An Overview of the New Proposed Medicare Fee Schedule

August 12, 2015

I reviewed the recent 815-page proposed Medicare fee schedule and found some interesting items that pathology practices and labs will want to take note of.  The overall goal of the document is to set the pricing for next year. It also seems to provide a template for future payment models, as it provides more information on the Medicare Access and CHIP Reauthorization Act (MACRA). This act begins the move to bundled payments, the shift to the Value Based Payment Modifier (VBPM) or Value Modifier (VM), and the eventual shift to the Merit Based Incentive Payment System (MIPS).

The document details the PQRS 2% penalty for 2018 and the proposed 4% decrease for those missing the VBPM metrics. It does not tell us exactly what the metrics will be for VBPM or how this will be tracked. We only know the goal is to have providers on this program as of January 2017. It does appear the penalties are growing as we get further into the bundling models.

The document tries to explain how Medicare will pay claims in the near future.  Starting in 2019 we are going to enter a different world with merit-based MIPS payments.  This program will basically bundle all the other value-based programs, and if you fail to meet the metrics, your Medicare payments will decrease starting at 4%, eventually moving to a 9% decrease.

The shift will work this way … Most providers already have a PQRS standard and an Electronic Health Record (EHR).  Starting in January of 2016, MACRA mandates the establishment of a VBP model for selected providers; the remaining providers are to be onboard by January 2017.  This program has to be budget-neutral.

In the end it will look like this:

(PQRS) + (EHR) + (VBPM) = MIPS (Merit Based Incentive Payment System)

By bundling these models, Medicare hopes to clarify how practices are tracked and hold them accountable for missing the metrics.

This should be an area of concern for medical practices, as many are currently failing on PQRS reporting.  We have several groups who have already failed to meet this metric and are now taking a 1.5% hit from Medicare.

It will be interesting to see how this is actually delayed and how it plays out more directly when the federal register is released in November.  According to MACRA, all providers are supposed to get a .05% increase in payments for 2016; this document does have a clause stating if the programs are not making money, then these increases can be denied.

Mick Raich is the President of Stark Medical Auditing and Vachette Pathology. He can be reached for comments at or 517-407-0763.

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