Quality Department Newsletter

August 25, 2015

CMS Issues Proposed Rule Changes to the Medicare Physician Fee Schedule for 2016

On July 8, 2015, The Centers for Medicare and Medicaid Services (CMS) released a proposed rule changing payment policies, rates, and quality provisions for the Medicare Physician Fee Schedule (PFS). This rule proposes changes to several quality reporting initiatives, including the Physician Quality Reporting System (PQRS), the Value-Based Modifier, and the Electronic Health Record (EHR) Incentive Program. It also will make changes to the Physician Compare website on Medicare.gov.

PQRS Modifications

CMS intends to continue to implement PQRS by proposing requirements for the 2018 PQRS payment adjustment consistent with the 2017 PQRS payment adjustment. The satisfactory reporting criteria established for 2017 PQRS requires the reporting of nine measures covering three National Quality Strategy domains. If an individual EP or group practice does not satisfactorily report on PQRS quality measures or satisfactorily participate in a QCDR, a 2% negative payment adjustment would apply in 2018.

CMS will be proposing changes to the PQRS measure set to eliminate duplicate measures and to add measures where gaps exists. There will be 300 PQRS measures in the set for 2016 if all measures are finalized. There will also be a reporting option that will allow group practices to report quality measures data using a QCDR.

According to CMS, the 2018 PQRS payment adjustment will be the last adjustment issued under the PQRS. Following 2018, adjustments for quality reporting will be made under the Merit-Based Incentive Program (MIPs).

Physician Compare

As part of the 2016 PFS proposed rule, CMS will continue its phased approach to public reporting on Physician Compare. In addition to making all individual and group-level PQRS data publicly available, CMS proposes the following new policies:

  • Including an indicator on profile pages for those who satisfactorily report the new PQRS Cardiovascular Prevention measures group
  • Make individual-level and group-level QCDR measures publicly available
  • Reporting on Value Modifier tiers for cost and quality and indicate if the individual EP or group practice was eligible to but did not report quality measures to CMS
  • Publicly report utilization data for individual EPs

Value-Based Payment Modifier

The Value-Based Payment Modifier (VBM) provides for differential payments under the PFS to groups and other EPs based on the quality and cost of care that they furnish to enrolled beneficiaries in the traditional Medicare Fee-for-Service program. The VBM program is set to expire in 2018 when the Merit-Based Incentive Program takes effect. The proposed changes intend to help with the transition from the VBM to MIPs.

The proposed changes to the 2018 VBM include:

  • To use the CY 2016 as the performance period for the CY 2018 VBM
  • To continue to apply the VBM in 2018 based on participation in the PQRS by groups and solo practitioners
  • To continue to set the maximum upward adjustment at +4.0 times an adjustment factor for groups with ten or more EPs, +2.0 times an adjustment factor for groups with between two to nine EPs and physician solo practitioners; and, +2.0 times an adjustment factor for groups and solo practitioners that consist only of nonphysician EPs
  • To set the amount of payment at risk under the CY 2018 VM to -4.0 percent for groups with ten or more EPs, -2.0 percent for groups with between two to nine EPs and physician solo practitioners, and -2.0 percent for groups and solo practitioners that consist only of nonphysician EPs who are PAs, NPs, CNSs, and CRNAs

For a complete overview of all of the proposed changes for 2018, visit:

What Physicians Need to Know about MACRA and Paying for Quality

Since 1997 when Congress passed the Balanced Budget Act that created the Sustainable Growth Rate (SGR) formula, physicians have lived with the threat of increasing payment cuts from the Centers for Medicare and Medicaid Services (CMS). This legislation was designed to contain the growth rate of medical spending by tying it to the inflation rate, but it has not been implemented since 2010 because of periodic patches by Congress, resulting in the possibility of larger mandated cuts every year. This cycle of threatened spending cuts and temporary patches ended permanently with the passage in April 2015 of the Medicare Access and CHIP Reauthorization Act (MACRA). MACRA replaced the SGR with a modest yearly increase of 0.5% in the Medicare Physician Fee Schedule (MPFS) from 2016 to 2019. While this increase does not keep pace with overall inflation, it is certainly more welcome than threatened cuts of 21.2%.

With much less fanfare, MACRA also created dramatic changes in the manner in which physicians will be paid. CMS had already indicated that there would be a shift away from the traditional fee-for-service model of healthcare payments toward rewarding value and quality over volume of care. Under MACRA, the initial payment incentive programs of the Physician Quality Reporting System (PQRS), Value Based Modifiers (VBM), and Meaningful Use (MU) will be rolled into one program call the Merit-Based Incentive Payment System (MIPS).

MIPS will be similar to the older value-based payment incentives which were tacked onto the fee-for-service payment model, but with much larger potential penalties and rewards. While some physician groups could see rewards of up to 12% in 2019 for providing, measuring, and reporting high quality care, physicians who fail to do so could face payment fines of up to 4% of CMS payments. These rewards and penalties will increase every year to a maximum 27% reward or 9% penalty in 2022.

Ultimately, the goal of CMS with MACRA is not simply to incentivize quality care under a fee-for-service model, but to move physicians away from fee-for-service altogether. Beginning in 2019, physicians may choose one of two models of payments. They may continue with the MIPS, or they can participate in an Alternative Payment Model (APM) program.

APM programs may include participation in an Accountable Care Organization, bundled payment programs, or other performance-based contracts which involve assumption of risk by
organizations for the cost and quality of care they provide. While the requirements for participation in the APM pathway are more stringent, there are potentially greater financial rewards for physicians who choose this route. Physicians who choose the APM pathway but fail to meet requirements may still participate in MIPS and avoid penalties.

The defining feature of MACRA is the reduction of healthcare spending. CMS projects that over time MACRA will decrease healthcare spending more than had the SGR program continued.
Additionally, the program is structured to be budget neutral. Payment bonuses for eligible providers will be paid for by the penalties collected from others. Practices that are already working to measure, report, and improve their quality of care are in the best position to weather these changes.

Through reforming the methods of payment to physicians, MACRA has great potential to encourage quality improvement in healthcare while decreasing waste and inefficiency, leading to increased value to patients. Despite the threat of payment reduction, some practic
es will either fail to appreciate the significance of MACRA, or choose not participate in MIPS or an APM. As the penalties for failure to participate increase each year, these physicians will find it harder to stay in practice. The economist Edwards Deming once said, “It is not necessary to change. Survival
is optional.”

Additional Resources

“An Update on the Division of Professional Affairs MACRA Strategy: Quality Reporting and Contribution to Savings” by Stanley W. Stead, MD, MBA:

H.R.2 – Medicare Access and CHIP Reauthorization Act of 2015:

Estimated Financial Effects of the Medicare Access and CHIP Reauthorization Act of 2015, Centers for Medicare and Medicaid Services:

The Perioperative Surgical Home Model

The Perioperative Surgical Home (PSH) model of care has been the subject of much discussion. The American Society of Anesthesiologists (ASA) has created an annual PSH conference, devoted much of the ASA Annual Meeting to discussion of the PSH model, and has launched a learning collaborative of 44 organizations to explore best practices in a PSH. This collaborative effort is part of a culture shift occurring in anesthesiology toward a recognition of the need for anesthesiol
ogists to expand our role as perioperative specialists. Since the perioperative period represents 50% to 60% of the costs and profits for healthcare systems, the opportunities for gains are significant. Anesthesiologists are uniquely positioned to be leaders in this process.

The Perioperative Surgical Home is a model of patient care that is analogous to the Patient-Centered Medical Home, but for surgical patients instead of primary care. It is a physician-led, team-based collaboration with anesthesiologists, surgeons, and healthcare organizations to optimize patient care in the perioperative period. The goals of a PSH are improving population health, increasing the safety and quality of care for individual patients, decreasing the costs of care, and eliminating waste. The Perioperative Surgical Home model is designed to achieve:

  • Optimization of patients’ preoperative physiologic status, increasing patient preoperative education, and increasing patient engagement in their care
  • Elimination of administrative waste and unnecessary labs and testing
  • Standardization of perioperative management of specific surgical procedures such as total joint replacement, cardiac surgery, or colon resections through developing care pathways
  • Reduction of the cost of care through standardization of supplies and implants
  • Integration of perioperative pain management led by the anesthesia team
  • Coordination of discharge planning and rehabilitation to decrease length of stay, readmission rates, and facilitate patients’ return to full activity

The PSH model is data driven and requires not only providing the highest quality evidence-based care possible but also being able to quantify and demonstrate this quality to facilities, surgeons, and patients. Data collection and analytic capabilities are paramount to success. Our nation’s healthcare system is moving away from the traditional fee-for-service compensation model toward rewarding value and quality. Perioperative care coordination will be a key factor in allowing for growth and success under these changes.

Quality in the News

You Can Now Look Up ER Wait Times, Hospital Noise Levels and Nursing Home Fines on Yelp
Source: The Washington Post
Yelp is adding a ton of health-care data to its review pages for medical businesses to give consumers more access to government information on hospitals, nursing homes and dialysis clinics. Consumers can now look up a hospital emergency room’s average wait time, fines paid by a nursing home, or how often patients getting dialysis treatment are readmitted to a hospital because of
treatment-related infections or other problems. READ MORE.

How Does Your Hospital Rate on Yelp?
Source: Modern Healthcare
The online consumer review company Yelp is entering the high-stakes world of gauging patient satisfaction. Yelp will offer quality statistics for hospitals, nursing homes and dialysis clinics during a time when metrics are being scrutinized for their usefulness and accuracy. READ MORE.

Empathy Training for Doctors
Source: The Sentinel
It’s hard to teach empathy in the classroom, yet it’s one of the foundations of the doctor-patient relationship. How well physicians can put themselves in their patients’ shoes is directly linked with patient satisfaction. READ MORE.

You Can’t Understand Something You Hide: Transparency As a Path to Improve Patient Safety
Source: Health Affairs Blog
Among those of us in the patient safety field, the story of Mary McClinton is achingly familiar. A devoted mother, a community activist, a dedicated teacher at a Baptist church, a beloved sister, Mrs. McClinton died in 2004 because of a medical error. READ MORE.

Docs Embracing Social Media, Against Advice
Source: Outpatient Surgery
A significant number of physicians appear to be ignoring their own advice — or at least the advice of their professional organizations — and engaging with patients both on Facebook and via e-mail, a study finds. READ MORE.

Patient Satisfaction Linked to Quality Outcomes
Source: Outpatient Surgery
A payment policy that incentivizes a hospital’s performance on patient satisfaction scores appears to be a fair way to measure surgical quality, according to new research published in JAMA Surgery. READ MORE.

The World isn’t Waiting for Better Healthcare Quality Measures
Source: Modern Healthcare
It doesn’t matter how much healthcare providers and researchers rail about the inadequacy and inconsistency of the consumer ratings offered by the CMS, theLeapfrog Group, journalism outfits and online startups. They are not only here to stay, they are proliferating. READ MORE.

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