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

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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.

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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.