How pathologists can survive MIPS in 2017

September 19, 2016

Is your practice still scrambling to get a handle on the ins and outs of the Merit-Based Incentive Payment System before it goes into effect Jan. 1? Well, take solace in knowing you’re not alone. In its current iteration, the proposed MIPS rule laid as part of the Medicare Access and CHIP Reauthorization Act (MACRA) was, simply put, not designed with pathology in mind.

Under MACRA, physicians have the option to avoid MIPS participation by participating in various alternative payment models that the Centers for Medicare and Medicaid Services deems to be “advanced.” The bad news: Very few APMs currently qualify for participation and CMS won’t start accepting proposals for specialty-focused Physician-focused Payment Models (PFPM) until early 2017. This means eligible pathologists will be forced to at least partially participate in MIPS during the 2017 performance year, or risk facing future penalties to their Medicare reimbursements. Fortunately, the good folks at the College of American Pathologists are working to develop a pathology-focused alternative payment model that they hope will receive approval next year from CMS.

Vachette has stayed on top of MIPS news throughout its development and has spent considerable time researching what the payment system will mean for pathologists, both in the short- and long-term.

Here’s a breakdown of what you need to know:

Performance Categories

By now, you’ve likely read or heard at least some information on the four categories that will be measured to compile your total MIPS score. But here’s what you may not know: Pathologists will likely only be scored in two of the four categories, and possibly only one if you’re an independent lab. For a quick refresher, let’s run through the categories briefly and note how each ties to an existing quality measurement program.



  • Quality: At 50 percent of your total MIPS score, this category is the most heavily weighted among the four. It will act as the successor to the Physician Quality Reporting System, which is currently in its final performance year (PQRS penalties, meanwhile, will be levied through 2018). At the behest of CAP, CMS has stated it will allow pathologists use CAP’s eight quality reporting measures for 2017, however, there is no guarantee that will be the case in subsequent years.

Those quality reporting categories include:

  • Breast Cancer Resection Pathology Reporting
  • Colorectal Cancer Resection Pathology Reporting
  • Barrett’s Esophagus Pathology Reporting
  • Radical Prostatectomy Pathology Reporting
  • Evaluation of HER2 for Breast Cancer Patients
  • Lung Cancer Reporting (biopsy/cytology specimens)
  • Lung Cancer Reporting (resection specimens)
  • Melanoma Reporting

*IMPORTANT NOTE FOR INDEPENDENT LABS: The proposed rule appears to exclude independent labs from reporting quality metrics, however, CAP is still seeking clarification from CMS at this time. Under the proposed rule, eligible clinicians (EC) or groups that are exempt from a reporting category will have that category’s weight redistributed to the remaining categories.

  • Resource Use: Weighted at 10 percent of an EC’s total MIPS score, resource use will replace the value-based payment modifier. As with VBM, pathologists will not face reporting requirements for resource use, since CMS calculates the category based on claims. Again, this category will be reweighted to zero and redistributed to remaining reporting categories.
  • Advancing Care Information: This replacement for the existing EHR Meaningful Use program is slated to be worth 25 percent of an EC’s total MIPS score. But, (stop me if this is becoming a reoccurring theme) pathologists also won’t be measured for ACI due to there being a lack of applicable measures.
  • Clinical Practice Improvement: Finally, we have a category that does apply for pathologists, albeit in a limited manner as currently presented. Weighted at 15 percent of your overall MIPS score, ECs will be graded on activities such as care coordination, patient engagement and safety. Unfortunately, very few of the activities apply to pathology, which is why CAP has recommended activities such as population management, patient safety and practice assessment and hospital antimicrobial susceptibility reports, among others, be added to make the category more inclusive for pathology.

To reiterate, most eligible pathologists will earn their composite MIPS score by reporting on just two categories, Quality and Clinical Practice Improvement. Meanwhile, independent labs have only Clinical Practice Improvement as their applicable category, which might leave you wondering if CMS expects your entire MIPS score to be based on just one measurement.

Thankfully, that isn’t expected to be the case, given that the proposed MIPS rule states any EC who is only able to report one category will be exempt from MIPS and will instead receive a neutral score. While that means you won’t receive any penalties to your Medicare payments, it also means you won’t be eligible for any bonuses either.

On its face, not being eligible for a bonus may seem like a drawback, but we’re going to go out on a limb and say it’s not. Here’s why: CMS has estimated that 70 to 80 percent of small or independent practices will initially be penalized under MIPS due to the relative lack a resources they can commit to quality reporting. So early on, avoiding a Medicare penalty should be a win considering the low number of ECs expected to receive bonuses under MIPS.

Who’s exempt from MIPS?

If you’re a Medicare-enrolled physician or non-physician practitioner, chances are you’re required to report under MIPS. That being said, there are a few exceptions.

They include:

  • Clinicians who are enrolled for Medicare for the first time in 2017.
  • Low-volume clinicians who have billed $10,000 or less in Medicare charges under their own NPI and provide Part B services to 100 or fewer Medicare beneficiaries during 2017.
  • Clinicians participating in a qualified alternative payment model, as determined by CMS.
  • Clinicians who participate in a partially qualified alternative payment model and choose not to be affected by MIPS payment adjustments.

To give you a better idea of how inclusive the program will be, CMS has estimated between 687,000 and 746,000 clinicians, or 95 percent of all MACRA eligible clinicians, will be required to report MIPS performance measures in 2017.

APMs and PFPMs

Conversely, the agency estimates that just 30,600 to 90,000 clinicians, good for about 5 percent of the overall pool, will be participate in an advanced alternative payment model that will meet the requirements to be a qualifying provider (QP) or Partial QP in 2017. That number is so small due to the fact that only six types of APMs will meet the criteria of being an advanced APM in 2017.

They include:

  • Track 2 and Track 3 Medicare Shared Savings Program (MSSP) accountable care organizations (ACOs)
  • Pioneer ACOs
  • NextGen ACOs
  • Oncology Care Model two-sided risk arrangements
  • Comprehensive Primary Care Plus
  • Comprehensive ESRD Care

Instead of a MIPS payment adjustment, QPs will receive a 5 percent APM Incentive Payment in 2019 (estimated to be drawn from a pool of between $146 million to $429 million) due to the large amount of risk they are assuming for becoming early adapters to this model.  Partial QPs are not eligible for this incentive payment, but can opt out of MIPS payment adjustments. Unfortunately, few of the advanced APMs that have been announced by CMS apply to pathology.

In addition to participation in advanced APMs, MACRA also allows specialties to create models for their own Physician Focused Payment Models that must include Medicare, address quality and cost of physician services and close an existing payment policy gap. In a recent webinar, CAP representatives stated that they are working to develop a pathology-focused model to submit to CMS for review sometime later this year after the final MACRA rule is released. However, these proposals won’t be reviewed by CMS until sometime in early 2017, which means pathologists will have to participate in MIPS in some form next year or else risk facing reimbursement penalties.


In 2019, approximately $833 million in MPFS payments will be withheld from clinicians scoring below a yet-to-be-determined performance threshold and awarded to those scoring above that threshold based on their 2017 performance.

Each year, a baseline threshold for performance will be defined by CMS based on reporting data from previous years. For example, if the agency chooses to set the benchmark at 50 points, a score of 51 would earn a slight incentive, while a score of 49 would net a slight penalty. The bonuses and penalties increase as a clinician’s score moves further from the baseline score.


Here’s the rub: CMS designed the program to be budget neutral, meaning incentives will be drawn from the same pot low performers pay into. But, that doesn’t mean there will be an equal number of winners and losers, as evidenced by the fact that CMS is including a “scaling factor” to multiply performance bonuses by in case incentive payouts don’t initially match the penalty fees taken in. That scaling factor is currently capped at “3”, meaning a provider could earn up to a 12 percent bonus (4%*3) in 2019 if enough ECs don’t meet the baseline performance threshold. The adjustments are set to increase each year through 2022 when they will be capped at +/- 9 percent — with the scaling factor allowing bonuses to reach a whopping maximum of 27 percent!

In addition, $500 million in exceptional performance payments will be distributed to MIPS-eligible clinicians who achieve the highest scores each year (This pot will be drawn from a CMS allocation and is not part of the budget neutral payment pool). Participants are eligible for an “exceptional” performance adjustment of up to 10 percent if they’re able to achieve the maximum composite score. If achieving the maximum score seems like a tall order, fear not! Providers who score in the 25th percentile above the CMS baseline threshold will also be eligible for an additional bonus of .5 percent. But just as with standard incentive pool, these additional bonuses will also be adjusted with scaling factor ranging from 0 to 1 to ensure they do not exceed $500 million in a given year.

The above graph shows a rough approximation of the thresholds clinicians must meet in order to avoid a negative payment adjustment, assuming the baseline performance threshold is set at 50. In this scenario, Clinicians scoring 12.5 points or lower would be eligible for the maximum penalty, while those scoring 62.5 or higher (the 25th percentile above the baseline) would receive a positive adjustment while also qualifying for an additional .5 percent bonus adjustment.

The above graph shows a rough approximation of the thresholds clinicians must meet in order to avoid a negative payment adjustment, assuming the baseline performance threshold is set at 50. In this scenario, Clinicians scoring 12.5 points or lower would be eligible for the maximum penalty, while those scoring 62.5 or higher (the 25th percentile above the baseline) would receive a positive adjustment while also qualifying for an additional .5 percent bonus adjustment.

Alternatives to full participation

In early September, CMS announced it would offer four paths to participating in MIPS during its inaugural year to allow smaller practices and rural providers the opportunity to adjust to the new reporting requirements. While the options to fully participate in MIPS or enroll in a qualifying APM were already widely known, it was somewhat surprising to see the two other options put forth by CMS.

The first would allow MIPS participants to completely avoid a negative payment adjustment by reporting some data required under MIPS in its first year, with the aim of better preparing clinicians for full participation in the coming years.

The second would allow participants to report data during a reduced reporting period that would likely begin sometime after Jan. 1, 2017. This option would still allow providers the opportunity to receive a small bonus payment while avoiding a negative adjustment.

While this is great news for providers who weren’t keen on participating in MIPS, it should be noted that the pathway to avoiding a negative adjustment is likely to be a popular one that could have a major impact on the bonus pool, given that bonuses were supposed to be paid out from fee schedule payments withheld from poor performers. If there are virtually no poor performers, there will be virtually no payouts for the exceptional ones, either.


Thankfully CMS came to its senses and realized the immense burden it was placing upon physicians by rushing MACRA’s implementation, because the outlook otherwise wasn’t good for pathologists. Unless you’re highly confident in your quality reporting, we’d recommend you simply report some data in 2017 to avoid receiving a negative Medicare payment adjustment in 2019. However, since the exact route to participate through this option won’t be detailed until the final rule is released in November, we’ll be stuck waiting for more info until then.

For now, here’s what you can do to avoid significant hits to your Medicare revenue next year, as well as a few of our predictions for the future:

  • Survive the first year of MACRA until CMS can review CAP’s proposal for a pathology-specific Physician-Focused Payment Model. If approved, pathologists could elect to participate under this model in 2018.
  • Understand the categories you’ll be required to report in if you’re looking to participate in MIPS for a full or partial year, especially if you’re an independent lab. There’s a good chance independent labs will receive neutral scores for 2017, due to a lack of applicable reporting categories. Most others will report just quality and clinical practice improvement. Since your other categories will be reweighted to zero, it’s crucial to do well in your remaining categories if you’re seeking a bonus payment.
  • If you’re not supremely confident in your quality reporting, it may be best to continue reporting some PQRS measures in 2017 so that you can avoid a negative payment adjustment. Those who are more confident may want to seek a slight bonus by electing to report during an abbreviated reporting window.
  • Over the next three to five years, pathologists who are not staying current with new MACRA provisions and are not submitting the data will see their revenues drop. Obviously, that is a significant problem for solo practitioners and small groups because they often don’t have the resources necessary to adequately submit data. However, CMS appears to have acknowledged this concern by offering a simple path to avoiding a negative adjustment in MACRA’s inaugural year.
  • If Medicare payments make up a small percentage of your overall revenue, you may be tempted to believe MACRA won’t have a dramatic effect on your bottom line. You’re wrong. Managed care plans tend to go as CMS does, so look for them to follow suit in the coming years (if they haven’t already) with the CMS’s push toward value-based payments.

This isn’t a change your practice must face alone. Contact us at 517-486-4262 or reach out to our president, Mick Raich, directly at to learn how our team can work with your practice to ensure you understand the rules governing MIPS and that you’re fully prepared to utilize this system to your benefit.

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