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Practice Matters
Success Strategies for MIPS Cost Category



A PHYSICIANS COSTS will account for 10 percent of his or her total MIPS score in 2018; next year, it may account for up to 30 percent.

How can neurologists benefit the most from the Merit-based Incentive Payment System? An expert offers tips for gaining the best value.

The formula that the Medicare program uses to calculate physician pay will be changing incrementally as the Quality Payment Program, now in its second year, continues to evolve. This year's big change: the introduction of “cost” as a component of the Merit-based Incentive Payment System (MIPS) formula.

The Quality Payment Program, established to reward physicians based on their performance, has two tracks: the MIPS and Advanced Alternative Payment Models (A-APMs). Most neurologists participate in the MIPS program, which is where the cost category applies.

Medicare didn't figure cost into its formula in the first year because its leaders thought physicians were not ready to manage costs, said Eric Cheng, MD, MS, FAAN, chief medical informatics officer for University of California, Los Angeles (UCLA) Health Sciences and associate professor of neurology at the David Geffen School of Medicine at UCLA. But the goal of Medicare's new payment approach is to improve the quality of care while reducing cost, so that was only a temporary reprieve.

“This is expected to be one of the most important categories as the weight (of the cost category) increases with time at the expense of some of the other categories,” said Dr. Cheng, a member of the Academy's Practice Management and Technology Subcommittee.

Indeed, a physician's costs will account for 10 percent of his or her total MIPS score in 2018; next year, it may account for 30 percent at the discretion of CMS. The financial consequence comes two years later: Physicians with the highest MIPS scores in 2018 will receive a positive payment adjustment in 2020; those with low scores may receive a penalty of up to 5 percent of total Medicare pay that year.


Unlike the other categories of the MIPS score — quality, improvement activities, and electronic communications — neurologists don't have to submit any cost data to CMS. The agency calculates the score using Medicare Part A and Part B claims.

The score uses two metrics:

  • Medicare Spending Per Beneficiary, a term used to describe the costs between three days before a hospital admission to 30 days after discharge. Those costs are assigned to the physician who provides the most care for the patient during the hospitalization.
  • Total Per Capita Costs. In this metric, Medicare attributes each patient to a primary care provider if, indeed, the patient visited one during the year. For those patients who were treated only by specialists, the patient's costs will be assigned to the specialist who provided the largest share of primary care services. (For practical purposes, this will be the specialist who made the most office visit claims for that patient during the year.)


Although CMS does the calculation, neurologists have three opportunities to make sure their MIPS cost score is the best it can be, Dr. Cheng said.

Verify your specialty. Check Medicare's Physician Compare website to make sure you are listed as a neurologist. Being misclassified as a primary care provider — which could denote a specialist in general practice, family practice, internal medicine, or geriatric practice — will lead to patients being attributed to you inappropriately. That will result in an inaccurate calculation of your Total Per Capita Costs metric.

Be a high-value neurologist. One of Medicare's overarching goals is to incentivize clinicians to provide proactive preventive care that reduces avoidable hospitalizations because the hospital is, by far, the most expensive care setting.

Preventing a patient with seizure disorder from needing an emergency department visit, a stroke patient from a recurrence, or a multiple sclerosis patient from falling translates into fewer hospitalizations. “Those types of things are super-costly and they really add up,” Dr. Cheng said.

This is how the MIPS payment approach incentivizes providers to think more broadly about the total cost of patient care than they needed to under the old fee-for-service system. Even if a neurologist spends a bit more time and money providing proactive care, he said, the costs will pale compared to that of an ED visit and hospitalization.

“Anything you can do to prevent that from happening is probably in alignment with what the patient wants and what Medicare wants,” Dr. Cheng said.

Document and code appropriately. CMS will use several risk-adjustment variables, including age, sex, dual-eligibility for Medicare and Medicaid, geographic location, and patients served by a teaching hospital.

But it will not adjust for specialty or for severity of a patient's condition. “All strokes are considered equal,” Dr. Cheng said, because Medicare has no way of distinguishing a minor stroke from a severe one.

However, CMS will consider the comorbid conditions that add to the complexity of patient's care, which is where its Hierarchical Condition Category (HCC) codes come into play. Each HCC — about 80 codes that identify conditions like alcoholic cirrhosis, morbid obesity, and late-stage kidney disease — is associated with a relative value that increases the payment for a given patient's care.

For example, coding for “epilepsy associated with specific stimuli” or “epilepsy resistant to treatment” informs CMS that a patient's condition is more complicated than that of a patient without those comorbid conditions and, thus, may be more costly to treat.

An HCC code can only be appropriately used if that condition figures into a clinician's decision-making and the condition is documented in the patient's medical record every year. Thus, a neurologist might appropriately use an HCC for a patient but a cardiologist treating that same patient should not because the comorbidity did not influence treatment decisions.

The codes are routinely used in Medicare Advantage claims, but they are controversial because some Medicare Advantage health plans have been accused of “upcoding” to inappropriately increase their revenue from the Medicare program.

Thus, many providers may be reticent to use HCC codes for fear of an audit and penalties. Dr. Cheng said neurologists must understand the HCC categories so they document appropriately, which is the only way coders can code accurately — because providers are concerned about CMS audits over their use of these codes, even though the codes support higher revenue for the MA plan, rather than the physician.

For example, if a neurologist treats a patient with epilepsy with a drug that also treats depression, the patient's depression needs to be documented and the HCC code should be used.

“That is something that influenced your medical decision-making, and it made that patient a little more complicated than someone without depression,” he said. “This is only way that Medicare can learn that one patient is sicker than the other.”