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08/22/2016    Pam Thompson

MACRA Preparations (Eric Lullove, DPM)

Dr. Lullove states, "Beginning THIS year, CMS and
HHS have begun tying and targeting 30% of all
reimbursement to quality initiatives. This
includes PQRS. By 2018, the number will be 50%. By
2021, 90%. It is not a matter of whether as a
provider you WANT to participate by reporting
quality measures, it is a question of whether or
not you want to participate in MEDICARE at all."

The 30% of all Medicare reimbursements tied to
quality initiatives Dr. Lullove mentions is
hospital reimbursement, which has been payment-
affected by PQRS since 2013.

Payments made under the acute inpatient
prospective payment system (IPPS) alone totaled
$120 billion and accounted for about 25 percent of
all Medicare spending in 2013, and by regulation
was tied to quality, as Dr. Lullove says. The IPPS
consumption of CMS spending does not include other
entities than the independent practitioner, like
home health care, DME and drugs. I would guees the
remaining 5% not accounted for in Dr., Lulove's
statement might have been reimbursed to these

I could find no data to support that any of the
30% Dr. Lullove mentions was tied and targeted to
independent practice physicians. If 30% of all
Medicare spending has already been accounted for
by hospitals and related, the current tying and
targeting of reimbursement to quality initiatives
at 30% may still lay completely at the hospital

The implication that 30%, then 50%, then 90% of
reimbursement is slated to be tied to quality
measures does not particularly correlate to a
significant reduction in independent physician's
bank accounts, nor should it initiate a worry-fest
about compliance Armageddon.

That by 2021, 90% of Medicare payment will be
tied to quality initiatives does not mean anything
more than what we already know. Hospitals will be
tied as they already are, with more quality tied
to more reimbursement as we approach 2021.
Hospitals will account for the clear majority of
reimbursement-tied-to-quality Dr. Lullove mentions

For independent physicians, MIPS will start
sometime in the next year or two, and if you don't
comply, you'll lose 2% (whenever that starts),
then up to 9% at the end (whenever that is), of
straight Medicare (not Advantage) revenue for
ignoring the new combination of MU/PQRS/ MIPS, if
no changes are made to the law.

That payers have been tracking quality data
doesn't, in and of itself, portend a financial
mandate for MU/PQRS/MIPS compliance.

Measurement or no, the only penalty/reward plan
currently in place is Meaningless Use and PQRS for
independent physicians (then MIPS), so it doesn't
matter how long payers have been tracking the data
(it's been tracked since Medicare began), and how
it's tied to hospitals now.

Hospitals are capitated too, and have been. DRG
payment is capitation: one bulk payment tied to

Yes, CMS plans to move to "value" payment for all,
which is capitation in one form or another.
Commercial payers want to do that too, but it will
be easier for them to hang on to CMS's coattails
once CMS sets the rules. It's a complex issue,
with lots of moving parts.

So commercial payers won't lead the change to
value. Too expensive. They'll follow CMS. CMS
isn't late to the game. They're driving it. And
commercial payers are happy with that.

Still, doesn't matter at the moment for podiatry.
Measurement and the change to value payment are on
two different tracks, and will run independently
for a while. The changeover to value will likely
be pushed back a bit too, when it comes time to
actually pull the trigger.

Of course, there's always been capitation, rising
and falling over the years. Many podiatry
practices will escape much of the early move to
value, save for wound care, I think.

As penalties for MU, PQRS (MIPS) go, certainly a
9% reduction in Medicare payment by 20XX (after
delays) can be offset by the typical practice as I
mentioned in my last post. And, with not too much
effort, a practice owner could offset twice that
loss, with some focused internal work.

As regards the added incentive payment amounts Dr.
Lullove calculates in his post, if a practice
would indeed meet the thresholds for a positive
adjustment (9% eventually), and in addition be
eligible for a full 10% bonus, and there were no
other adverse actions taken to reduce CMS's
budget, I'd probably just respond with, "Hey, Dr.
Lullove, you're right. Never mind".

Can't do that.

Dr. Lullove's indication that the "10% incentive"
makes potential revenue loss un-recoupable, so
non-compliance is futile and a bad idea, is a bit

Dr. Lullove's inclusion of the 10% bonus in
addition to positive payment adjustments
references a finite $500 million pool, slated each
year from 2019 to 2024, to award “exceptional
performance” bonuses to MIPS providers with the
highest composite performance scores.

The 10% bonus isn't solidly 10%. The bonus is
awarded on a sliding scale up to 10%, added to the
base MIPS bonus. It is outside of the budget
neutrality requirement.

No metrics are yet available for how much
competition there might be for this bonus
incentive, but the pool is finite.

The number of players that make up the pool of
eligible bonus recipients, and how much Medicare
revenue each player has in the practice, will
affect that finite bonus pool.

If you played this game, but the $500 million was
eaten up by the multi-million dollar Medicare
practice players just ahead of you, would you get
paid anything??

If you look at ProPublica's metrics on utilization
of, and payment for, Medicare services, it
provides a quick 'n dirty way to see what that
competition might be.

Regardless, if a practice isn't working to its
revenue-generating, cost-waste saving potential,
the practice already experiences more loss than
that bonus might compensate.

Dr. Lullove correctly infers that the 10% bonus is
a loss. It IS a potential loss, just not a

It's not that there's an additional 10% loss
incurred in non-compliance to MIPS (or MU/PQRS).
It's potential "loss' of income never made.

Is it a "loss"? Sure. It's the same type of loss
you suffer because your cancellation rate is too
high, or you can't get new patients in within 24
hours. Or you code poorly. Or miss pathology
presentation. Or need an associate. Or, or, or...

It's financial loss due to not generating income
to your potential. It's not a loss you can see,
but loss via "income never made" is almost the
worst kind of loss. So I applaud Dr. Lullove for
bringing it up.

Is CMS's potential "incentive" loss "un-
recoupable", mandating compliance? No. Should you
do things in your practice to not keep losing
money you heretofore never made? Sure.

One could argue that not meeting practice revenue
and physician income "benchmarks" is a clear
demonstration of this same type of loss (and is as
egregious a loss as missing out on a sure-thing
"incentive" bonus).

On that basis, every practice that runs below
revenue "benchmarks" ($750,000 a year per FTE
podiatrist is the benchmark I use with my clients,
with up to 40% of their demographic as Medicare)
is experiencing this insidious loss every day.

Even 100% Medicare nail/C&C practices can generate
almost $500K a year, working 4 days a week, 4
hours a day, 48 weeks a year. No sweat. Is a
practice making less than this losing un-
recoupable revenue? Yep.

Should a 100% Medicare practice generating $500K a
year part-time work on MIPS compliance?
Absolutely. Plenty of time, no cognative drain day
to day, pretty good income per hour. Why not gain
a few points using a free EHR and some oversight?

However, using the potential "loss of income never
made" as a reason to justify compelled compliance
for the majority of podiatrists is a baseless

Setting a practice's potential loss at 37% of a
podiatrist's potentially increased income for non-
compliance is just bad math. I will say, if I am
incorrect, and by complying to MIPS and somehow
getting that 10% bonus means you'll increase your
gross revenue by 37%, please, please, go for it.
That's awesome math.

On the other hand, if I was going to address my
"income never made" loss as a practice, I would
look closer to home, to something I could control,
right now. Like not enough patients, or poor
collections, or cost waste. At least I'd know that
if I "complied" with appropriate practice
management strategies, I would gain revenue I
could keep.

Relying on the government to pay me to play their
game, instead of my game, makes me Charlie Brown
to CMS's Lucy with a football.

Compliance to government regulation is certainly
no guarantee you'll ever see a 10% bonus or a 9%
positive adjustment. Maybe they give it to you
then audit it away soon thereafter. Or pre-pay
audit it. Then there's budget neutrality.

MACRA is a budget neutral law. This means that
Medicare's ENTIRE BUDGET, including the pool of
money available for payment adjustment, is fixed
to a $20 million yearly variance, up or down.

If CMS's budget increases, e.g., through
utilization by more baby boomers, CMS will
decrease ALL reimbursement, including MIPS payment
adjustments, to achieve neutrality. It's the law.
Slices of the positive adjustment pie will be
smaller. So that 9% increase based on your
Medicare gross revenue may not ultimately be 9%.

That's before sequestration, still in effect.

As Dr. Lullove indicates, MACRA is a zero sum
game. If provider B in Dr. Lullove's example
outperforms provider A, Provider A gets a
decrease, and Provider B gets an increase.

One physician’s increase threatens the payment of
another, so bonuses and penalties offset each
other overall. But the maximum MIPS hit or reward
is subject to decreases on the reward side (and
lesser penalties if CMS is under budget) due to
budget neutrality.

That CMS has included in the MACRA law (Section
220) a statement ensuring aggressive investigation
and reduction of "over-valued" RVUs starting in
2017, is entirely another matter, but in this
context, can further reduce revenue gain from
positive MIPS adjustments and incentive bonus.
Reduce RVUs, reduce the payout, sneakily, and
under the radar. Clever boys.

As I previously mentioned, if you like compliance,
or must, for some cost-benefit reason, comply, do

I do not believe that compliance is financially
mandatory at this point, for most podiatrists. And
may never be.

As to Dr. Lullove's indication that participation
may be a "question of whether or not you want to
participate in MEDICARE at all", I submit that CMS
is not going to kill the ever-less-expensive
golden gooses of care delivery as Medicare rolls
shoot to highest ever with baby boomers. They're
aren't enough physicians, NPs, and PAs to take
that much risk.

Payers will sidle right up to whatever line you
draw, but they aren't stupid. They won't kill off
the majority. Just the weak. So be strongly
independent. Comply or ignore. Work your business.
But, no fear.

Pam Thompson, Thompson & Associates, Guerrilla

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