Impact Insights

Week in Review 4/3/15

The SGR repeal bill passed by the House last Friday would have significant implications for EPs and federal incentive programs, according to an excellent article published in Modern HealthcareUnder the bill, a “merit-based incentive payment system” or “MIPS” would be implemented for ambulatory providers in 2019.  The MIPS would consolidate existing federal incentive initiatives – including meaningful use and PQRS – under a single umbrella.  Current penalties, such as the ones for failing to achieve meaningful use, would also be eliminated in 2019.  Instead, under the MIPS, physicians would receive a bonus payment or penalty based on their total score across four different performance areas (only one of which would pertain to meaningful use of certified EHR technology).  The maximum bonus or penalty would start at 4% of Medicare reimbursement in 2019 but would increase to as much as 9% in 2022.  The categories and weights that would make up a provider’s MIPS score are below:

Components of Scoring Under the Merit-Based Incentive Payment System (MIPS)


As Modern Healthcare points out, the weights of the performance areas could actually change over time though.  For example, if 75% of EPs are achieving MU, the weight of that category could drop from 25% to 15%.

The bill also includes a provision that would make it a “national objective” to achieve “widespread exchange of health information through interoperable certified EHR technology nationwide by December 31, 2018.”  See the Impact Advisors Week in Review blog post from 3/20/15 for more information.

To become law, the bill still has to be passed by the Senate and signed by the President.  The Senate is expected to take up the bill when they get back from a two-week recess on April 13th.

Impact Advisors’ Thoughts:  This change would definitely be big news, and Modern Healthcare really does an excellent job summarizing the details and implications.  A few thoughts and takeaways of our own though:

  • The “merit-based incentive payment system” in the SGR repeal bill would only apply to EPs (outpatient providers), not to hospitals.  There may very well be a comparable bill from Congress down the road that would similarly consolidate incentive and quality programs on the inpatient side – but for now the MIPS would just be for EPs.
  • The bill would not eliminate meaningful use requirements, but it would certainly reduce the pressure on some EPs to meet them.  On the surface, that is not necessarily a bad thing, given the (fairly justified) feeling among providers that MU requirements are increasingly cumbersome and overly-prescriptive.  However, could it also have the unintended consequence of decreasing motivation to actually use the capabilities in certified EHRs, and to invest time designing workflows that maximize the benefits of new functionality from vendors?
  • Ultimately, the long-term impact of the MIPS (assuming the SGR bill passes the Senate) depends almost entirely on how HHS fleshes out the requirements and how the agency goes about actually administering the law.  For context, CMS and ONC have literally published thousands of pages in the Federal Register about meaningful use requirements – but the law that Congress originally passed to establish the EHR incentive program took up only a handful of pages in the 2009 stimulus bill.  So the bottom line is there is a LOT that can – and does – happen in the time between when Congress passes a law and HHS actually implements it in practice.


According to a new report on M&A from Irving Levin Associates, 2014 was an “unusual year” in healthcare, with M&A in nearly every services segment (!) increasing from the previous year.  Among the sectors with more mergers and acquisitions in 2014 include:

  • Behavioral Health Care
  • Home Health & Hospice
  • Hospitals
  • Managed Care
  • Physician Medical Groups, and
  • Rehabilitation and Other Services.

The only segment that saw a drop in mergers and acquisitions between 2013 and 2014 was “Laboratories, MRI & Dialysis” – which declined 8%.

Impact Advisors’ Thoughts:  The increase in M&A doesn’t just affect the organizations involved in an event.  As activity increases, there is also considerable pressure – and uncertainty – for smaller, stand-alone organizations that are not part of a merger or acquisition, especially if they are already struggling to compete in their market.