact on the specialty during the next several years. All physicians will ease into the new requirements. For instance, with quality measures developed by the College of American Pathologists (CAP), pathologists can prevent a 2019 Medicare financial penalty by reporting on 1 quality measure in 2017. In future years, Medicare will require greater reporting and performance activity from all physicians and group practices in order to avoid decreases in reimbursement.
With the expansion of health care fringe benefits during World War II, the advent of Medicare in 1965 under Title XVIII of the Social Security Act, and subsequent health care coverage programs under the control of the Centers of Medicare & Medicaid Services (CMS), the United States has seen a steep rise in health care expenditures. Currently, the CMS provides health care coverage for roughly 105 million beneficiaries at a cost of more than $1.1 trillion annually.2,3 In an effort to hold health care providers accountable for a portion of this increased cost, Congress created the Sustainable Growth Rate (SGR) formula in the Balanced Budget Act of 1997.4 Simplistically, the SGR was an adjustment factor applied to physician fee schedule (PFS) payments that was designed to ensure that the yearly expense per Medicare beneficiary did not exceed the growth in the Gross Domestic Product. However, implementation of this SGR-related PFS update was repeatedly delayed by Congress over the years (the “doc fix”), which eventually led to a potential 27.5–percentage point negative adjustment in PFS payment rates if an alternative to the SGR was not identified. These “doc fixes” also were a factor in the creation of quality pay for performance programs, the first being the Physician Quality Reporting System (PQRS). The PQRS, initially known as the Physician Quality Reporting Initiative, was created within the Tax Relief and Health Care Act of 2006 and made permanent within the Medicare Improvements for Patients and Providers Act of 2008.5,6 Subsequently, the Patient Protection and Affordable Care Act of 2010, commonly referred to as “Obamacare,” established the Value-Based Payment Modifier (VBPM) program and the concept of Accountable Care Organizations (ACOs) through the Medicare Shared Savings Programs (MSSPs).7
All of these programs had the intent of establishing accountability on the part of the health care provider for the quality and cost of care by linking these to payment. However, despite having these payment adjustment programs in place, the constant threat of a large SGR payment cut remained and made financial planning difficult for physician practices. Congress responded to this concern by passing the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).8 This legislation was game-changing in that it terminated the never functionally implemented SGR formula, establishing a new framework for rewarding health care providers for better care, not merely more care, and made participation mandatory for all CMS-eligible clinicians (ECs) who wanted to avoid a negative adjustment to their Medicare Part B payments. Under MACRA, the last payment adjustment year related to the PQRS, VBPM, and Electronic Health Record Incentive program (Meaningful Use) will be in 2018, based on January 1, 2016, to December 31, 2016, reporting. In essence, this legislation has bundled all of the prior physician quality reporting programs into one, which the CMS has designated as its Quality Payment Program (QPP). More than 600 000 clinicians will now be reimbursed under the QPP. Initial reporting of metrics for this new program began January 1, 2017, and will close December 31, 2017, with payment adjustments related to this performance period starting in 2019.
Within the QPP, there are 2 payment pathways—the Merit-Based Incentive Payment System (MIPS) and the Alternative Payment Model (APM). An EC during the first 2 years is defined by law as any physician, physician assistant, nurse practitioner, clinical nurse specialist, certified registered nurse anesthetist, or any group that includes such professionals and bills CMS for those professional services. In future years, CMS has indicated it anticipates expanding this EC definition. Pathologists at independent laboratories are also considered ECs. This latter point is an important change from the previous quality reporting programs from which they had been excluded, because they were considered Medicare suppliers. Here, we will further describe the details of these 2 payment pathways, based on the CMS's final rule (81 FR 77008), and what you and/or your practice need to do to avoid a potential penalty in 2019.9
MERIT-BASED INCENTIVE PAYMENT SYSTEM
According to CMS calculations, most ECs will fall into the MIPS pathway. The ECs can be excluded from MIPS by participating in a qualified APM, by not exceeding the low-volume threshold of seeing fewer than 100 Medicare patients or billing CMS less than $30 000 in a year in part B payments on the physician fee schedule, or by being a first-time enrollee in CMS. Based on an EC's or a group's performance within 4 categories, an overall composite performance score (CPS) will be calculated. This CPS is what will be used to compare the EC or the group to the rest of those within the MIPS and determine the potential bonus or penalty they will receive. The potential impact on CMS payments in 2019 from MIPS performance in 2017 is ±4%: this increases to ±5% in 2020, ±7% in 2021, and then ±9% in 2022 and beyond. The performance adjustments are budget neutral, such that the total amount of penalties and bonuses will equal zero.
The 4 categories within MIPS are—Quality, Clinical Practice Improvement Activities (CPIAs), Advancing Care Information (ACI), and Resource Use. The requirements within each category can change depending on whether or not an EC is considered “patient facing” or “non–patient facing.” This distinction is critical because performance requirements can differ between the 2 groups. According to the 2016 final rule, a non–patient facing EC must bill 100 or fewer patient-facing encounters in a calendar year. For those in a group, 75% of the ECs must fall within the above definition in order for the group to be considered non–patient facing. According to CMS, ECs and groups will be notified of their classification at the start of each performance year. A final list of what qualifies as a patient-facing encounter is available at the CMS Web site (Quality Measure Encounter Codes; accessed January 24, 2017), but the ones most likely to affect pathologists include apheresis, bone marrow biopsy procedure, and evaluation and management CPT codes. Based on a preliminary analysis by CMS, most pathologists will be classified as non–patient facing.
In order to ease transition into the new program, CMS has made several options available for reporting in 2017. In order to avoid a penalty in 2019, an EC or group simply must report something within one of the performance categories—for example, one quality measure, regardless of the number of cases—or attest to one CPIA, such as providing timely communication of test results. By simply reporting on one measure or activity, the EC and/or group will avoid the 4% downward payment adjustment in 2019. Other potential participation options include a partial year of reporting—meaning at least 90 days' worth of patient data—or a full year of reporting. Those that chose 1 of these 2 latter options would be eligible for a partial or a full bonus, respectively. The CMS has acknowledged that most small practices would be at a disadvantage and would likely have received a penalty in 2019 without these transition year rules.
Within the Quality performance category, an EC or group must report on 6 applicable measures, or all that apply to them if they do not qualify for reporting 6 measures. Depending on the reporting mechanism, the reported data must be on at least 50% of their Medicare patients if done via claims reporting, or 50% of all their patients (regardless of payer) if using another reporting mechanism. For 2017, the CMS has maintained all 8 current CAP–developed quality measures (Table 1). There are other measures available that may apply to a limited number of pathologists and are only reported via a registry. If an EC is unsure if he or she qualifies for additional measures, the EC may contact CMS at the Quality Payment Program Service Center at 1-866-288-8292 or use the online measure tool on the CMS Web site (https://qpp.cms.gov/measures/quality; accessed January 4, 2017). Each applicable measure will receive a score ranging from 0 to 10 points depending on the EC's performance compared with others who reported on the same measure. If 6 measures were applicable to the EC, then a total of 60 points would therefore be available in this performance category. The CMS has classified the 2 lung cancer and the melanoma pathology reporting measures as “high-value” and outcome measures. There are potential bonus points available for reporting on the high-value measures.
Additional measures that may apply to a subset of pathologists are: (1) Measure 265 (NQF 0645): Biopsy Follow-Up, National Quality Strategy Domain—Communication and Care Coordination: Percentage of new patients whose biopsy results have been reviewed and communicated to the primary care/referring physician and patient by the performing physician; and (2) Measure 440: Basal Cell Carcinoma/Squamous Cell Carcinoma, Biopsy Reporting Time, Pathologist to Clinician: Percentage of biopsies with a diagnosis of cutaneous basal cell carcinoma and squamous cell carcinoma (including in situ disease) in which the pathologist communicates results to the clinician within 7 days of biopsy date.
Considered “high-value” measure for 2017 reporting.
Of all of these performance categories, only the CPIA category represents a new pay-for-performance concept for CMS, where an EC is rewarded for activities such as care coordination, patient engagement, and safety. Within the final rule, there are 6 subcategories with a total of 92 medium- or high-weighted activities that could count toward obtaining the 40 points available in this performance category. As a non–patient facing EC, the EC or his or her group would need to attest to performing 2 medium-weighted or 1 high-weighted CPIA for a minimum of 90 days. In contrast, patient-facing ECs need to report 4 medium-weighted or 2 high-weighted CPIAs for full credit in this category. Some potential activities that pathologists may participate in are listed in Table 2. Reporting will be done via attestation, and future guidance is expected from the CMS regarding this process. Of importance is that those who report individually via claims will also have to attest individually for CPIA. This is in contrast to those reporting as a group, in which they would attest on 1 to 2 items as a group.
The ACI performance category is, in essence, the Electronic Health Record Incentive Program (Meaningful Use). Historically, pathologists have been given an exemption from this program because the interoperability and information exchange measures within the program were not applicable to laboratory information systems (LISs). At least at the start of MIPS, it appears this exemption will continue, because non–patient facing clinicians will not be scored in this category. The CMS will reweight this category to zero for non–patient facing clinicians, and will reallocate the percentage value in this category to the Quality performance category in determining the CPS.
Similarly, the Resource Use performance category will not be scored in 2017. Therefore, this category will be reweighted to zero for all ECs, with its percentage of the CPS also being reallocated to the Quality performance category. In the future, this performance category will be similar to the VBPM program but focused solely on claims-based cost calculation. The CMS will base the resource use score on the patients attributed to an EC. At least initially, it is anticipated that pathologists will not be eligible for patient attribution, and therefore would be ineligible for participation in this category.
As previously mentioned, an overall CPS will be calculated based on the performance within each evaluable category and will range from 0 to 100. In 2019, those with a CPS higher than 70 will be eligible for a high-performance bonus. The initial proposed weighting of each category will be 60% of the CPS based on the Quality performance score, 15% based on the CPIA score, and 25% based on the ACI performance score. Resource use for the 2017 reporting year will be 0%. However, for non–patient facing ECs, the ACI category will not apply. Therefore, for most pathologists the CPS will be based solely on Quality (85%) and CPIA (15%).
As a case example, a non–patient facing EC has 4 quality measures that apply to him or her, equating to 40 possible points within the Quality performance category. The EC reports on the 2 lung measures, the Barrett esophagus measure, and the colorectal cancer measure, and he or she receives a score of 36 out of 40 points. Plus, the EC receives 2 bonus points for the 2 high-value measures, for a final total of 38 out of 40 points. The Quality performance category would then contribute 81 points toward the CPS (38/40 × 85% = 81). Within the CPIA the EC reports on 1 high-weighted CPIA and receives the full 40 points within that performance category. This would lead to an additional 15 points (40/40 × 15%) toward the CPS, and a final CPS of 96 out of 100 points. In addition to likely doing well compared with other ECs, given a final CPS higher than 70, this EC would be eligible for a high-performance bonus as well.
For the purpose of MIPS, there are several reporting options, which are the same as what was available for PQRS. These include claims-based, traditional registry, group practice reporting option, Electronic Health Record, measure groups, and the Qualified Clinical Data Registry (QCDR). Historically, pathologists have primarily used claims-based reporting, with a smaller percentage using a traditional registry, a group practice reporting option, or the Electronic Health Record. Measure groups do not apply to pathology, and until recently a QCDR was not available. The group practice reporting option is available to multispecialty group practices and uses a Web interface for transmitting data for prepopulated quality measures.
ALTERNATIVE PAYMENT MODEL
Other new payment pathways within the QPP are designated as APMs. These are advanced APMs and physician-focused payment models (PFPMs). The APMs are systems that are meant to promote accountability for a patient population, improving care coordination and encouraging the delivery of high-quality care in a cost-conscious manner. Currently, there are no pathology-specific advanced APMs or PFPMs; however, several pathology practices, especially those in some academic and large multi-institutional groups, are participating in this pathway through their involvement in a specific type of ACO. A potential advantage of participating through an advanced APM pathway is that you are excluded from MIPS, and from 2019 to 2024 your entity will receive an automatic 5% bonus. Additionally, starting in 2026, the physician fee schedule update will be 0.75%, as opposed to only 0.25% from those ECs in the MIPS pathway.
Advanced APM encompasses MSSP tracks 2 and 3, Next Generation ACO model, Oncology Care model, Comprehensive End Stage Renal Disease model, and Comprehensive Primary Care+ in 2017. These models differ from some other traditional ACOs and MSSP track 1 in that there is substantial financial risk to the entity. These entities must report on measures that are comparable to MIPS, use certified Electronic Health Record technology, and carry substantial financial risk (8% or more of total Medicare revenue or 3% or more of expected Medicare expenditures). Additionally, these entities must meet a percent of revenue or patient threshold that increases each year (Table 3) in order to qualify as an advanced APM and therefore be exempt from MIPS. In 2018, the CMS may expand the program to include MSSP track 1+, a new voluntary bundled payment model, and the Comprehensive Care for Joint Replacement Payment model.
The concept of PFPM was created within the MACRA legislation to foster the development of additional APMs for providers who might not be able to participate in existing pathways; however, no definition was provided. The CMS final rule first revealed the definition and fulfillment criteria. In a broad sense, a PFPM is an APM that must include Medicare beneficiaries, is anticipated to reduce cost and/or improve patient care, and closes an existing payment policy gap. The CMS did expand the definition to include nonphysician health care providers. Any group or entity may propose a PFPM by submitting a proposal to CMS with a projection of the anticipated size and scope of the PFPM; description of the burden of disease, illness, or disability on the target population; and an assessment of the financial opportunity. These proposals will be reviewed by the PFPM Technical Advisory Committee, which makes a recommendation to the Health and Human Services Secretary. The models accepted by the CMS will then undergo a process similar to that of other APMs, including public announcement, comment period, and request for applications.
FUTURE CONSIDERATIONS AND SUMMARY
Additional information regarding the QPP can be found at https://qpp.cms.gov/ (accessed January 14, 2017). The history of such programs suggests that the MIPS requirements within each performance category will become more complex and demanding in future years. The thresholds have intentionally been set low at the start of the program to ease EC transition into the program and to minimize disruption to the delivery of health care. As ECs become more familiar with the program, reporting requirements will likely increase. Another potential threat to pathology is the retirement of our high-performing measures by the CMS. As a whole, pathology has done well within the PQRS program. The quality gaps initially seen at the time of creation of the measure have diminished, and therefore the need for those measures from the perspective of the CMS is less pronounced. However, CAP is striving to maintain these measures because they ensure that the quality of care that best serves Medicare beneficiaries will be promoted within the pathology community. However, additional measures need to be created to facilitate all pathologists' compliance with the MIPS program. The creation of a pathology-specific QCDR with a broader menu of measures is one potential way to help the pathology community succeed within MIPS. The CAP is currently in the process of introducing such a registry to the medical community.
Participation in an APM by a large number of pathologists is not likely at this time. Similarly, pathology practice will not readily lend itself to the development of PFPM, given the broad range of services provided and specialties with which we interact. Although pathologists' services influence a large percentage of spending, we do not directly control a large portion of the total cost of care; therefore, the risk may seem too great for pathologists to participate in these models. However, pathologists must continuously reassess how to best position ourselves for the future.
In the short term, it is essential for ECs and/or their groups to be aware that by simply reporting anything in 2017 they will avoid a 4% penalty to the PFS in 2019. For the Quality performance category, this can most easily be done via claims-based reporting, traditional registry, or, if the EC is part of a multispecialty group, the group reporting option Web interface. Information about the pathology-specific quality measures can be found on the CAP Web site within the advocacy pages (http://www.cap.org/web/home/involved/advocacy/physician-quality-reporting-system; accessed January 14, 2017), or on the CMS Web site (https://qpp.cms.gov/measures/quality; accessed January 14, 2017). An alternative way to participate in 2017 to avoid the MIPS negative payment adjustment is to attest to performing a CPIA. A full list of improvement activities can be found at https://qpp.cms.gov/measures/ia (accessed January 14, 2017).
The authors would like to acknowledge and express our gratitude to Charles Fiegl, BA, for his expert review of the manuscript.
The authors have no relevant financial interest in the products or companies described in this article.