Practice Area

CMS Payment Models & Reimbursement Policy


After years of talking about paying physicians for performance instead of volume, the Centers of Medicare and Medicaid Services (CMS) has recently proposed regulations (the “Proposed Rule”) that will place greater emphasis on quality indicators. The Proposed Rule has been promulgated to implement the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and provides details on two key provisions of MACRA – the Merit-Based Incentive Payment System and the Advanced Alternative Payment Models. Data reporting under these systems will begin during the 2017 calendar year with providers first receiving payments based on this reporting in 2019.

Merit-Based Incentive Payment System (MIPS)

MIPS is a four-part program that will replace and supplement the current Physician Quality Reporting System (PQRS) and the Meaningful Use Program. Based on the composite score generated by a provider through MIPS, the provider will experience an upward or downward adjustment (initially up to 4 percent in either direction, with this percentage increasing over time.) Medicare fee-for-service reimbursements based on the comparison of the provider’s scores to MIPS is designed to be more streamlined and flexible than the predecessor programs and to provide greater opportunities for providers in different specialties to report on measures which are meaningful to the provider’s particular specialty. The four components of MIPS are as follows:

  • Quality
    • Initially comprising 50 percent of the total MIPS score, the quality component replaces the current PQRS system. Providers will select and report on six quality measures out of a total of 200 measures, 80 percent of which will be tailored to different medical specialties. This is a reduction from the nine quality measures currently required for PQRS reporting.
  • Advancing Care Information (ACI)
    • Initially comprising 25 percent of the total MIPS score, ACI replaces the Meaningful Use Program. Like the adjustments between PQRS and the Quality metric described above, ACI will require providers to report on fewer measures and will expand the number of available measures, including several specialty-specific measures. All providers will be required to attest to having completed a security risk assessment as required by the HIPAA regulations. Most important, ACI will eliminate the “all or nothing” compliance standard featured in the Meaningful Use Program, thereby allowing providers to demonstrate partial compliance while earning some points toward the composite MIPS score.
  • Clinical Practice Improvement Activities (CPIA)
    • Initially comprising 15 percent of the total MIPS score, providers will report on practice improvement activities such as care coordination, expanded practice access, and patient safety. There will be more than 90 options to amass a total of up to 60 points, with certain options (such as participating in a patient-centered medical home) being weighted more heavily than other activities.
  • Cost
    • Initially comprising 10 percent of the total MIPS score, the cost metric will be solely based on Medicare claims data.

The Proposed Rule provides for MIPS data to be collected through third parties such as Qualified Clinical Data Registries or other certified vendors.

Advanced Alternative Payment Models (Advanced APMs)

The Proposed Rule provides for additional incentive payments for providers (including physicians, physician assistants, nurse practitioners, clinical nurse specialists and CRNAs) who participate in Advanced APMs. An Advanced APM is a recognized program whereby clinicians accept financial risk and use certified EHR technology while providing high quality and coordinated care. For 2017 the following programs have been recognized as qualified Advanced APMs:

  • Comprehensive End Stage Renal Disease Care Model
  • Comprehensive Primary Care Plus
  • Medicare Shared Savings Program – Tracks 2 and 3 only
  • Next Generation ACO Model

In addition, Oncology Care Model Two-Sided Risk Arrangement will become available in 2018. CMS will update the list of programs qualifying as Advanced APMs on an annual basis. The Proposed Rule will not make any changes to these pre-existing programs.

If a provider is receiving a sufficient percentage of payments through the Advanced APM and is treating a sufficient number of patients in each year (the required percentages will vary year-to-year), the provider will be exempt from the MIPS reporting requirements discussed above. Providers will, however, need to report through the MIPS program for at least the first year to determine whether they qualify for payments under Advanced APMs.

What’s Next?

As of publication, these regulations are only in proposed form. CMS is accepting comments on the Proposed Rule through June 27, 2016, with final regulations expected this fall.

We will continue to monitor the development of these programs. Your Houston Harbaugh attorney can assist you in determining how you can benefit from these programs. To schedule a consultation with an attorney, contact our firm online or call us directly at 412-281-5060.

CMS Reimbursement Policy

The Centers for Medicare and Medicaid Services (CMS) recently finalized changes to the reimbursement policy for laboratory tests for Calendar Year 2018. The date of service (DOS) policy, or the “14-day rule” as it is commonly referred to in the laboratory industry, governs who can seek reimbursement from Medicare for clinical laboratory diagnostic tests (CLDTs) conducted on stored specimens. The revisions to the DOS rule will have a significant impact on the relationship between hospitals and laboratories that perform certain advanced diagnostic tests.

The DOS Policy

Generally, CMS bundles the payment for a laboratory test with the payment for a hospital service if the date of service for a laboratory test falls during an outpatient or inpatient stay. The default date of service for a laboratory test is the date the specimen was collected. However, the DOS rule is an exception to this policy. The exception allows a clinical laboratory to move the date of service to when a test is actually performed on the specimen if certain criteria are satisfied. By moving the date of service of the test, the laboratory is able to bill Medicare directly for the service, rather than the hospital.

Specifically, the DOS policy allows a clinical laboratory to seek reimbursement from Medicare for a test conducted on a stored specimen collected during a hospital surgical procedure when the test is ordered at least 14 days following the patient’s discharge from the hospital. If the test is ordered prior to 14 days from the patient’s discharge, however, the payment for the clinical laboratory test is bundled with the hospital payment. When enacting the 14-day rule, CMS expressed concerned that only tests that could be “legitimately distinguished” from the care a beneficiary received in the hospital should be reimbursed directly by Medicare. CMS explained that it would be difficult to make this determination if the test was ordered within 14 days of the patient’s discharge.

Critics of the DOS policy, however, have argued that such a framework requires hospitals to bill for services that they do not provide and are unrelated to the care the patient receives in the hospital setting. Additionally, the policy has proven administratively challenging for clinical laboratories, which must determine whether the particular test was collected during a hospital surgical procedure and whether it was indeed ordered 14 days following the patient’s discharge. Reimbursement can be further complicated given CMS’s decision to delegate the interpretation of such DOS policy provisions to the Medicare administrative contractors. This patchwork regulatory scheme can be confusing for clinical laboratories operating in multiple jurisdictions, which may face different reimbursement rules depending upon the jurisdiction in which they are seeking payment for a clinical laboratory test.

The New Exception

The revised DOS policy will allow clinical laboratories to seek reimbursement from Medicare directly for certain advanced laboratory diagnostic tests (ALDTs) and molecular pathology tests. Effective January 1, 2018, clinical laboratories will bill Medicare directly for these laboratory tests conducted on specimens collected during a hospital outpatient encounter, but which are performed after the outpatient has been discharged from the hospital. To qualify as an ALDT under the new exception, the test must be (i) a CLDT covered under Medicare Part B, and (ii) offered and furnished by a single lab that uses a proprietary algorithm to analyze multiple biomarkers of DNA, RNA or proteins to predict the probability a specific individual patient will develop a certain condition or respond to particular therapy. Additionally, the ALDT must also provide “new clinical diagnostic information” that cannot be obtained from another test.

Unlike the original DOS rule, a laboratory’s ability to bill Medicare directly for a qualifying ALDT under the new exception will no longer depend on when the test was ordered. Laboratories may seek reimbursement directly from Medicare for such tests conducted on samples obtained from a hospital outpatient after the outpatient’s discharge, regardless of the amount of time that has elapsed from the date that the test was ordered. For those tests that do not qualify as an ALDT however, the original DOS exception will still apply. In those instances, laboratories will only be able to receive reimbursement directly from Medicare if the test is ordered at least 14 days after a patient’s discharge from the hospital.

The new DOS policy will ease some of the challenges that clinical laboratories face when seeking reimbursement for certain advanced diagnostic tests. Going forward, laboratories may more easily obtain payment for these diagnostic tests without the difficulties associated with seeking payments from hospitals.

If you have questions about Medicare or Medicaid payment or reimbursement, call Houston Harbaugh at 412-281-5060 to schedule a consultation with one of our health care attorneys. You can also reach us by emailing the firm using our online contact form.