The Many Problems With Medicare’s MIPS Exclusion Thresholds

The 2015 Medicare Access and CHIP Reauthorization Act (MACRA) allows the secretary of the Department of Health and Human Services, Tom Price, to define a low-volume threshold for the purpose of excluding some number of eligible clinicians from participating in MACRA’s Merit-Based Incentive Payment System (MIPS). Secretary Price may identify a minimum number of beneficiaries, a minimum number of items and services, and a minimum amount of Part B charges that if not exceeded would, again, exempt a provider from MIPS participation.

This year, MIPS performance year one, those eligible clinicians with less than or equal to $30,000 in Part B allowable charges, or less than or equal to 100 Part B beneficiaries served, are excluded. Under the 2018 proposed MACRA rule released this past June 20, Secretary Price or the Centers for Medicare and Medicaid Services (CMS) is, for performance year 2018, tripling the exclusion dollar amount to $90,000 and doubling the number of beneficiaries served to 200. This past May, CMS informed more than 807,000 clinicians, or approximately two-thirds of Medicare Part B clinicians, that they would be exempt from MIPS this year.

The proposed 2018 rule would again exempt two-thirds of clinicians, or more than 900,000. This percentage and number would be substantially higher, however. CMS estimates clinicians participating under the MACRA alternative payment model (APM) pathway would double between 2017 and 2018, or from an estimated 70,000–120,000 to 180,000–245,000, due to the agency initiating the Comprehensive Primary Care Plus (CPC+) demonstration, a new accountable care organization (ACO) model titled Track 1+ and reopening the Next Generation ACO demonstration. CMS has chosen to exclude the vast majority of clinicians because, the agency states in the current proposed rule, it seeks to “move the program further in the least burdensome manner.”

While excluding a significant percentage of clinicians from MIPS participation is a popular idea among those excluded, as well as among many representative trade and professional associations, it creates several interrelated problems for both those excluded and included in MIPS as well as for the Medicare program more broadly.

Effect On Excluded MIPS Clinicians

Beyond limiting burden, CMS is excluding solo and small-group-practice eligible clinicians because the agency argues they will be comparatively less competitive under MIPS, or more likely to receive a negative payment adjustment in payment year 2019. (Performance and payment years are two years apart.) CMS makes this argument based on participation rates in MACRA’s predecessor program, the Physician Quality and Reporting System (PQRS). As CMS notes in its 2018 proposed rule, in 2015 only 70 percent of practices with just 1–15 physicians participated in PQRS compared to 90-plus percent for larger-size groups. In last year’s proposed MACRA rule, CMS estimated only 13 percent of solo practices and 30 percent of practices with two to nine eligible clinicians would receive a positive MIPS adjustment in payment year 2019 compared to, for example, 81 percent of practices with 100 or more eligible clinicians.

However, in the current proposed rule, CMS estimates that under its standard participation assumptions 90 percent of those groups with 1–15 clinicians will participate in MIPS in 2018. This participation rate is not significantly worse than the agency’s estimate for 2018 participation by groups with 16–24 providers at a 91.7 percentage rate. The estimated percentage of practices with one to 15 providers receiving a negative payment adjustment in 2020 is actually lower than for practices with 16–24 providers, or 10.0 percent compared to 10.9 percent. As for positive adjustments, CMS estimates that in 2020 aggregate positive adjustments for groups with 1–15 clinicians will be $288 million compared to $258 million for practices with 100 or more clinicians. (It’s estimated that 1–15-size clinician groups will have approximately 30 percent more in allowed Part B charges, but this is offset by their being 25 percent less likely to receive an exceptional payment adjustment.)

Excluding two-thirds of MIPS participants again in 2018 when CMS presents no data that they would not be competitive, undermines MACRA’s intent. Implementing the program such that it is “least burdensome” is not the same as altogether exempting two-thirds of clinicians. That smaller practices were less likely to participate in PQRS says nothing about their ability to compete under MIPS. This is particularly true because CMS has, again, proposed a very low Composite Performance Score (CPS) threshold of 15 points, the minimum score necessary to avoid a negative payment update. The 15 points become even more easily achieved because CMS will award five bonus points to participating small groups.

Among other problems, excluding small groups from earning a MIPS score, even those who are willing to voluntarily participate, incents complacency. It denies these practices the opportunity to succeed or earn annual Part B payment increases that can be substantial over time. One estimate shows MIPS can cause up to a 46 percent spread in clinician payment rates over the next five years. Comparatively lower reimbursement lessens excluded clinicians’ ability to improve care delivery, ironically producing the opposite effect of what MACRA intends. Because scores will be publicly reported at the National Provider Identifier (NPI) or individual clinician level, exclusion will also cause non-participating clinicians to not only be less competitive but less employable as well: Is a group more likely to hire a high MIPS performer or a non-performer? In addition, selective participation will reinforce or legitimize already existing complaints about MACRA accelerating industry consolidation.

Effect On MIPS Participants

Excluding two-thirds of eligible clinicians has a measurable negative effect on those eligible clinicians required to participate in MIPS. You can never do one thing. In last year’s proposed MACRA rule, CMS estimated that aggregate positive adjustment dollars would equal $1.333 billion (including $500 million for exceptional performance bonus payments) in payment year 2019. In the current proposed rule for the payment year 2020, this amount under standard participation assumptions is now approximately 50 percent less, or estimated at $673 million (again including the $500 million for exceptional performance). It is true that the number of participating eligible clinicians is estimated to decline between 2017 and 2018 but by only 8 percent to 14 percent.

MIPS is a zero sum game. Total negative payment adjustments have to equal total positive adjustments. Scoring performance on a curve, meaning exempting two-thirds of MIPS-eligible clinicians, effectively collapses the MIPS CPS distribution curve. This is also helped by CMS artificially setting the CPS in 2018 at a least burdensome, or again easily achievable, 15 points out of a 100-point maximum. The CPS threshold score for 2017 is a mere three points. The consequences of this approach are made apparent in Table 86 in the current proposed rule. In payment year 2020, in which payment adjustment scores, per MACRA, are allowed to range from -5 percent to +5 percent, CMS estimates no MIPS participating provider will receive a positive payment adjustment (that includes exceptional performance payments) of more than 1.7 percent. The average adjustment will be 0.9 percent. As a percentage of estimated total Part B spending in 2018, the MIPS positive payment adjustment, again $673 million, is estimated to equal 1.16 percent of CMS’s estimated allowable Part B charges of $58 billion. If no moneys are paid in exceptional bonus payments, MIPS payments at $173 million will equal 0.3 percent of allowable charges.

The effect of eliminating two-thirds of eligible clinicians from the MIPS formula is to financially undermine participating clinicians. They effectively lose by winning, particularly when you consider MIPS-scored APMs; for example, Track 1 ACOs have made infrastructure investments with the reasonable expectation that they would be competitive under MIPS. This problem becomes substantially worse the longer CMS excludes a significant percentage of eligible clinicians from MIPS participation because the annual payment rate adjustments, as suggested above, accumulate year over year. In addition, with such small payment adjustments, one is left to wonder whether eligible clinicians will fully engage in the program or will MIPS become largely a check-the-box compliance exercise for those required to participate. This “pick your pace” approach, as former CMS acting administrator Andy Slavitt termed it, also leaves one to question why CMS is not working harder to design and implement more incentive neutral policies to improve quality and spending efficiency.

Effect On The Medicare Program Beneficiaries

MACRA is intended to help or incent eligible clinicians to provide higher-quality care that is more spending efficient. It is not intended to punish clinicians for no reason. If you exclude two-thirds of clinicians, you are either violating the intent of the law or intentionally allowing for poorer-quality care for a substantial number of Medicare beneficiaries. If all Medicare beneficiary lives are of equal value and if MIPS-participating eligible clinicians provide comparatively better care, the result of a “least burdensome” policy is to produce two classes of Medicare beneficiaries or beneficiaries not of equal standing within MIPS. The variation in care gets worse when you factor in beneficiary care under the Medicare Shared Savings or ACO program and Medicare Advantage. The policy is particularly problematic if not perverse because it fundamentally discounts the future for a population that does not and cannot afford it. The future is now or at least nearer term for the elderly, particularly the frail elderly. This then is a policy of positive injury or a breach of a positive duty.

In sum, delaying or denying MIPS participation for two-thirds of eligible clinicians is a step backward. The PQRS program, MIPS’s predecessor, did not have an exemption for clinicians with a low volume of Medicare patients or allowed charges. That CMS would propose to increase the exclusion thresholds is also puzzling because just seven months ago in the last year’s final MACRA rule, CMS stated, “we anticipate that more clinicians will be determined to be eligible to participate in the program in future years.”

Delay and deny for however long will ultimately leave excluded clinicians unable to compete for several years. As ACOs, other Medicare pay-for-performance providers and a long list of commercial plan providers—for example those participating in the closely observed Alternative Quality Contracts—have learned improving quality and reducing spending growth takes years of effort. As is frequently stated, improving quality and spending efficiency is not akin to flipping a switch. Implementing the MACRA program is already compromised by CMS’s proposal to again delay implementing the MIPS cost component, designed to constrain service volume growth, for another year, leading to inadequate risk adjustment and the fact that lower performers cannot be rewarded for improvement. If MACRA is ever to be a catalyst for change, the proposal to increase the exclusion thresholds is neither right nor effective.

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