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Changes to the Medicare PFS The SGR methodology of determining physician pay updates often resulted in annual uncertainty about physician payments for the next year. Congress was forced to pass several annual temporary "fixes" to avert large cuts to physician payments.
Under MACRA, this uncertainty is being replaced by modest updates (0.5 percent annually from 2015 through 2019 to the Medicare physician fee schedule (PFS). From 2020 to 2025, payment rates will be frozen. Beginning in 2026, payment rates will be updated 0.25 percent annually for providers participating in the Merit-Based Incentive Payment System (MIPS); providers participating in Alternative Payment Models (APMs) will receive annual updates of 0.75 percent.
Two value-based payment tracksMACRA shifts the traditional Medicare PFS payment to two value-based payment tracts. The first track, MIPS, consolidates and expands pay-for-performance incentives in the fee-for-service system. The second track, APMs, provides bonus payments for physicians who participate in "alternative payment models" that hold providers financially accountable for healthcare costs.
MACRA consolidates as well as expands the pay-for-performance incentives of the traditional fee-for-service model. The MIPS program consolidates the Physician Quality Reporting System (PQRS), the Electronic Health Records (EHR) Incentive Program, and the Physician Value-Based Modifier into a single payment adjustment applied to physician payments beginning in 2019.
MIPS also broadens the definition of quality to include resource use and clinical improvement measures. The range of adjustments based on performance against MIPS measures will grow through 2022. Because the program is designed to be budget neutral, the total negative adjustments across all providers will equal the total positive adjustments for all providers. This is a zero-sum game.
Providers may opt out of MIPS if they participate in the APMs. Under the APMs, lump-sum bonuses to the PFS are available from 2019 to 2024. Qualifying APMs require providers to take on "more than nominal" financial risk, report quality measures, and use certified EHR technology.