Alternative Payment Model Promises More Penalty Than Pay

Otolaryngologists and doctors across the country are being doused in an alphabet soup of new payment models and concepts, swimming through terms like CPIA, ACO, and MACRA.

One of the most important acronyms in the soup is MIPS, or Merit-Based Incentive Payment System. In the federal legislation that forever abolished the reviled sustainable growth rate (SGR) reimbursement formula, the MIPS, a new pay-for-performance program, was born.

The new financial realities hitting healthcare were discussed in a session on new payment models at the American Academy of Otolaryngology-Head and Neck Surgery’s Annual Meeting.

Under the MIPS, Medicare reimbursement for physicians will be a function of quality determined by the so-called Value-Based Payment Modifier (VBM) and the Physician Quality Reporting System (PQRS), along with resource use determined by the VBM, meaningful use of electronic health records (EHR-MU), and clinical practice improvement activities (CPIA).

Potentially big swings of reimbursement money are possible, said Robert Lorenz, MD, MBA, who co-chairs the American Academy of Otolaryngology’s Ad Hoc Payment Model Workgroup with Jane Dillon, MD, MBA. “You’ll see either an additional revenue of 4% to 9%, or a penalty of 4% to 9%, so [it is] a significant change in CMS funding over time,” he said.

But centers that participate in certain alternative payment models (APM) can opt out of the MIPS. “The problem is, we don’t know much about what CMS [Centers for Medicare and Medicaid Services] has in store for us with the alternative payment model,” Dr. Lorenz said. Centers using APMs will be required to take financial risk, use quality measures that are equivalent to those in the MIPS, and use an EHR.

Who Pays Out of Pocket for Medical Care?

Two nontraditional payment models were discussed in the session. In one, used by a group in Georgia, patients pay a flat fee for a whole package of care. The other, an “episode of care” model used in Arkansas, is a system in which physicians can be rewarded or penalized based on how their expenses compare to an average.

The first model, used for the past two years at Northwest ENT and Allergy Center in the Atlanta area, is designed to appeal to the uninsured and those with high deductibles.

Drew Locandro, MD, president of the center, called it “the most pure payment system ever devised.” Patients pay a guaranteed cash price for all of the care required for a certain procedure: the office consultation, in-office testing, surgeon fees, anesthesiologist services, facility services and supplies, and pathology lab fees. The cash package option is available for the most common ENT procedures, including tonsillectomy, septoplasty, and ear tubes.