Consolidating Regulatory Penalties: Introducing MIPS

As I noted in last month’s column (available online at PracticalDermatology.com), we have now entered a new phase of modern medical practice: The Penalty Phase. Physicians who do not participate in the Federal Government’s Meaningful Use Program will lose a percentage of their Medicare reimbursement. The Meaningful Use requirements, however, represent just one of several regulatory systems with which physicians are required to comply. There is also the Value-Based Modifier and the Physician Quality Reporting System.

With so much to keep track of, it is no surprise that physicians often express certain distaste for the regulatory side of medicine. New developments, however, may consolidate the organizational structures of the regulatory spectrum in medicine.

Re-arranging Penalties

Before we get to the changes, let’s take a quick look at the numbers as they stand currently:

This year, if you are not a Meaningful User of an Electronic Health Record (EHR) and you do not use PQRS, you will be penalized 2.5 percent of your Medicare reimbursement. This may not be a significant amount, at least not enough to compel a paper record-based physician to invest in electronic medicine. However, it’s worth noting that this number will not only increase over the next several years, but that we are already being penalized two percent of Medicare reimbursements due to the sequester. This is a forgotten penalty. Altogether, the penalties for not being a Meaningful User or PQRS respondent is 4.5 percent.

In 2016, the penalty for not using PQRS and Meaningful Use will rise to four percent, and then in 2017 it moves to five percent. Also in 2017, a new penalty will take effect for the Value-Based Modifier, which could add an additional two percent. Add that on top of the two percent sequester penalty and we’re at nine percent.

The numbers for 2018 are not known yet, but there is no reason to expect the penalties to level off or dwindle. Therefore, it’s possible that in 2018, you could be risking up to 10 percent or more for opting not to comply with the Federal government’s various regulatory programs.

What Is MIPS?

In 2019, the penalty structure will undergo a comprehensive overhaul. At that time, Value-Based Modifier, PQRS, and Meaningful Use will be consolidated into one program called the Merit-Based Incentive Payment (MIPS) system. MIPS was designed to streamline the different penalty/payment systems into one, which should at the very least streamline the burden of sifting through everything separately.

The penalty structure of MIPS will be almost identical regarding the amount physicians will need to pay for non-compliance, however one positive is that the penalty will start at a much lower amount (in 2019) and gradually rise back to the expected counts. In 2014, the total penalty against Medicare reimbursement is four percent, as compared to five percent in 2020, seven percent in 2021, and nine percent in 2022. At this point, the program caps at nine percent in penalties.

The downside to combining all of these programs into one is that physicians now must comply with all measures in order not to be penalized. The finer details have not been unveiled at this time, but presumably it will incorporate standards from Meaningful Use, PQRS, and Value-Based Modifier and continue them on in one comprehensive package.

MIPS will also unveil a bonus incentive payment system of up to 10 percent for users who display exceptional performance. According to the American Academy of Dermatology (AAD), measures to qualify for bonuses will “address clinical care, safety, care coordination, patient and caregiver experience, and population health and prevention.” However, the bonuses do not apply simply for avoiding penalties. Physicians will have to perform all measures and land in the highest percentage group of performers.

What Is Enough For You?

While it is encouraging that the government has finally streamlined these systems into a comprehensive program, the sad reality is still that, within five to seven years, the penalties may be too great for some physicians in private practice to overcome without transitioning to electronic. Whether those penalties will increase beyond that point is unknown. Moreover, it remains unclear how EHR vendors will accommodate for these changes in their own software. At the very least, EHR systems will likely have interoperability by 2017, which will hopefully make the market easier to navigate for physicians.

Nevertheless, despite the streamlining and the short-term reduction in penalty fees, the writing is on the wall for paper-based physicians. In a few short years, the penalty for not going electronic will be roughly 10 percent, perhaps more. For those opting not to comply with these measures, it will not doubt become increasingly difficult to continue practicing. n

Mark Kaufmann, MD is Associate Clinical Professor of Dermatology at Mount Sinai Hospital in New York. He is co-chair of the Dermatology workgroup for CCHIT and is on the Medical Advisory Board of Modernizing Medicine.