In the early hours of Friday, February 9, the U.S. House of Representatives voted to approve the Bipartisan Budget Act of 2018, a 2-year budget agreement that includes a six week extension of appropriations to avoid a government shutdown. Amongst the 600 plus page bill were some modest amendments to the MIPS, the new Medicare physician payment system implemented under MACRA.

Changes to the Merit-Based Incentive Payment System

The budget bill makes no structural changes to MIPS, but does offer some relief for providers that have been anxious regarding the original three-year timeline for full implementation. Under the new law, the transition period for MIPS increases from two years to five years, through performance year 2021. During this extended transition CMS will be required to “increase the performance threshold…to ensure a gradual and incremental transition to the performance threshold” required by the mean/median calculation in the sixth year of the program(performance year 2022).

However, for those hoping for relief from the cost category, the law requires that CMS continue to weigh the cost category at least 10 percent throughout the transition period, and up to 30 percent. Oddly, the bill also prohibits CMS from including improvement in cost scoring for the transition period, a reversal of CMS’s policy for performance year 2018.
The budget bill would also remove certain Part B claims from the MIPS program that are unrelated to professional services beginning with the current 2018 performance year. This will exclude prescription drugs and durable medical equipment billed under Part B from MIPS payment adjustments beginning in payment year 2020. In addition, the change will further increase the number of clinicians excluded from the program by the low-volume threshold, as charges for non-professional billed items will no longer count towards the $90,000 minimum required for reporting.

The changes can be expected to modestly decrease the impact of MIPS on providers over the next three years, while still providing for an increasing impact of MIPS over time. In addition to excluding more providers by removing items from the program, the exclusion will also prevent providers from absorbing penalties or bonuses on those billed items. The reduced performance thresholds for years three, four, and five of the program further mean that more providers can be expected to receive positive adjustments, which in turn will reduce the maximum available bonuses. Those failing to report however will continue to receive the maximum penalty.

Congress Continues to Promote Risk-Based Payment Models

The legislation included the provisions of the Chronic Care Act, a bill sponsored by a bipartisan group of Senators that is intended to improve how Medicare cares for beneficiaries with chronic conditions. These provisions also demonstrate the continuing preference Congress is providing for risk-bearing payment models such as tracks 1+, 2, and 3 of the Medicare Shared Savings Program. New authorities for risk-bearing ACOs include:

  • Incentives for staying in ACOs for primary care. Starting in 2019, the new law will allow Accountable Care Organizations to offer cash incentives up to $20 for each visit for a beneficiary to a primary care provider. This is intended to allow ACOs to promote in-ACO care, ideally promoting continuity and better management over time.

  • Telehealth flexibility for ACOs. Again, for risk-bearing models, beginning in 2020 the law will remove restrictions on the telehealth originating site to enable ACOs to provide telehealth services to patients in their homes.

The attenuation of MIPS incentives described above also makes the 5 percent bonus available through participation in a risk-bearing model more attractive. However, Congress did not ignore track 1 ACOs entirely, directing CMS to make prospective attribution available at the discretion of the ACO, and to allow beneficiaries to elect to be assigned to a track 1 ACO of their choosing just as they may for track 2 and 3 ACOs today. Caravan will be providing additional guidance to clients regarding the impact of these changes for ACOs as we prepare for the 2019 performance year.

Elsewhere in the bill, Congress approved a number of Medicare extenders including the inpatient hospital payment adjustment for low-volume hospitals and the Medicare-dependent hospital (MDH) program.

You can view the full text of the bill here. If you have any questions about the impact of the legislation on ACOs, you can contact us at

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