Insight, analysis & opinion from Joe Paduda

< Back to Home


Medicare doc payment – the details

My post earlier this week on the pending changes to provider reimbursement resulted in a few emails from colleagues looking for clarification and more detail.  So, here goes.

First, why?

Well, everyone agreed that the Medicare doc payment program known as Sustainable Growth Rate (SGR) that had been in place for decades was not working. Details here.

And, CMS – as well as pretty much everyone in health policy not tied to a specialty medical society – wanted increased reimbursement for cognitive services, and lower payments for procedures – surgeries, imaging, etc.

So, in 2015 Congress repealed SGR and replaced with Medicare Access and CHIP Reauthorization Act (MACRA) (you can now forget what MACRA stands for.  The highlights are, MACRA;

  • Still uses CPTs and reimbursement based on RBRVS system
  • Tosses out the old quality evaluation metrics and methodology, replacing it with one that seems more doc-friendly.
  • The evaluation system is MIPS – Merit-based Incentive Payment System, and includes a value-based payment modifier, physician quality reporting system, and meaningful use of Electronic Health Records
  • MIPS goes into effect in 2019, using data from 2017 and 2018 to evaluate provider performance.  CMS expects docs who score high will get bonuses of 4 – 9% over the next five years.
  • Provides for an annual payment increases of 0.5% thru 2019, then frozen till 2026
  • Then .75% increase for APM providers (see below) and .25% for others

While those increases may seem pretty small, it’s important to understand that these are on the margin.  That is, the extra payments may well double – or even triple, the profit margin for providers.  Conversely, for providers that don’t meet standards, profits (or margins for not for profits) may hit zero.

What is the hoped for result?

With APM reimbursement going into effect in 2019, MACRA is intended to drive docs from fee for service (FFS) into a merit-based, quality-driven reimbursement system.  However, participation in the Alternative Payment Model s not mandatory; and CMS’ expectation is the vast majority of docs will NOT be in APMs, even though APMs (which include) Medical Homes, ACOs, etc) can get lump sum bonuses of 5% from 2019 – 2024; after that reimbursement increases 0.75% annually.

What does this mean for workers’ comp?

RBRVS stays around, which is key as almost all provider fee schedules are based on RBRVS.

Providers are going to work very hard to meet CMS’ quality standards, regardless of whether they choose to stay with MIPS or go to APM.  They have to; their financial viability is dependent on it.

5 thoughts on “Medicare doc payment – the details”

  1. I’m still wondering whether this will be a positive or negative impact on the quality of care injured workers receive. If a provider is earning bonuses from CMS, I would assume that would positively impact the quality of care for workers’ comp patients as well. I think these providers are going to start expecting bonuses from workers’ comp payers as well. Do payers have the ability to measure and reward meaningful metrics?

    I’m also concerned that those providers who don’t get bonuses, will start looking around for alternative payers. Would sure hate to see that workers comp becomes the most lucrative market for sub-par providers.

    1. Don’t know what state you’re in, Jennifer, but here in Florida, work comp is the most lucrative market for providers.

  2. So for an orthopedic surgical practice will this mean that the blend of workers comp versus other insurance will change? Do All outcomes have to be reported for quality indicators, Workers Comp and Other insurance? I know that for Board recertification the surgeons divide their report out between Workers Comp outcomes and Other insurance. Interesting, as this update just opens up a lot more questions on how the practices are going to focus. We already have plenty of providers that no longer do workers comp. I have one provider that still does not even use EHR, he does only comp, so he dictates and the chart is on paper. May we live in interesting times!

  3. Thanks for writing this. So, basically, Medicare Part B providers get the amount they would have received under the RBRVS system BUT have that amount multiplied by some value ultimately getting from 0.91 to 1.09 from 2 years earlier depending on how they score. Won’t this increase the incentive to get lots of volume?

    1. Sean
      I’m not sure the multiplier will alter utilization incentives, however the quality and other measures are designed to at least partially address this.

Comments are closed.

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



© Joe Paduda 2023. We encourage links to any material on this page. Fair use excerpts of material written by Joe Paduda may be used with attribution to Joe Paduda, Managed Care Matters.

Note: Some material on this page may be excerpted from other sources. In such cases, copyright is retained by the respective authors of those sources.