MIPS: The ‘death knell’ for small practices?

By Joseph Burns
Medical Economics, February 25, 2016

Beginning in 2019, the new Merit-based Incentive Payment System (MIPS), which is part of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), will raise the focus on physician performance measurement to a new level.

MIPS will replace the Physician Quality Reporting System (PQRS) and CMS will adjust Medicare payments to most physicians either up or down by as much as 9% depending on how well they score in four performance categories: quality, resource use, clinical practice improvement activities, and meaningful use of electronic health records systems. Also, physicians who score extremely high will be eligible for a 27% payment bonus.

Robert A. Berenson, MD, a fellow at the Urban Institute in Washington, DC… is one of the nation’s best-known health policy experts. In the interview below, Berenson elaborates on his views regarding MIPS.

Medical Economics:  You’ve been critical of the measurement approach that CMS and other payers have adopted, and you focus in particular on MIPS. Are you concerned that MIPS will have some unintended consequences, and, if so, what concerns you most?

Robert Berenson:  We lack measures that are core to what is central to the performance we expect from particular specialists. I also have concerns that the approach may compromise physicians’ intrinsic motivation to practice high-quality care for their patients as they respond to specific incentives for particular aspects of performance.

With MIPS, Congress is combining PQRS, Meaningful Use and the value-based modifier. Those were three separate programs that were going to add up to a little more than 2% of a physician’s Medicare payment. But the penalties under MIPS now add up to 9%, with potential gains of 27% for some lucky physicians. They’ve created a whole new formula for how you get either rewards or penalties.

Only about 50% of physicians in private practice today are submitting data for PQRS because of the administrative burden and the lack of respect practicing physicians have for what they are being measured on. But now, the total they stand to lose is only 2% or so. No one can afford to lose 9%, which means MIPS has the potential to hasten the demise of small practices.

ME:  Are you saying that physicians in small practices will get a bonus of 9% and have the potential to get a 27% bonus, but that’s not enough of a financial gain to keep physicians in private practice?

RB:  The problem is that you as a physician would have to either spend money to bring in a consultant to produce the data from your medical records or you would have to use one of the registry options that CMS is offering. Both are resource intensive. Some doctors will say, ‘I’m going to have to be part of somebody’s system because I can’t produce this data.’ That happened to my former practice. Shortly after I left they said, ‘We can’t administer this practice. It’s getting too complicated. We’re just going to sell to a hospital system.’

ME:  By ‘too complicated,’ do you mean physicians don’t have the sophisticated IT systems that they would need to collect and report the MIPS data? They don’t have the staff to do it, and there are too many other demands on their time to do MIPS and still see 20 to 40 patients a day?

RB:  That’s right. The obligations required to submit the data mean they will have to pay someone to do it for them. And we already know that small practices are just getting by and accept much lower payment levels from insurers than large practices do. To get back the 2% lost under PQRS, physicians could see a few more patients each week. But when [the loss is] 9% and the requirements are more complex, that’s a whole different situation.

Included in the same MACRA legislation was a replacement for [Medicare] sustainable growth rate payments but that amounted to only nominal fee increases for the next decade. It’s virtually nothing, meaning physician payment is not keeping pace with inflation and then you have the potential of losing 9% on top of that.

So, we’re talking about the potential loss of payment above 9% and perhaps well into double digits. Look at it this way: because the fee increases aren’t keeping up with inflation, practices will need some bonus income to stay even.

ME:  So if it’s no longer financially viable to operate a small physician practice, then is the only alternative to be acquired by a hospital, health system, or some larger entity, in particular because so many payers are moving to value-based care?

RB:  Yes. That’s how it looks, and there are a lot of people in the insurer and provider worlds who say that the Affordable Care Act and now MACRA are all about bigness, meaning consolidation. I don’t believe that myself. But I believe the MACRA legislation indicates that physicians unwilling to accept the yet unproved value-based payment approaches will take a real hit, and when you combine that hit with all the other trends in the market, then you see all these factors pressuring small practices.

ME:  To play devil’s advocate, is it necessarily bad that many physicians will join larger organizations?

RB:  Well, in essence, we are under-valuing small practices and we now have MIPS which could be the death knell of many small practices. And for what? There’s good evidence from a Health Affairs paper by Lawrence P. Casalino, MD, MPH, PhD, and others that, in fact, the smallest practices had the best performance on avoiding unnecessary hospital admissions. The researchers were surprised because they assumed that you needed systemic processes in place to keep ambulatory care-sensitive admissions down.

But what Casalino and others found is not surprising to me. Those doctors know their patients, and when something’s wrong, they see them or they’re on the phone with them. Then they solve the problem without admitting the patient or sending the patient to the ER, which often guarantees an admission. Conversely, many practices in large health systems don’t know their patients as well. I am not saying small practices do as well on all aspects of care, just that what they do well is often underappreciated.

ME:  You question whether we should even be using the performance measures we currently use.

RB:  At the individual doctor level, I believe — and behavioral economists have said so as well — that pay for performance (P4P) actually often is counter-productive. I’d like to know what impact P4P has before enacting a program like the MIPS. So far the evidence hasn’t shown that the approach improves care. We need to evaluate not only what happens to the measures we incentivize, but what happens to overall care when health professionals are financially incentivized to improve particular aspects of care — the only ones we can measure. It may be that ‘testing to the test‘ is the result.

ME:  So, there’s much work to be done. Is there any hope that Congress or CMS will even be willing to improve the MIPS program and perhaps take up some of these issues?

RB:  Well, MACRA, including MIPS, is the law now. Congress tells CMS to do it and CMS has to implement it. My prediction is we will see an annual review not unlike the SGR ‘doc fix,’ except this one will be easier to pass because there will be little budgetary impact. If there is enough pushback or unintended consequences, we may see a willingness to revisit the program.



URGENT: Explaining MIPS; Action required

By Don McCanne, M.D.
Quote of the Day, March 21, 2015

Yesterday’s Quote of the Day message sounded the alarm on legislation that would replace the flawed Sustainable Growth Rate formula (SGR) for updating Medicare payments with a new Merit-based Incentive Payment System (MIPS) – legislation with strong bipartisan support that will be taken up in Congress this week and is expected to pass.

The SGR formula is considered to be flawed primarily because economic factors considered in the formula would result in inappropriate payment reductions in many of the yearly adjustments. Thus there is consensus that the formula should be repealed. However, it did provide an administratively simple process for trying to keep Medicare rates from increasing well beyond the growth in the economy. That is, there was no administrative burden placed on the providers; they merely had to accept adjustments in their payments.

The concern is over its replacement: MIPS. On reading the summary of the “SGR Repeal and Medicare Provider Payment Modernization Act,” you will see that MIPS places a tremendous administrative burden on health care professionals in a health care system that is already overwhelmingly overburdened with administrative excesses. The only way to escape this additional burden is to participate in Alternative Payment Models (APMs) which, in themselves, create further significant administrative burdens (ACOs, PCMHs, etc.). MIPS is an administrative nightmare.

Under the MIPS payment system, eligible professionals with higher scores will receive positive payment adjustments (and may be eligible for an additional incentive payment). We have observed repeatedly how such systems are gamed in order to receive these extra payments. The problem is that those who do not game the system, and especially those with practice situations and patient populations that make it very difficult to score higher points, will almost automatically receive performance scores below the threshold since their performances will be compared with the gamers. This will result in negative payment adjustments – reducing payments by up to nine percent. If you think SGR is unfair, MIPS robs from these hard-working professionals who are just trying to make the system work for their patients, and gives the spoils to those who likely have consultants to show them how to game the system.


Physicians were so relieved to get rid of the sustainable growth rate (SGR) method of adjusting Medicare payments that they seemed to care less about the replacement: the Merit-based Incentive Payment System (MIPS) and the Alternative Payment Models (APMs). They should have cared. Robert Berenson explains why.

After a period of grief, financial stress and burnout, physicians who have not yet bailed out may be ready to push back. Berenson gives us some limited reassurance that since there will not be a huge budgetary impact like there was with repeal of SGR, Congress may be more willing to revisit this legislation. But the protesting physicians had better bring along their pitchforks, just to be sure.