Transforming the Merit-based Incentive Payment System into the Data-driven Performance Payment System

(a)

Implementation of the Data-driven Performance Payment System

(1)

In general

Effective January 1, 2027, there is established the Data-driven Performance Payment System, which shall consist of the payment system under section 1848(q) of the Social Security Act (42 U.S.C. 1395w–4(q)), including as amended by this section. (2)

References

Subject to paragraph (3), any reference to the payment system under section 1848(q) of the Social Security Act (42 U.S.C. 1395w–4(q)), including the terms Merit-based Incentive Payment System and MIPS, shall be deemed a reference to the Data-driven Performance Payment System and DPPS, respectively. (3)

Transition

In order to provide for an orderly transition and avoid provider confusion, the Secretary of Health and Human Services shall provide for an appropriate transition in the use of the terms Merit-based Incentive Payment System (and MIPS) and Data-driven Performance Payment System (and DPPS) in reference to the payment system under section 1848(q) of the Social Security Act (42 U.S.C. 1395w–4(q)). Before the completion of such transition, any reference to the Data-driven Performance Payment System (or DPPS) shall be deemed to include a reference to the Merit-based Incentive Payment System. (b)

Reforming application of adjustment factors

(1)

In general

Section 1848(q)(6) of the Social Security Act (42 U.S.C. 1395w–4(q)(6)) is amended— (A)in subparagraph (A)— (i)by inserting for years before 2028, after Taking into account paragraph (1)(G),; (ii)in clause (ii)— (I)in subclause (I), by striking clause (iii) and inserting subclause (III); (II)in subclause (II), by striking clause (iv) and inserting subclause (IV); and (III)by redesignating subclauses (I) and (II) as items (aa) and (bb), respectively, and adjusting the margins accordingly; (iii)in clause (iii), by striking clause (ii)(I) and inserting subclause (II)(aa); (iv)in clause (iv)— (I)by striking subclause (II) and inserting item (bb); (II)by striking clause (ii)(II) and inserting subclause (II)(bb); and (III)by redesignating subclauses (I) and (II) as items (aa) and (bb), respectively, and adjusting the margins accordingly; (v)by redesignating clauses (i) through (iv) as subclauses (I) through (IV) and adjusting the margins accordingly; (vi)by striking Taking into account and inserting the following:

(i)

Adjustment factors for years before 2028

Taking into account

; and

(vii)by adding at the end the following new clause:

(ii)

Adjustment factors for 2028 and subsequent years

For 2028 and each subsequent year, the DPPS adjustment factor specified under this subparagraph for a DPPS eligible professional for such year shall be equal to— (I)subject to subparagraph (F)(v), in the case of a DPPS eligible professional with a composite performance score for such year above the performance threshold established under subparagraph (D) for such year, 1.25; (II)in the case of a DPPS eligible professional with a composite performance score for such year equal to such performance threshold, 1; (III)in the case of a DPPS eligible professional not described in subclause (IV) with a composite performance score for such year below such performance threshold, 0.75; and (IV)in the case of a DPPS eligible professional who is treated under paragraph (5)(B)(i) as achieving the lowest potential score applicable to each applicable measure or activity that is required to be reported by the professional for such year, 0.5.

;

(B)in subparagraph (B)(iv), by striking and subsequent years and inserting and each subsequent year through 2027; (C)in subparagraph (D)(i), by striking that are positive, negative, and zero; and (D)in subparagraph (E)— (i)by inserting and ending with 2027 after beginning with 2019; (ii)in clause (ii)— (I)by striking subparagraph (A) and inserting subparagraph (A)(i); and (II)by redesignating subclauses (I) and (II) as items (aa) and (bb), respectively; (iii)by redesignating clauses (i) and (ii) as subclauses (I) and (II), respectively; (iv)by striking In the case of and inserting the following:

(i)

Application of adjustment factors for years before 2028

In the case of

; and

(v)by adding at the end the following new clause:

(ii)

Application of adjustment factors for 2028 and subsequent years

(I)

In general

In the case of covered professional services (as defined in subsection (k)(3)(A)) furnished by a DPPS eligible professional during a year (beginning with 2028), subject to subclauses (II) and (III), for purposes of determining the amount paid under this part with respect to such covered professional services and DPPS eligible professional for such year, the update to the nonqualifying APM conversion factor established under subsection (d) applicable to such services and such professional for such year shall be multiplied by the adjustment factor specified under subparagraph (A)(ii) with respect to such professional and such year. (II)

Nonapplication to certain updates

Subclause (I) shall not apply with respect to covered professional services furnished during a year in the case that the update to the conversion factor described in such subclause for such year is less than 0 percent. (III)

Nonapplication of certain adjustment factors for lack of timely feedback reports

(aa)

In general

Subclause (I) shall not apply with respect to covered professional services furnished by a DPPS eligible professional during a year if the DPPS eligible professional does not receive timely feedback in accordance with item (bb) with respect to each quarter of the performance period for such year and would, without application of this item, otherwise be subject to the DPPS adjustment factor described in subparagraph (A)(ii)(III) for such year. (bb)

Timely feedback described

For purposes of item (aa), a DPPS eligible professional receives timely feedback in accordance with this item with respect to a quarter of a performance period if, not later than the date that is 60 days after the last day of such quarter, such professional receives the confidential feedback required under paragraph (12) on the performance of such professional during such quarter with respect to administrative claims-based measures included in the performance categories described in subparagraph (A)(i)(II) of such paragraph, including— (AA)a description of the patients and episodes attributed with respect to such measures for purposes of assessing the performance of such professional during such quarter; (BB)an identification of the items and services furnished by such professional or another individual that will contribute to the assessment of the performance of such professional during such quarter with respect to such measures; and (CC)an identification of whether each item or service identified under subitem (BB) for the quarter was furnished by such professional or another individual (and, in the case that the performance of such professional for such quarter with respect to such measures is assessed based on participation in a group practice or other group, whether each such item or service was furnished by such professional, another individual in such group, or another individual outside of such group). (IV)

Hold harmless

In computing the amount of any coinsurance under section 1833(a)(1) and the expenses incurred for applying the deductible under section 1833(b) with respect to covered professional services furnished by a DPPS eligible professional for a year, such coinsurance and incurred expenses shall be computed as if the update to the conversion factor applicable to such services and professional for such year were not subject to the adjustment factor under subclause (I).

(2)

Conforming amendment

Section 1848(d)(20) of the Social Security Act (42 U.S.C. 1395w–4(d)(20)) is amended by inserting , subject to subsection (q)(6)(E)(ii), before the update to the nonqualifying APM conversion factor. (c)

Reforming performance thresholds

Section 1848(q)(6)(D) of the Social Security Act (42 U.S.C. 1395w–4(q)(6)(D)) is amended— (1)in clause (i), by striking clauses (iii) and (iv) and inserting clauses (iii) through (vi); and (2)by adding at the end the following new clauses:

(v)

Temporary extension of special rules

(I)

In general

With respect to each of 2028 through 2033 (or such later year as determined by the Secretary pursuant to subclause (II)), the Secretary shall establish a performance threshold for purposes of determining DPPS adjustment factors under subparagraph (A) for such year in accordance with the requirements described in clause (iii), except that such performance threshold may not be greater than 75 points. (II)

Flexibility to extend special rule

In the case that extraordinary circumstances, including a natural disaster, a public health emergency, or cybersecurity incident, affect reporting, data collection, or the assessment of performance under this subsection for 2034, the Secretary may extend the application of subclause (I) until the first year for which such extraordinary circumstances do not affect reporting, data collection, or assessment of performance under this subsection (as determined by the Secretary). (III)

Optional transition period

With respect to the year immediately following the last year with respect to which subclause (I) applies (after application of subclause (II), if applicable), the Secretary may, pursuant to notice and comment rulemaking, establish a performance threshold for purposes of determining DPPS adjustment factors under subparagraph (A) for such year and such subsequent consecutive years as specified by the Secretary in a manner that provides for a gradual and incremental transition from the performance threshold established under subclause (I) to the performance threshold established under clause (vi). (vi)

Replacement performance threshold

(I)

In general

With respect to the year immediately following the last year with respect to which clause (v) applies and each subsequent year, the performance threshold established under this subparagraph for purposes of determining DPPS adjustment factors under subparagraph (A) shall be computed in accordance with the replacement performance threshold methodology established by the Secretary under in subclause (II). (II)

Replacement performance threshold methodology

For purposes of subclause (I), the Secretary shall, pursuant to notice and comment rulemaking and based on the recommendations submitted under subclause (III), establish a methodology (referred to in this clause as the replacement performance threshold methodology) to be used instead of the mean or median described in clause (i) for computing the performance threshold applied under this subparagraph. (III)

Recommendations for replacement performance threshold methodology

Not later than December 31, 2029, the Comptroller General of the United States shall, in accordance with subclause (IV), submit to Congress and the Secretary a report including detailed recommendations on a methodology to be used instead of the mean or median described in clause (i) for computing the performance threshold described in subclause (I) and that is based on data that are accurate and reliable. (IV)

Recommendation requirements

In making the recommendations required under subclause (III), the Comptroller General of the United States shall— (aa)seek to prevent unintended consequences that may result from weighing quality and cost performance categories; (bb)consider the impact of such recommendations on different types of DPPS eligible professionals, including such professionals in a small group practice and such professionals that serve rural or underserved communities; and (cc)consult with stakeholders, including organizations representing physicians.

(d)

Maintaining budget neutrality

Section 1848(q)(6)(F) of the Social Security Act (42 U.S.C. 1395w–4(q)(6)(F)) is amended— (1)in clause (i)— (A)in the clause heading, by inserting

for years before 2028

after

factor

; and (B)in subclause (I)— (i)by striking With respect and inserting For years before 2028, with respect; and (ii)by striking subparagraph (A)(ii)(I) and inserting subparagraph (A)(i)(II)(aa); (2)in clause (ii)— (A)in the clause heading, by inserting

for years before 2028

after

requirement

; and (B)in subclause (I), by striking Subject to and inserting For years before 2028, subject to; (3)in clause (iii)— (A)in subclause (I), by inserting before 2028 before that are below; and (B)in subclause (II), by inserting before 2028 after with respect to a year; and (4)by adding at the end the following new clause:

(v)

Budget neutrality for 2028 and subsequent years

For 2028 and each subsequent year, the Secretary shall decrease DPPS adjustment factors under subparagraph (A)(ii)(I) for DPPS eligible professionals whose composite performance score for such year is above the performance threshold established under subparagraph (D) for such year in order to ensure that the estimated increase in the aggregate allowed charges resulting from the application of such adjustment factors (after application of this clause) to such professionals for such year is not more than the estimated decrease in such charges resulting from the application for such year of DPPS adjustment factors under subclauses (III) and (IV) of subparagraph (A)(ii) to DPPS eligible professionals whose composite performance score for such year is below such performance threshold.

(e)

Investing in under-resourced practices to assist in value-based care and quality improvement

Section 1848(q)(6) of the Social Security Act (42 U.S.C. 1395w–4(q)(6)) is amended by adding at the end the following new subparagraph:

(G)

Investing in under-resourced practices to assist in value-based care and quality improvement

(i)

In general

In the case of a DPPS eligible professional who furnishes covered professional services during a year that is a DPPS savings year (as defined in clause (v)) and for which the professional meets the criteria specified in clause (ii), in addition to the amount of payment that would otherwise be made for such services under this part for such year, there also shall be paid to such professional, from the amount specified in clause (iv)(I) for such DPPS savings year, a lump-sum incentive payment (in such amount as specified by the Secretary) which shall be used by such professional to improve care management, address health-related social needs, implement and further the use of certified EHR technology (as defined in subsection (o)(4)), improve performance with respect to the performance categories described in paragraph (2)(A), or implement and participate in value-based care models. (ii)

Criteria

(I)

Attestation

A DPPS eligible professional meets the criteria specified in this clause for a year if, with respect to such year and professional, data was submitted under this subsection and, for purposes of this subparagraph, it is demonstrated through an attestation that the professional is in a small practice described in subclause (II). (II)

Small practices

Subject to clause (iii), a small practice described in this subclause is a practice of 15 or fewer professionals. (iii)

Secretarial authority to give priority to certain small practices

The Secretary may, with respect to a DPPS savings year and based on the amount specified in clause (iv)(I) with respect to such year, for purposes of this subparagraph give priority to DPPS eligible professionals in certain small practices by applying clause (ii)(II) for such year as if instead of describing a practice of 15 or fewer professionals, such clause described any one or more of the following: (I)A practice of 15 or fewer professionals located in a rural area. (II)A practice of 15 or fewer professionals located in a health professional shortage area (as designated under in section 332(a)(1)(A) of such Act). (III)A practice of 15 or fewer professionals located in a medically underserved area. (IV)A practice of 15 or fewer professionals with a low composite score. (iv)

Funding for incentive payments

(I)

Amount available

The amount specified in this subclause, with respect to a DPPS savings year, is the amount by which the amount described in subclause (II) for such year exceeds the amount described in subclause (III) for such year. (II)

Aggregate decrease

The amount described in this subclause is the estimated decrease in the aggregate allowed charges resulting from the application of DPPS adjustment factors under subclauses (III) and (IV) of subparagraph (A)(ii) to DPPS eligible professionals whose composite performance score for a year is below the performance threshold under subparagraph (D) for such year. (III)

Aggregate increase

The amount described in this subclause is the estimated increase in the aggregate allowed charges resulting from the application of DPPS adjustment factors under subparagraph (A)(ii)(I) (after application of subparagraph (F)(v)) to DPPS eligible professionals whose composite performance score for a year is above the performance threshold under subparagraph (D) for such year. (IV)

Funding limitation

In no case may the amounts used to carry out this subparagraph with respect to a year exceed the amount specified for such year under subclause (I). (v)

DPPS savings year

For purposes of this subparagraph, the term DPPS savings year means a year (beginning with 2028) for which the amount described in clause (iv)(II) exceeds the amount described in clause (iv)(III). (vi)

Coordination with other incentive payments

The amount of any additional payment under this subparagraph and any other provision under this section or section 1833, including section 1833(m) shall be determined without regard to any additional payment under such other provision and this subparagraph, respectively.