In a blog post last week, CMS acting administrator Andy Slavitt said that physicians will have the ability to choose among several options to report data to Medicare under the new physician payment system ushered in by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

Starting in 2019, physicians will be reimbursed on one of two tracks. The first track will continue to provide reimbursement on a fee-for-service basis, but with an upward or downward adjustment based on the physician’s performance under the new Merit-Based Incentive Payment Systems (MIPS). The MIPS system will replace the Physician Quality Reporting System (PQRS), the Meaningful Use Program, and the Value-based Modifier Program. On the other track, physicians participating in advanced alternative payment models (APMs), including certain accountable care organizations (ACOs), will receive their fee-for-service reimbursement without being subject to MIPS.

As Administrator Slavitt recognized in his post, numerous physicians–particularly those in small and rural non-hospital-based practices–expressed concern about the impending implementation of MIPS. Their concern stems from the fact that the upward or downward adjustment in 2019 will be based on their reporting of quality and other data beginning on January 1, 2017.  Many physicians simply do not have the resources in place to satisfy these reporting requirements. According to Administrator Slavitt, CMS will attempt to assuage these concerns by giving physicians the following three options to report under MIPS:

1. Report on some of the required MIPS data. Physicians using this option will not be eligible to receive a performance bonus, but will not be subject to a penalty.

2. Report all of the required MIPS data for less than a full year. Physicians using this option will be eligible to receive a smaller bonus.

3. Report all of the required MIPS data for the full year. Physicians using this option will be eligible to receive the full bonus depending on their performance score.

As discussed above, a fourth option is to bypass the MIPS reporting requirements by participating in an advanced APM. However, it is estimated that up to 90% of physicians will not be participating in advanced APMs in 2017. This is primarily due to MACRA’s requirement that advanced APMs bear at least some risk of monetary losses for the services they provide. This requirement prevents physicians in certain ACOs from being considered part of an advanced APM, including those participating in Track 1 of the Medicare Shared Savings Program, as only Tracks 2 and 3 bear downside risk.

While the announcement does not fundamentally alter MACRA’s two track system over the long term, it does make participation on the MIPS track more palatable for physicians in the short term by giving them the option to phase in their reporting without being penalized. Assuming the proposal moves forwards as generally described, it sets up a number of interesting behavioral questions to observe.  How many and which providers are willing to take on risk?  What will those in the MIPS track learn from those that take on risk?  Finally, has CMS set the precedent that providers will be able to avoid taking on risk in the future?

CMS expects to release the final rule implementing MACRA in November. We will provide insight and analysis on the final rule as soon as it is released.