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What Hematologists Need to Know About Alternative Payment Models in Medicare Part II

In an article in December, we explored the impending changes to Medicare physician payment associated with the implementation of the Merit-Based Incentive Payment System (MIPS). That calculation taking into account quality, cost, and participation in various program may seem confusing. As part of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), physicians are given another path that will allow them to potentially avoid some elements of the MIPS. This option, however, offers its own potential advantages and disadvantages and may not be achievable for all practices. 

The MIPS program will begin to be implemented in 2019 and in that first year 4% of Medicare physician fee schedule payments will be at stake based on performance in that program. However, the legislation states that those practices that are qualified participants in alternative payment models will not be subject to the requirements of the MIPS program. Qualified participants are those that meet certain thresholds of payments that come from alternative payment models. Alternative payment models are not fully defined but must include more than nominal risk for the providers of care. The legislation sets up thresholds that a practice may meet for this criteria which require a certain percentage of either Medicare or all payer payments be made through alternative payment mechanisms. In the first year of the program, a practice would have to have 25% of Medicare payments come through alternative payment mechanism. In later years that threshold increases to 50%.

Commonly known alternative payment models would include accountable care organizations and bundled payments. However, the requirement that a practice take on more than nominal risk means that many existing alternative payment programs that were created by the Center for Medicare and Medicaid Innovation (CMMI) would not qualify. Many of these programs offer bonuses for performance above benchmarks but do not penalize those practices which outspend expectations. For example, the Medicare Oncology Care Model, which has enrolled practices and will become operational in 2016, would not qualify because the program pays a bonus for performance beyond benchmarks but does not penalize those practices with higher costs. 

It is important to note that while those who are qualified participants in these alternative payment models will be exempt from MIPS, there are many elements of MIPS that will be embedded within the alternative payment models. For example, all of these models must include some reporting of quality measures and all must include a certified electronic health record system. And since more than nominal risk is required, costs of care are included as well. However, a well-crafted alternative payment model may allow a stronger focus for a practice on a particular patient population, provided it meets the thresholds that are required. In order to further encourage physicians and practices to enter into these alternative payment models, CMS will pay them 5% more for their services throughout the year. Notably, both MIPS and bonuses associated with alternative payment models are paid on the basis of physician fee schedule services, which exclude Part B drugs, a significant source of revenue (and cost) for most hematology practices. 

There are many more details that are still being developed. CMS is expected to release proposed rules on these issues in the spring of 2016 that will help to address the issues of the definition of alternative payment models. These rules will also provide some guidance on the methods by which physicians and practices can actually have payment models reviewed to determine if they meet the threshold of an alternative payment model.

For hematologists, alternative payment models could potentially include bundled episodes for stem cell transplant, a fixed payment for a course of chemotherapy, or some kind of risk-sharing for a year of caring for a patient with hemophilia. As the rules are proposed and then finalized, ASH will inform members how they might be able to participate in this program and whether it may offer advantages over participating in the MIPS.