Part B Drugs CMS Rule Could Cut Payments for Some Specialists

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For certain specialists, however, payments may increase or decrease by up to 16% in 2018.
For certain specialists, however, payments may increase or decrease by up to 16% in 2018.

On November 2, 2017, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that could result in steep payment reductions for physicians of certain specialties in 2018.1 Under the rule, payment adjustments based on the Merit-Based Incentive Payment System (MIPS) will be calculated differently starting in the new year. This could result in significant payment adjustments for specialists who administer a greater quantity of Part B drugs.

“For most types of physicians, these payment adjustments would only range between ±5%, as provided for under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA),” according to a press release from Avalere Health, a healthcare consulting firm based in Washington, DC.1 For certain specialists, however, payments may increase or decrease by up to 16% in 2018, with further adjustments to follow in 2020, after MIPS has reached full implementation.

Background on MIPS

“On January 1, 2017, MACRA transitioned to MIPS, a new way to pay physicians for care, which will make Medicare Part B physician payment adjustments based on a composite performance score,” John Feore, JD, and Richard Kane, MIPP, of Avalere Health, noted in the press release. MIPS is 1 of 2 pathways for clinician participation under MACRA.2 The other option, the Advanced Alternative Payment Model (AAPM), offers qualifying participants an annual 5% lump-sum bonus in payment years 2019 to 2024. For eligibility, a practice must either receive at least 25% of its Medicare Part B payments through the AAPM, or at least 20% of the entity's Medicare patients must be seen through the AAPM.3

In addition to the lump-sum bonus, qualifying participants will not be required to fulfill MIPS reporting requirements, and their Medicare physician fee schedule will increase by 0.75% starting in 2026. If AAPM entities do not meet the criteria, they may choose to participate in MIPS. “Many specialists may not have an alternative to the MIPS track due to limited opportunities for specialists to join an Advanced Alternative Payment Model,” stated Richard Kane, senior director at Avalere.

The New Rule

Under the new rule to take effect in 2018, calculations of MIPS adjustments will include the cost of Medicare Part B drugs, and this change could have a significant impact on payments for some physicians. Physicians who administer more Part B drugs may experience substantial payment variability and financial risk compared with other physicians.

Research conducted by Avalere consultants showed that specialists such as oncologists, rheumatologists, and opthalmologists more frequently bill for Part B drugs compared with physicians from primary care specialties. “As a result, Part B drugs represent a larger percentage of total billed Medicare allowed charges for these specialists,” and they “could see substantially higher payment penalties or rewards than their counterparts who administer fewer Part B drugs,” they noted. 

In addition, the level of financial risk for certain specialties will continue to rise as implementation of the MIPS program progresses over the next few years. For example, payment adjustments for rheumatologists and oncologists could increase or decrease by as much as 29% in performance year 2020.1

Before MIPS went into effect, CMS programs including the Physician Quality Reporting System, Physician Value-Based Payment Modifier, and the Medicare Electronic Health Record Incentive only pertained to physician fee schedule services and did not include the cost of Part B drugs.4 With the inclusion of these costs, the new rule represents a significant change in their approach.

Medical Bag spoke with Avalere's director, John Feore, for further details on the rule.

Medical Bag: What are the reasons for the changes described under the new rule? 

Feore: CMS states in the rule that its proposal is actually a clarification of existing policy. CMS points to the MACRA statute as requiring the MIPS payment adjustment to be applied to Part B drugs.

Medical Bag: Which specialties are expected to be affected most significantly? 

Feore: Our analysis shows that rheumatologists and oncologists face the greatest potential impact under this provision. Any specialty that prescribes a high dollar amount of Part B drugs as a percentage of their total Medicare allowed charges may be affected.

Medical Bag: What can physicians do to prepare for these potential changes? 

Feore: Physicians should be preparing to fully participate in MIPS, gain an understanding of their reporting options, and closely examine how they can best perform under the program. In 2019, the third year of the program, many of the flexibilities that have enabled CMS to “ramp up” to full implementation will go away and the program will have to be fully implemented.

Medical Bag: Is there anything else that clinicians should know about the topic?

Feore: The impact for specialists can be both negative and positive. Those specialists who thrive under the program and perform at the highest levels may receive large bonus payments. This is the design of MIPS, which is a budget-neutral program — outside of the separate $500 million exceptional performance bonus pool.

 

References

  1. Feore J, Kane R. CMS proposal for new Medicare payment system could lead to large payment variability for specialists [press release]. Washington, DC: Avalere Health. http://avalere.com/expertise/life-sciences/insights/cms-proposal-for-new-medicare-payment-system-could-lead-to-large-payment-va. Published October 5, 2017. Accessed November 11, 2017.
  2. MACRA basics: Advanced Alternative Payment Models (AAPMs). American Academy of Family Physicians. www.aafp.org/practice-management/payment/medicare-payment/aapms.html. Accessed November 11, 2017.
  3. What's the Quality Payment Program? Quality Payment Program. https://qpp.cms.gov. Accessed November 11, 2017.
  4. Medicare Part B drugs and the Merit-based Incentive Payment System (MIPS) payment adjustment. Centers for Medicare & Medicaid Services. www.cms.gov/Medicare/Quality-Payment-Program/Resource-Library/Medicare-Part-B-Drugs-and-the-MIPS-Payment-Adjustment.pdf. Accessed November 11, 2017.

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