Payment Reform Glossary
We compiled a list of common payment reform terms to provide assistance as you make decisions regarding your practice.
Patient Protection and Affordable Care Act (ACA) – Also known as “Obamacare,” this law reformed much of the health care system and created several programs on which MACRA builds.
Advancing Care Information (ACI) – ACI is the new term for meaningful use under MIPS.
Accountable care organization (ACO) – ACOs are groups of doctors, hospitals, and other health care professionals who provide coordinated high-quality care to the patients they serve. Coordinated care helps ensure that patients get the right care at the right time with the goal of avoiding unnecessary duplication of services and preventing medical errors. When an ACO succeeds in both delivering high-quality care and spending health care dollars more wisely, it will share in the savings it achieves for the payer. While ACOs are predominantly a Medicare initiative, some state Medicaid programs have launched their own models, sometimes with slightly different names.
Alternative payment model (APM) – Alternative payment model is a catchall term for payment that is not based solely on fee-for-service. APMs may include episode groups (also referred to as bundled payments), shared savings, or full capitation. APMs typically have some level of financial risk built in. Some models have upside risk, others have downside risk, and some have both (two-sided risk). Upside risk in payment models allows physicians to share in savings with no potential for losses, while downside risk places the physician at financial risk for losses. Most APMs also have a quality measurement component.
Shared savings programs typically set financial (and frequently quality) benchmarks that physicians must meet in order to receive a portion of the savings they generated for the payer. Shared savings usually mix fee-for-service payments billed at the time of service with data aggregated over some time span and then retrospectively reconciled. Any shared savings would be distributed. In upside-only models, there is no penalty for missing these targets, but in two-sided risk models, physicians would have to refund the payer based on the incurred losses.
Full capitation provides a set amount per patient that a payer will give to a physician to deliver and manage the patient’s care. Typically, the capitated amount is given on a monthly basis, and is known as a per member per month payment. The capitation is usually risk adjusted based on the patient’s health conditions and sometimes also adjusted for sociodemographic factors that influence health but are out of the control of the physician. Physicians are responsible for all of the care costs that a patient incurs even if costs exceed the capitated rate.
Episode groups can either be based on a procedure or a condition. Procedure-focused episode groups are more popular because they have clear starting points and natural end points. Condition-focused episode groups, on the other hand, can be harder to define, particularly for chronic conditions because of their ongoing nature. Some condition-focused episode groups focus on acute exacerbation of chronic conditions. While difficult to develop and implement, condition-focused episodes will help the health system move to value-based care because they do not incentivize one type of procedure or treatment.
Advanced APM – Under MACRA, advanced APMs are alternative payment models that meet the following criteria: the statutory definition of an APM, a minimum of 50% of participating providers using certified electronic health record technology, payment tied to comparable quality measures as those used in MIPS, and greater than nominal financial risk.
Comprehensive ESRD Care (CEC) Model – Innovation model designed to identify, test, and evaluate new ways to improve care for Medicare beneficiaries with end-stage renal disease.
Certified electronic health record technology (CEHRT) – CEHRT meets the data standards established by the CMS and the Office of the National Coordinator for Health Information Technology to qualify for the EHR Incentive Program.
Children’s Health Insurance Program (CHIP) – CHIP provides coverage to eligible children and, in some states, pregnant women. CHIP is a joint federal-state program similar to Medicaid.
Clinically integrated networks (CINs) – CINs are collaborations between otherwise independent health care professionals to improve health care quality and contain costs. CINs use evidence-based guidelines across providers to improve the delivery of care. If CINs meet certain standards established by the Federal Trade Commission, the government provides a safe harbor for collective bargaining.
Center for Medicare and Medicaid Innovation (CMMI) – This division of CMS is responsible for overseeing advanced APMs and other demonstrations, along with testing and evaluating new payment and delivery system reforms.
Centers for Medicare and Medicaid Services (CMS) – The agency responsible for overseeing Medicare and the implementation of MACRA.
Comprehensive Primary Care Initiative (CPCI) – CPCI was a four-year multipayer initiative designed to strengthen primary care. The initiative paid population-based care management fees and had shared savings opportunities for participating primary care practices to support the provision of a core set of five comprehensive primary care functions. These five functions are risk-stratified care management, access and continuity, planned care for chronic conditions and preventive care, patient and caregiver engagement, and coordination of care across the medical neighborhood. Obstetrician–gynecologists were not permitted to participate unless they were in a multispecialty practice.
Comprehensive Primary Care Plus (CPC+) – CPC+ is a national advanced primary care medical home model that aims to strengthen primary care through a regionally-based multi-payer payment reform and care delivery transformation. CPC+ includes two primary care practice tracks with incrementally advanced care delivery requirements and payment options to meet the diverse needs of primary care practices in the United States. Obstetrician–gynecologists are not permitted to participate unless they practice in a multispecialty primary care practice with family physicians, internists, or geriatricians.
Clinical practice improvement activities (CPIA) – CPIA is one of the four performance categories under MIPS. This category is brand new and is not based on an existing Medicare reporting program. Currently, there is an inventory of more than 90 activities that physicians can choose from to improve care delivery.
Composite performance score (CPS) – The CPS is the combined score for each of the four performance categories that make up MIPS. Each category has a different weight that changes from year to year. The CPS is used to determine the positive or negative payment adjustment a physician will receive for the Medicare physician fee schedule.
Eligible provider – Eligible provider is the term used in statute for those providers who qualify for payment adjustments under MIPS. CMS has opted to use “MIPS-eligible clinician” instead.
Episode Groups – Episode groups are a collection of services that are related to treating a condition (either chronic or acute) or performing a procedure. Services that fall within in an episode group are both clinically and temporally related. An episode may be performed by a single provider or practice or by multiple providers across settings. Episode groups can be used to either measure resource use or bundle payments. Both uses are intended to drive the delivery of more efficient care and reduce the provision of unnecessary services.
Episode groups can be operationalized in one of two ways: prospective payment and retrospective reconciliation. Prospective payments generally cover the entire episode, including all services related to the condition or procedure and to all providers rendering relevant care. Payments are made to an accountable entity that in turn pays each provider who delivered care during the episode. Savings or losses are not typically shared with the payer. Although it is termed "prospective," payments are generally made after the episode ends based on a previously determined price for the episode based on what is deemed appropriate care for the episode. Retrospective reconciliation is typically paid out on a fee-for-service basis, and after a set period of time, the target episode price and the actual average episode price are reconciled across all episodes attributed to a provider. The accountable entity can share in any gains or losses along with the payer.
Procedure-focused episode groups have proliferated more so than condition-focused episodes because they have clear starting points and natural end points. Condition-focused episode groups can be harder to define, particularly for chronic conditions, because of their ongoing nature. To deal with the lack of precise timing, some condition-focused episode groups focus on acute exacerbations of chronic conditions. While difficult to develop and implement, condition-focused episodes will help the health system move to value-based care because they do not incentivize one type of procedure or treatment.
Fee-for-Service – The Medicare Part B Physician Fee Schedule is currently fee-for-service with no link to quality and no incentives to reduce volume.
Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) – MACRA changes the way physicians and other providers are paid under Medicare and replaces the faulty Sustainable Growth Rate formula. MACRA is composed of two different components: the Merit-based Incentive Payment System and advanced APMs.
Merit-based Incentive Payment System (MIPS) – MIPS is one payment option under MACRA that combines the Physician Quality Reporting System, the Value-based Modifier Payment program, and the Medicare Electronic Health Record Incentive (aka “meaningful use”) program into one single program. Payment adjustments are made to the rates a physician receives under the physician fee schedule based on performance under MIPS.
Moving to Value-based Payments – The secretary of Health and Human Services (HHS) announced goals for Medicare and the entire health system in 2015 to move away from fee-for-service toward value-based care. HHS set a goal of tying 30% of traditional or fee-for-service Medicare payments to quality or value through alternative payment models, such as ACOs or bundled payment arrangements, by the end of 2016, and tying 50% of payments to these models by the end of 2018. HHS also set a goal of tying 85% of all traditional Medicare payments to quality or value by 2016 and 90% by 2018 through programs such as the Hospital Value-based Purchasing and the Hospital Readmissions Reduction Programs.
For more information about the department’s strategy to pay for quality, you can read Secretary Burwell’s perspective in the New England Journal of Medicine.
Medicare Shared Savings Program (MSSP) – The MSSP is an ACO established under the ACA to facilitate coordination and cooperation among providers to improve the quality of care for Medicare fee-for-service beneficiaries and reduce unnecessary costs. Eligible providers, hospitals, and suppliers may participate in the MSSP by creating or participating in an ACO.
Meaningful Use – Meaningful use is the standard which providers must meet in order to qualify for the Electronic Health Record Incentive Program.
Oncology Care Model (OCM) – The OCM is new payment model for physician practices administering chemotherapy. Under the OCM, practices will enter into payment arrangements that include financial and performance accountability for episodes of care surrounding chemotherapy administration to cancer patients.
Protecting Access to Medicare Act of 2014 (PAMA) – The PAMA prevented a scheduled payment reduction for physicians and other providers who care for Medicare patients from taking effect on April 1, 2014.
Patient-centered Medical Home (PCMH) – PCMHs are a primary care medical home model that provides continuous, comprehensive, and coordinated care. PCMHs not only focus on somatic health but also integrate behavioral health care into their practices. PCMHs are responsible for arranging for specialty care that cannot be provided by the PCMH physicians. Sometime these care coordination relationships are more formalized and are referred to as “medical neighborhoods.”
PCMHs oftentimes must be accredited or certified by a national body in order to receive supplemental or enhanced payment. Some accrediting bodies do not recognize obstetrician–gynecologists as primary care providers and therefore will not certify their practices as PCMHs; however, there are other certifying bodies that are more permissive and do allow single-specialty obstetrics and gynecology practices to become PCMHs.
For more information, you can visit the Agency for Healthcare Research and Quality’s web page.
Physician Quality Reporting System (PQRS) – The PQRS is a quality reporting program that encourages individual eligible professionals and group practices to report information on the quality of care to Medicare. PQRS gives participating providers and group practices the opportunity to assess the quality of care they provide to their patients, helping to ensure that patients get the right care at the right time. It is one of the Medicare reporting programs that is being moved into MIPS.
Qualified Clinical Data Registry (QCDR) – QCDRs are one of the reporting mechanisms physicians and group practices can use to report MIPS performance measures. Under MACRA, QCDRs must meet certain criteria in order to be eligible to submit data on behalf of providers.
Qualified Professionals – Individual physicians or other providers who practice under an advanced APM.
Quality Payment Program (QPP) – QPP is the new name for the payment changes created under MACRA, which encompasses both MIPS and advanced APMs.
Quality and Resource Use Report (QRUR) – Reports that provide information to physicians about their resource use and quality of care delivered under the Value-based Payment Program.
Sustainable Growth Rate – The formula that the Medicare Part B Physician Fee Schedule was based on through the end of 2016.
Value-based Payment Modifier – The value-based payment modifier is a reporting program that is used to adjust fee-for-service payments to providers based on quality and cost and is being incorporated into MIPS.