Regulatory Changes for 2017


Quality Payment Programs

By Alpha Lillstrom Cheng, JD, MA
July 7, 2017

As you know, the Centers for Medicare & Medicaid Services (CMS) is responsible for developing, proposing, and finalizing regulations in order to implement health care–related legislation that has been passed by Congress and signed into law. On behalf of the more than 4,200 members of the Private Practice Section, PPS regularly analyzes and provides stakeholder input in the form of “comments” to proposed rules that pertain to private practice physical therapy.

In recent years, payment for services provided to Medicare beneficiaries has been moving away from the standard fee-for-service model and toward payment on the basis of quality; therefore, regulatory proposals relevant to the practice of, and payment for, physical therapy care have increased in number and complexity. This year three such rules will go into effect. In the March issue of Impact, this column covered changes in the 2017 Medicare Physician Fee Schedule (MPFS) relevant to payment adjustments for physical therapists paid under the fee schedule. In the June issue, I discussed the planned expansion of the Comprehensive Care for Joint Replacement (CJR) bundling program and the impact this policy could have on physical therapists in private practice. Below I will describe the implementation of the Quality Payment Program (QPP) which seeks to reconfigure quality reporting into a new comprehensive program that will reward value and the outcomes of care.

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) abolished the sustainable growth rate (SGR) formula for Medicare provider compensation and required the gradual shift of Medicare reimbursement from fee for service to pay for performance. Charged with implementing MACRA, CMS published the final rule with comment period on November 4, 2016.1

Until MACRA, Medicare measured the value and quality of care through a patchwork of programs. Most clinicians participated in one or more programs such as the Physician Quality Reporting System (PQRS), the Value Modifier program (VM), and the Medicare Electronic Health Record (EHR) Incentive Program. With the passage of MACRA, Congress streamlined these various programs into a single framework in order to transition from volume-based payments to payments based on value and quality. This rule implements these changes through the QPP, which rewards value and outcomes through one of two paths—the Merit-Based Incentive Payment System (MIPS) or participation in Advanced Alternative Payment models (APMs).

CMS expects the QPP to reward the delivery of high-value patient care through rules that “emphasize high-quality care and patient outcomes while minimizing burden on eligible clinicians while also being flexible, highly transparent, and able to improve over time with input from clinical practices.”2 The rule went into effect for physicians on January 1, 2017, but for this first year, a provider can begin any time between January 1 and October 2, 2017.3 “The first payment adjustments based on performance go into effect on January 1, 2019.”4

In response to comments submitted by PPS and other stakeholders, CMS provides additional flexibility to the program so that providers may “participate in a way that is best for them, their practice, and their patients.”5 CMS states that “the bedrock of the QPP is high-quality, patient-centered care followed by useful feedback, in a continuous cycle of improvement.”6 Furthermore, CMS expects that “over time, the portfolio of quality measures will grow and develop, driving towards outcomes that are of the greatest importance to patients and clinicians.”7

Physical therapists are not currently required to participate in MIPS, but the Secretary of Health and Human Services (HHS) has the authority to add them to the program as early as 2019. As the policies evolve, PPS will continue to provide perspective and feedback to CMS. We anticipate that the parameters for applying MIPS to physicians and the clinicians in this first group will provide insight into how the program will develop and expand.


Merit-Based Incentive Payment System
Restricted by statute, only physicians, physician assistants, clinical nurse specialists, and certified registered nurse anesthetists are to participate in the QPP through MIPS for the first two years.8 CMS “intends to consider using its authority to expand MIPS to other additional Medicare providers.”9 Beginning with performance year 2019, the MIPS program may be broadened to include physical and occupational therapists, speech-language pathologists, and audiologists, to name a few. Meanwhile, the transition to the MIPS also included eliminating the PQRS program; therefore, physical therapists have been left with no specific reporting mechanism that would enable them to obtain a Medicare bonus. Consequently, PPS formally urged CMS to include physical therapists in MIPS as soon as possible. CMS says it will take the suggestion into consideration when “expanding the definition of a MIPS eligible clinician for year three.”10 In the meantime, CMS reiterates its invitation for any clinician—including physical therapists—to voluntarily report on measures and activities under MIPS to become accustomed to and learn from the process.11

MIPS eligible professionals will be evaluated and reimbursed by CMS for providing high-value care based on their performance in four categories: quality, advancing care information (the use of electronic health records [EHRs]), clinical practice improvement activities performance, and resource use.

Eventually, CMS will require clinicians to report up to six measures from a range of sanctioned options that seek to accommodate the differences among specialties and practices. From the outset, this reporting must include at least one outcome measure if available.12 MACRA requires HHS to establish an annual list of quality measures (published no later than November 1 of the year prior) “from which MIPS eligible clinicians may choose for purposes of assessment for a performance period.”13 Seven high-priority outcome measures for physical therapy have been sanctioned by CMS for reporting in CY 2017.14 These seven functional status measures were submitted by Focus on Therapeutic Outcomes (FOTO) to the National Quality Forum (NQF), which subsequently issued its endorsement. They are measures of functional status change for patients with knee impairments (217); hip impairments (218); foot and ankle impairments (219); lumbar impairments (220); shoulder impairments (221); elbow, wrist, and hand impairments (222); and general orthopedic impairments (223).15

Advancing Care Information
Despite PPS’s comments, CMS still considers the use of certified electronic health record technology (CEHRT or EHR) to be a core element of MIPS, “valuing it at 50 percent of the overall score.”16 As readers may know, the federal government provided substantial financial incentives for physicians to adopt EHRs; therefore, it is no surprise that CEHRT is a strong and central component of the QPP. For physical therapists, who were not included in the program to assist professionals in adopting CEHRT, this is likely to remain an obstacle. CMS responds to PPS’s concerns that clinicians will have a spectrum of experiences with EHRs by hinting that there could be flexibility when considering how “clinicians would be scored for each performance category in future rulemaking.”17

Clinical Improvement Activities
The “Improvement Activities Performance” category is intended to reward clinical practice improvements that have a proven association with better health outcomes. The focus is on activities such as care coordination, beneficiary engagement, population management, and health equity.18 CMS provides a list of improvement activities that they have assigned the highest point value.19 This category will be given 15 percent weight for the overall MIPS score.20

In addition to the challenge of envisioning how the improvement activities can be applied to physical therapists, PPS and others suggested requiring fewer activities to be reported. In the final rule, CMS reduces the requirement to “no more than four medium-weighted activities, two high-weighted activities, or any combination thereof.”21 For clinicians practicing in rural or medically underserved areas, this minimum requirement is reduced by half.22

PPS also requested that CMS work with physical therapists to ensure that when the time comes, appropriate and relevant activities are sanctioned. Throughout the final rule, CMS states it will consider these recommendations when considering expanding the definition of a MIPS eligible clinician and preparing for the “operationalization of the expanded definition.”23

Resource Use
While the clinician’s performance in this resource use (cost) category will not be scored during the first year, CMS intends to increase the category’s score up to “the 30 percent level required by MACRA by the third MIPS payment year of 2021.”24 The CY 2017 cost category evaluation also includes 10 episode-based measures, including three under the CJR model. Those MIPS eligible providers who participate in the CJR model for total hip arthroscopy, total knee arthroscopy, or the surgical hip/femur fracture treatment episodes25 will have their cost evaluated using these measures.26


Feedback Reports
Beginning in performance year 2018, CMS plans to provide feedback on an annual basis to MIPS participants.27 CMS also intends to “provide informative performance feedback to clinicians who voluntarily report to MIPS, which would include the same performance category and final score rules that apply to all MIPS eligible clinicians.”28 It is unclear what kind of feedback the agency will provide to volunteer participants to whom many of the elements of MIPS do not apply.

Low-Volume Threshold
MACRA preemptively exempts from participation eligible providers who have a low volume of Medicare patients. CMS originally suggested that providers “billing charges less than or equal to $10,000 AND provides care for 100 or fewer beneficiaries” be exempt. PPS pointed out that under that proposed definition, some private practice physical therapists could surpass those thresholds after treating only a few complex patients, thereby setting up a perverse incentive and potential restriction of access for those who need care the most. CMS agreed, and allowed for the low-volume threshold exemption to be granted if only one of these conditions is met.29 The final rule revises the low volume threshold as “less than or equal to $30,000 in Medicare Part B allowed charges OR less than or equal to 100 Medicare patients.”30

Advanced Alternative Payment Models
Using new tools created by the Affordable Care Act (ACA), some Medicare clinicians participate in alternative payment models (APMs) such as Accountable Care Organizations and the Medicare Shared Savings Program. These APMs can be organized around a specific clinical condition, care episode, or population, and provide bonus payments for high-quality and cost-efficient care.31 Then MACRA incentivized “Advanced APMs”—a subset of APMs in which practices can earn more in exchange for accepting risk related to their patients’ outcomes.32 Clinicians who are members of Advanced APMs are exempt from MIPS reporting requirements. It is important to note that many clinicians who participate in a standard APM may not meet the law’s requirements for sufficient participation in advanced APMs to earn bonus payments; therefore, CMS intends to make it easy for clinicians to switch between MIPS and the Advanced APM components of the QPP based on what works best for them and their patients.

There is no requirement that all participants be MIPS eligible clinicians; therefore, a physical therapist could be part of an Advanced APM. To make it easier for physical therapists to participate, PPS recommended that CMS certify more existing payment models such as CJR and Bundled Payments for Care Improvement (BPCI) as Advanced APMs. There are currently seven Advanced APMs, one of which is the CJR bundled payment model.33

A final obstacle is that both standard and Advanced APMs are required by CMS to use EHR. PPS not only encouraged CMS to revise the current criteria for Advanced APMs to include gradual phase-in of EHRs but also argued for a waiver of this requirement for providers who were not previously incentivized to use EHRs. The final rule remains unchanged, citing MACRA’s requirement that all participants use CEHRT.34

CMS launched a Quality Payment Program website to explain the new program and help clinicians easily identify the measures most meaningful to their practice or specialty. MIPS is expected to continue to evolve over multiple years. CMS readily admits that the “iterative learning and development period will last longer than the first year of the program . . . therefore [they] envision that CY 2018 to also be transitional in nature to provide a ramp-up of the program.”35 Keep in mind that this rule was written by the HHS staff under the Obama Administration and that CMS anticipates “making proposals on the parameters of this second transition year through rulemaking in 2017.”36 It is unknown how extensively the current Administration and Secretary Price will modify the trajectory of the QPP, and whether or not physical therapists will begin to be included in 2019.

We will continue to work with CMS to ensure that this evolving program is hospitable for private practice physical therapists at the time they are required to participate. In the meantime, you may choose to voluntarily participate as a way to familiarize yourself with the program. Should you do so and experience challenges, please let us at PPS know so what we may convey your concerns to the Administration.


1. CMS-5517-FC: Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models.

2. Ibid., p 77009.


4. Ibid.

5. CMS-5517-FC, pp 77010.

6. Ibid., p 77010.

7. Ibid., p 77010.

8. Ibid., p 77036.

9. Ibid., under section 1848(q)(1)(C)(i)(II) of the Act, pp 77036.

10. Ibid., p 77038.

11. Ibid., p 77038.

12. Ibid., p 77114.

13. Ibid., p 77136.

14. Table A: Finalized Individual Quality Measures Available for MIPS Reporting in 2017, Ibid., pp 77594-77598.

15. Ibid., pp 77594-77598.

16. Ibid., p 77015.

17. Ibid., p 77139.

18. Ibid., p 77177

19. Table 26—Finalized Improvement Activities Assigned the Highest Points, Ibid., pp 77312-77313.

20. Ibid., p 77179.

21. Ibid., p 77185.

22. Ibid., p 77188

23. Ibid., p 77039.

24. Ibid., p 77166.

25. The expansion of CJR to include surgical hip and femur fractures was delayed until October 2017. It could be delayed again.

26. Table 7—Episode-Based Measures Finalized for the CY 2017 Performance Period, Ibid., p 77174.

27. Ibid., p 77015.

28. Ibid., p 77038.

29. Ibid., p 77063, 77066

30. Ibid., p 77063.


32. Ibid.

33. Ibid.

34. CMS-5517-FC, p 77013.

35. Ibid., p 77011.

36. Ibid., p 77011.


Alpha Lillstrom Cheng, JD, MA, is a registered federal lobbyist working with Connolly Strategies & Initiatives, which has been retained by PPS. An attorney by training, she provides guidance to companies, nonprofit organizations, and political campaigns. For six years, she served as Senior Policy Advisor and Counsel for Health, Judiciary, and Education issues for Senator Jon Tester (Montana), advising and contributing to the development of the Affordable Care Act, as well as working on issues of election law, privacy, government transparency, and accountability. Alpha has also directed Voter Protection efforts for Senators Bob Casey, Al Franken, Russ Feingold, and Mark Begich. She was Senator Franken’s Policy Director during his first campaign and was hand-picked to be the Recount Director for his eventual 312-vote win in 2009.

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