Understanding value-based care compensation for independent practices

Understanding value-based care compensation for independent practices October 8, 2018

With the move toward value-based care, the Centers for Medicare & Medicaid Services (CMS) and many private payers have developed measures to determine compensation and incentives for independent practices. When the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) was implemented, it eliminated the Sustainable Growth Rate (SGR) law which helped to determine physician payments and increases for Medicare services. Now CMS offers the Quality Payment Program (QPP) with two tracks.

Depending on their practice size, specialty, location, or patient population, independent physicians can choose to participate in the Merit-Based Incentive Payment System (MIPS) or the Alternative Payment Model (APM).

An independent physician may choose to participate in MIPS as an individual or as part of a Virtual Group. For those reporting as an individual, the payment adjustment will be based solely on their performance. Virtual Groups are groups of two or more practices made up of solo practitioners and groups of 10 or fewer eligible clinicians who join together “virtually” to participate in MIPS as a group for a performance year.

Within MIPS, a score is applied that determines the payment adjustment for the independent practice. The score is based on four performance categories: Quality, Promoting Interoperability, Improvement Activities, and Cost.

Many private payers are also adopting a value-based care compensation model for independent physicians. HFMA (Healthcare Financial Management Association) reports that in 2017, BlueCross BlueShield in Western New York “determined physician payment based on Healthcare Effectiveness Data and Information Set (HEDIS) compliance, with 27 measurements ranging from adolescent immunizations to colorectal cancer screening to osteoporosis management.”

In 2018, the insurer is “measuring physician performance based on HEDIS quality measures (80 percent) and cost of care (20 percent). Examples of cost-of-care measures include inpatient utilization, emergency department utilization, laboratory services, and specialist services.”

For CMS, MIPS ties payments to quality and cost-efficient care. The APM is a “payment approach that gives added incentive payments to provide high-quality and cost-efficient care.” In addition, independent physicians participating in the Advanced APM track of the Quality Payment Program may earn a 5 percent incentive for achieving threshold levels of payments or patients.