Are You Ready for MACRA?


Who? – You– if you have a Medicare Part B patient population.

What? – MACRA (Medicare Access and CHIP Reauthorization Act of 2015) is bipartisan legislation that replaced Medicare’s flawed Sustainable Growth Rate (SGR) formula with a new approach to paying clinicians for the value and quality of care they provide. Previously, Medicare measured the value and quality of care provided by physicians and other clinicians through a patchwork of programs (PQRS, Value Based Modifier, Transparency Disclosure). Congress has now streamlined these various programs into a single framework to help clinicians transition from payments based on volume to payments based on value.

The proposed rule would implement these changes through the unified framework called the “Quality Payment Program” (QPP) which includes 2 paths: Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs).

When? – Starting January 1, 2017

         January 2015: The goal was first announced to transform Medicare by moving away from traditional fee-for-service payments towards a payment system focused on linking physician reimbursement to quality of care and patient outcomes.


         April 16, 2015: MACRA is signed into law; the legislation advances a coordinated framework for healthcare providers to take part in the QPP program that rewards value and outcomes in one of two ways: MIPS or APMs.


         April 27, 2016: Notice of Proposed Rulemaking is issued; this is the first step in implementing certain provisions of MACRA. The proposal serves to align and modernize how Medicare payments are tied to cost and quality of patient care.


         January 1, 2017: proposed start date; first performance year for clinicians will be from January 1 through December 31, 2017; the first payment year for MIPS will be 2019.

How? – MACRA makes important changes to how Medicare pays those who give care to Medicare beneficiaries – these changes create a Quality Payment Program (QPP). The QPP is a flexible system that allows providers to choose from 2 paths that link quality to payments: the Merit-Based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs).

Merit-Based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs).

1)         MIPS: a new pay-for-performance program that consolidates former reporting programs by combining parts of the Physician Quality Reporting System (PQRS), the Value Modifier (VM or Value-based Payment Modifier), and the Medicare Electronic Health Record (EHR) incentive program (aka Transparency Disclosure program) into one single program. Initially, most physicians are expected to be participants in MIPS. In 2019, the MIPS program will become the primary Medicare quality reporting program for physicians and MACRA will provide bonuses for physicians who score well in the MIPS. Performance and “composite scores” under the MIPS will be based upon 4 categories:


  •          Quality (PQRS/50%)

  •          Resource Use (VBM/10%)

  •          Meaningful Use (25%)

  •          Clinical Practice Improvement Activities (15%)

  •          The law requires MIPS to be budget neutral, therefore physician’s MIPS scores would be used to compute a positive, negative or neutral adjustment to their Medicare payments. In the first year, adjustments are calculated so that negative adjustments can be no more than 4% and positive adjustments are generally up to 4%, with additional bonuses for the highest performers. CMS will begin measuring performance for healthcare providers in January 2017, with payments based on those measurements beginning in 2019.


             Medicare Part B clinicians may be exempted from the payment adjustment under MIPS if they: are newly enrolled in Medicare, have less than or equal to $10,000 in Medicare charges and less than or equal to 100 Medicare patients, or are significantly participating in an Advanced Alternative Payment Model (APM).

    2)         APMs: under the new law, Advanced APMs are the CMS innovation Center models, Shared Savings Program tracks, or statutorily-required demonstrations where clinicians accept both risk and reward for providing coordinated, high-quality and efficient care. Accountable Care Organizations (ACOs), Patient Centered Medical Homes (PCMH), and bundled payment models are some examples of APMs.


             The law provides incentives and a pathway for physicians to develop and participate in new models of health care delivery and payment. Most eligible APM entities will be required to involve “more than nominal” financial risk. To encourage physicians to participate in APMs and to help offset investments or other costs they may incur, the legislation provides 5% bonus payments from 2019 to 2024 for those who participate in APMs, in addition to the opportunities for gainsharing or increased revenues that APMs provide. This provides a transition period to support successful implementation of new models. Certain patient-centered medical home models (PCMH) would not be required to assume downside financial risk, and medical homes automatically get the maximum Clinical Practice Improvement credit in MIPS.


             These models must also meet criteria for payment based on quality measurement and for the use of EHRs. An advantage of the program is that physicians would only be subject to the quality and EHR requirements for their APM; they would be exempt from the MIPS program and the MIPS payment adjustments.


             Q: What is the MACRA?

             A: On April 14, 2015, a large bipartisan majority in Congress passed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). President Obama signed the MACRA into law on April 16, 2015. It repeals the Sustainable Growth Rate (SGR) formula, which linked Medicare annual payment updates for physicians and other professionals to prior year spending and gross domestic product (GDP) growth. MACRA contains scheduled Physician Fee Schedule (PFS) updates, a new Merit-Based Incentive Payment System (MIPS), a new Technical Advisory Committee for assessing Physician Focused Payment Model (PFPM) proposals, and incentive payments for participation in Alternative Payment Models (APMs).


             Q: What section of the MACRA addresses the new methods of payment for eligible professionals (EPs)?

             A: Section 101 repeals the Medicare SGR methodology for updates to the physician fee schedule (PFS) and implements scheduled PFS updates, including a higher update rate for “qualifying APM participants” beginning in 2026. Section 101 also adds the new MIPS for eligible professionals (EPs), sunsets payment adjustments under the current Physician Quality Reporting System (PQRS), the Value-Based Payment Modifier (VM), and the Medicare Electronic Health Records (EHR) Incentive Program, often referred to as the Transparency Disclosure (MU) program, and consolidates aspects of those programs into the new MIPS. Additionally, section 101 of the MACRA promotes the development of APMs by providing incentive payments for certain EPs who participate in APMs and by encouraging the creation of additional PFPMs. This section will be the subject of notice and comment rulemaking.


             Q: What is the timeline for the MIPS program and incentive payments for participation in APMs?

             A: MIPS payment adjustments and APM incentive payments will begin in 2019, based on performance or APM participation, respectively, in a prior performance period.


             Q: What are the options for EPs under the MACRA?

             A: EPs can participate in MIPS or meet requirements to be a qualifying APM participant. EPs in MIPS can receive a positive, downward, or neutral payment adjustment, starting at +/- 4 percent in 2019 and growing to +/- 9 percent in 2022 and later). EPs who are determined to be qualifying APM participants (QPs) for a given year will be excluded from MIPS and receive a 5 percent lump sum incentive payment for that year. The APM incentive payment will be available from 2019 through 2024. Beginning in 2026, QPs will receive a 0.75 percent fee schedule update, and all other EPs will receive a 0.25 percent fee schedule update.


             Q: What is MIPS?

             A: MIPS promotes better care, healthier people, and smarter spending by evaluating EPs using a Composite Performance Score that incorporates EP performance on quality, resource use, clinical practice improvement activities, and Transparency Disclosure of certified electronic health records. Based on the Composite Performance Score, EPs may receive an upward payment adjustment, a downward payment adjustment, or no payment adjustment.


             Q: What are the payment adjustment amounts in the MIPS Program?

             A: The maximum payment adjustment amount starts at 4 percent in 2019 and incrementally increases to 9 percent in 2022 and onward. The adjustments must be balanced and scaled in such a manner that the program is budget neutral. For 2019 to 2024, there will also be an additional payment adjustment given to the highest MIPS performers for exceptional performance.


             Q: What is an APM?

             A: A Medicare APM is:

             A CMMI model under section 1115A (other than a Health Care Innovation Award);

             Medicare Shared Savings Program (MSSP);

             A demonstration under the Health Care Quality Demonstration Program; or

             A demonstration required by Federal law.


             Q: What is an eligible alternative payment entity?

             A: Eligible alternative payment entity means, with respect to a year, an entity that: (1) participates in an APM that requires participants to use certified EHR technology and provides for payment based on quality measures comparable to those in MIPS; and (2) either bears more than nominal financial risk for monetary losses under the APM or is a medical home expanded under CMS Innovation Center authority.


             Q: What is the incentive payment for qualifying APM participants?

             A: A 5 percent lump sum payment based on the QP’s estimated aggregate payment amounts for Part B covered professional services for the preceding year.


             Q: How can EPs qualify for incentive payments for participation in APMs?

             A: EPs must meet certain thresholds to be QPs and qualify for incentive payments. In 2019 and 2020, EPs must have 25 percent of their payments or patients through an eligible alternative payment entity. In 2021 and 2022, EPs must have 50 percent of their payments or patients through an eligible alternative payment entity, or through a combination of an eligible alternative payment entity and certain other payer arrangements. In 2023 and later, EPs must have 75 percent of their payments or patients through an eligible alternative payment entity or through a combination of an eligible alternative payment entity and certain other payer arrangements.


             Q: What other payer arrangements count towards becoming a qualifying APM participant (QP)?

             A: Beginning in 2021, EPs can also qualify as a QP based on thresholds for combined payments from Medicare and other payers. This is called the combination all-payer and Medicare payment threshold option. Under this option, EPs must meet a minimum percentage (25 percent) of Medicare payments for covered professional services or patients through an eligible alternative payment entity and the overall threshold through other payer arrangements that have similar requirements to those for eligible alternative payment entities.


             Q: What is a partial qualifying APM participant (partial QP)?

             A: A partial QP is defined as an EP who does not meet the thresholds established for a qualifying APM participant but meets slightly reduced thresholds. Partial QPs do not receive the 5 percent APM incentive payment, but they can choose whether or not to participate in MIPS. If they choose not to report to MIPS, they will have no payment adjustment for that year.



    MACRA RFI Posting “RFI on Physician Payment Reform” (CMS-3321-NC) External FAQ (n.d.). Retrieved from


    Additional Resources

    CMS: for more info


    CMS QPP Fact Sheet:


    AMA: for more info


    Medicare Payment Reform Benefits by State (AMA):




    MACRA Bill Summary (AMA):