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Ending Therapy Cap Rationing; Could a Merit-based Payment Incentive System Work?

Written by: Michelle Caldwell on Thursday, April 9, 2015 Posted in: Outpatient Rehab

MIPS Over Caps Could Prevent Rationing Care to Most Needy

If the Sustainable Growth Rate formula for physician payment in the Medicare program has been the object of criticism for unacceptable value-based methodologies, its repeal is certainly a positive step to providing some rationale for paying for needed healthcare. The Merit-based Payment Incentive System (MIPS), announced last month, will change Medicare payments under Part B. Could this new legislation provide insight to how outpatient therapy providers could be paid in the future?

MIPS will consolidate the Physician Quality Reporting System (PQRS), Value-based Modifier and “Meaningful Use” program for electronic health records (EHRs) starting in 2018. Currently, these programs impose penalties of at least 5 percent of Medicare payments for doctors who don’t participate or meet requirements. Under these programs, data collected has been used to craft the MIPS methodology for physician payments.

The legislation proposes sweeping changes targeting four key areas which will combine to adjust physician payments: quality, resource use, clinical practice improvement (including care coordination and improvement activities) and the meaningful use of certified EHR (electronic health record) technology. Composite performance scores will be used to annually evaluate every MIPS-eligible professional, which would result in the calculation of a MIPS adjustment factor and, when applied to a revised payment schedule, will determine that provider’s annual Medicare reimbursements. The Department of Health and Human Services (HHS) must publish a plan by May 1, 2015, for the development of quality measures for the incentive payment system and alternative payment.

Currently, outpatient therapy for Physical, Occupational and Speech-Language Therapy services are paid for based upon the published Physician Fee Schedule with total beneficiary payment limited to prescribed amounts set by law. This process has been renewed annually for the past eighteen years in attempts to control Medicare payment to outpatient therapy providers. The professionals and rehabilitation associations have argued that these arbitrary limits restrict access and availability of appropriate required care for Medicare patients, and serve only to ration therapy services without consideration of population need. The exceptions to the therapy cap have expired as of March 31, 2015, and unless the SGR Repeal is amended, the cap will remain fixed through 2017.

While considerable effort is underway, calling for the total repeal of the therapy cap, chances of that happening remains slim without sufficient methodology to control spending for outpatient therapy services.

Despite the recent study of outpatient practice and delivery of therapy services, an alternative payment methodology is not available, leaving policy makers stalemated in reaching any agreement in view of the spending risks associated with paying for therapy value.

If enacted, the SGR Repeal and Medicare Provider Payment Modernization Act could provide the framework for other Medicare professionals, including Outpatient Rehabilitation Service Providers. While therapist providers have been exempt from Meaningful Use incentives and represent but a fraction of the total Medicare spend, the $25 billion spent annually gives policy makers and legislators cause for concern when looking for places to cut the budget. Subjected to reporting requirements to substantiate payment and comply with regulatory mandates, data acquisition channels are developed sufficiently to collect quality, performance and outcome measures as required by a MIPS.

CMS identifies more than 40,000 therapists enrolled in and receiving Medicare Part B payments for outpatient rehabilitation services. Current estimates indicate another 25,000 providers (acute hospitals, outpatient centers, and corporate/group practices) bill Medicare for outpatient therapy services. Moving toward a merit-based payment system common to all providers would quickly demonstrate the value of these services while establishing the incentives for delivering effective and efficient care.

The Merit-Based Incentive Payment System would judge providers on quality, resource use, electronic health record use and clinical practice improvements. The risks associated with removal of the Therapy Caps, and collecting these data for 12 to 18 months, are most likely less than the costs associated with administering to a payment system by limiting care access and paying more when these needs go unmet.