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With new Medicare law eliminating the broken sustainable growth rate (SGR) formula, pathologists will have additional opportunity to earn payment incentives for participating in quality initiatives in future years while never having to face another SGR cut again.

President Obama signed the Medicare Access and CHIP Reauthorization Act (HR 2) into law on April 16. The law retroactively overturns a 21% SGR cut that went into effect on April 1. The Centers for Medicare & Medicaid Services (CMS) will be tasked with implementing provisions in the bill over the next several years. Key physician payment highlights in the bill include:

  • Repealing the SGR formula used to determine physician updates.
  • Medicare fees for physician services receive a 0.5% increase in July and 0.5% annual increases from 2016-2019.
  • Combines multiple quality reporting programs into a single Merit-based Incentive Payment System (MIPS) program and sunsets current quality program penalties in 2019.
  • Starting in 2019, physicians can earn incentive payments in MIPS of 4% and will increase to 9% in 2022 and beyond depending on how well they score.
  • The percentage for penalties under MIPS also would be capped to equal the bonus percentage amount for that year. For instance, in 2019 the bonus incentive amount and the maximum penalty is 4%.
  • Physicians participating in alternative payment models (APMs), such as accountable care organizations, receive a 5% bonus from 2019-2024 and are not subject to MIPS requirements.
  • Starting in 2026, physicians in alternative payment models qualify for 0.75% pay updates while other physicians not in these models receive 0.25% updates.

The MIPS program would begin after Medicare Physician Quality Reporting System (PQRS), Electronic Health Record (EHR) Meaningful Use, and value-based modifier (VBM) penalties end in 2018. Those penalties could have exceeded 9% in 2019.

Pathologists will still face potential PQRS, EHR meaningful use, and VBM penalties of 4.5% to 10% in 2015 through 2018, but the CAP has worked to mitigate or stop these penalties for pathologists. For instance, the CAP secured hardship exemptions for pathologists from meaningful use penalties in 2015 and 2016. The CAP also has developed eight pathology-specific PQRS measures and worked with the CMS to ensure when pathologists do not have applicable measures to report that they are not penalized.

Instead, the MIPS will build upon current Medicare quality measures and programs, and payment adjustments, including incentives or penalties, depend on how well physician performed in quality, resource use, meaningful use, and clinical practice improvement activity categories. Additional bonuses of 10% will go to exceptional performers, with $500 million of Medicare funds set aside each year for this purpose.

The CAP secured language in the bill to ensure pathologists can more easily comply with quality programs. Specifically, the law gives the Secretary of Health and Human Services flexibility to utilize comparable measures and activities under the performance categories for physicians who do not have face-to-face interaction with patients. Pathologists have been disadvantaged in quality and meaningful use programs in the past, but the CAP provision is designed to help pathologists meet the requirements of the new incentive program.

Physicians will have to meet a performance threshold in MIPS that will determine bonus and penalty amounts. If a physician falls below the threshold, he or she would receive a negative payment update. If the physician scores above the threshold, he or she will receive positive payment updates. If the physician is close to the mean or median, he or she will receive no payment adjustment.

MIPS scores include four factors (The percentages are adjustable for individual physicians or group practices):

  • quality (PQRS/30%);
  • resource use (VBM/30%);
  • meaningful use of an EHR (25%); and
  • clinical practice improvement activities (15%).

Resources for the MIPS include summaries from the House Energy and Commerce Committee and the American Medical Association (AMA).

CMS to Reprocess Small Number of Claims

The CMS announced that it had processed a batch of physician claims for Medicare services with the 21% SGR reduction. The agency had been holding claims for 10 business days. President Obama signed the SGR repeal law two days after the CMS deadline to begin paying claims with the pay cut.

"While the Medicare Administrative Contractors (MACs) have been instructed to implement the rates in the legislation, a small volume of claims will be processed at the reduced rate based on the negative update amount," the CMS stated. "The MACs will automatically reprocess claims paid at the reduced rate with the new payment rate. No action is necessary from providers who have already submitted claims for the impacted dates of service."

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The MIPS program begins in 2019 following the expiration of current Medicare penalty programs. The MIPS also has penalties that depend on performance in the new system, but those amounts would be capped each year and are lower than total penalties for current Medicare incentive programs.

Physicians also participating in alternative payment models (APMs), such as accountable care organizations, are not subject to MIPS requirements. Below is a timeline for how the new law would implement key provisions.

  • 0.5% Medicare increases: July 1-December 31, 2015, annual updates 2016-2019
  • 0% Medicare update: 2020-2025
  • Future Medicare updates: 0.75% for APM participants and 0.25% for all others in 2026 and beyond
  • MIPS bonuses: up to 4% in 2019, 5% in 2020, 7% in 2021, 9% in 2022 and beyond
  • MIPS penalties: no more than 4% in 2019, 5% in 2020, 7% in 2021, 9% in 2022 and beyond
  • Exceptional MIPS performers: Up to 10% additional MIPS bonus 2019-2024
  • PQRS, meaningful use, VBM total penalties: 4.5% in 2015, 6% in 2016, 9% in 2017; 10% or more in 2018. These penalties expire in 2019.
  • APM bonuses: 5% in 2019-2024

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Joining an impressive lineup for the 2015 CAP Policy Meeting, the CAP announced Sen. Dan Coats (R-IN) will be the meeting's Congressional Keynote Speaker.

The May 4-6 Policy Meeting is an opportunity for pathologists to act as an advocate for their practice and patients. Register today to engage with nationally recognized experts, connect with other colleagues, and influence issues that are impacting the pathology practice. On May 6, CAP members will visit with their own lawmakers, like Sen. Coats, and congressional staffs during the CAP's Annual Hill Day.

From 1981 to 1999, Sen. Coats served in Congress, first in the House of Representatives and then in the Senate. He returned to the private sector and then was appointed US Ambassador to Germany. He was again elected to the Senate in January 2011.

Sen. Coats, a member of the Senate Finance Committee, recently voted for the Medicare Access and CHIP Reauthorization Act, bipartisan legislation that would permanently repeal Medicare's Sustainable Growth Rate (SGR) formula and replace it with a system that pays doctors to encourage quality and value over quantity.

Review the full 2015 CAP Policy Meeting agenda and make your voice heard.

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The CAP and pathologists in California, Colorado, and Texas are objecting to state legislation to address out-of-network (OON) billing. The College is working with state pathology societies to oppose bills in the three states.

In Texas, legislation (House Bill 3133/Senate Bill 481) is being considered to reduce the $1,000 minimum amount potentially subject to mediation under that state’s out-of-network balance billing law.

Under current law, a patient who is balanced billed more than $1,000 by a facility-based, out-of-network physician, including a pathologist, can seek mediation of the bill. If the facility-based physician receives a patient's written acknowledgment of disclosures, including advance notice of the provider’s out-of-network status and estimated costs for the services, the physician bill is not subject to mediation.

The legislation under consideration in Texas would remove the minimum amount and allow any bill for facility-based, out-of-network physician services, exceeding co-payment, co-insurance and deductibles, to be subject to mediation initiated by the patient. The legislation has passed the state Senate and is opposed by the Texas Society of Pathologists and the CAP.

In Colorado, a committee on April 20 postponed indefinitely legislation (Senate Bill 259 ) to compel pathologists and other out-of-network physicians to provide advance notice of OON status and a written estimate of charges to a patient before providing and billing for services. Under the bill, physicians that fail to provide requisite notice to the patient could be charged with deceptive trade practices.

The committee vote to postpone indefinitely was 5-4. The bill had been opposed by Colorado Society of Clinical Pathologists and the CAP.

California OON Legislation Would Ban Balance Billing

In California, legislation (AB 533) would limit the amount of payment that an out-of-network provider, practicing at an in-network facility, could receive for services. The limit would be equal to the same amount that both the covered person and the heath plan pay to in-network providers.

Additionally, under the bill the out-of-network physician "shall not attempt to collect more than the in-network cost sharing from the enrollee after receiving payment from the plan." The legislation is scheduled to be heard on April 21. The bill is opposed by CAP and the California Society of Pathologists.

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Effective April 1, facilities and hospitals providing non-emergency services must advise patients of the contact information of pathology providers, and other specialists, that could be anticipated to be providing services to the patient in order to avoid "surprise" medical bills for OON services.

Under the new law enacted in 2014, patients must be provided with contact information to ascertain insurance participation for any physician who services are scheduled to be performed on the patient, including pathology. If a pathology provider is not in the patient’s insurance network, the provider must inform the patient prior to providing non-emergency services that the amount, or estimated amount, for the service is available upon request. If requested, the provider must also disclose with a warning that costs could go up if unanticipated complications occur.

The law also makes bills for emergency services from OON physicians and "surprise bills" subject to an independent dispute resolution (IDR) process after an insurer has made an initial "reasonable payment" for such care. A surprise bill is defined as a bill received by:

  • an insured for services rendered by an OON physician where a network physician is unavailable or the patient had no knowledge that the physician was out of network, or did not consent to the referral of the OON physician; or
  • an uninsured patient who did not receive the required disclosures.

Consumers who receive OON non-emergency services because there were no adequate in-network physicians available, or because they received a referral to an OON provider without the proper disclosures, will not have to pay more than their usual in-network co-pay/cost-sharing. The disputed bill must be negotiated directly between the physician and the health plan.

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