The Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”), signed by President Obama in April of 2015, enacted legislation that will significantly impact provider reimbursement. MACRA repealed the Sustainable Growth Rate (“SGR”) formula and implemented: (i) scheduled updates to the Medicare Physician Fee Schedule (“MPFS”) including a 0.5 percent positive annual update beginning July 2015 through 2019; (ii) the merger of existing quality reporting programs into the new Merit-Based Incentive Payment System (“MIPS”); and (iii) the provision of incentives for physicians to participate in Alternative Payment Models (“APM”). Notably, on February 16, 2016, CMS released its first set of core clinical quality measures for the new payment system.


MACRA permanently repealed the SGR formula avoiding the looming 21.2 percent cut to MPFS payments scheduled to take effect in April of 2015. In SGR’s place, MACRA implements scheduled updates to the MPFS over the course of the next several years, including a 0.5 percent positive annual update to the MPFS for the period beginning July 2015 through 2019.

Summary of MACRA Payment System

MACRA provides two performance-based paths for an eligible professional to be reimbursed. An eligible professional may choose to either: (1) continue to participate under the MPFS and receive a bonus or penalty associated with the individual’s MIPS performance; or (2) participate in an APM and be excluded from participating in MIPS.

  1. Who Is an “Eligible Professional”?

Beginning in 2019, the term “eligible professional” includes the following providers: Doctors of Medicine or Osteopathy, Doctors of Dental Surgery or Dental Medicine, Doctors of Podiatric Medicine, Doctors of Optometry, Chiropractors, physicians assistants, nurse practitioners, Clinical Nurse Specialists and certified registered nurse anesthetists. Other professionals paid under the MPFS may be considered “eligible professionals” in future years pending creation of viable performance metrics.

  1. PATH 1- MIPS Participation

MIPS builds off of concepts in the Physician Quality  Reporting System (“PQRS”), the Value Based Modifier (“VBM”) and the Medicare Electronic Health Record Incentive (“EHR”) programs (“Programs”) and consolidates aspects of each program into a single quality reporting program. The first MIPS performance year is 2017; however, MIPS payment adjustments will be on a two-year lag and begin in 2019. Current penalties under PQRS, VBM and EHR will end at the close of 2018. Beginning in 2019, MIPS will be the only quality reporting program for eligible professionals. MIPS will have four main categories: quality (30 percent weighted; concepts derived from the PQRS program); resource use (30 percent weighted; concepts derived from the VBM program); meaningful use (25 percent weighted; concepts derived from EHR program); and clinical practice improvement (15 percent weighted).

Eligible professionals participating in MIPS will continue to receive payment based on the MPFS but will also receive positive, downward or neutral payment adjustments depending on MIPS performance. The applicable MIPS adjustment starts at +/- 4 percent in 2019 and extends to +/-9 percent in 2022. Additional bonuses (up to 10 percent) will be available for exceptional MIPS performances.

  1. PATH 2-APM Participant

An “eligible professional” may opt to participate in the APM system if he/she either: (i) receives a minimum percentage of his/her revenue from APMs; or (ii)  a minimum percentage of his/her patients participate in APMs (25 percent in 2018 and extending to 75 percent in 2023). Qualification as an APM participant will be determined annually. APM participants will be excluded from participating in MIPS for the qualifying year. An APM participant will receive a 5 percent lump sum incentive payment for years 2019-2024, as well as higher payment adjustments to the MPFS than MIPS participants for years 2026 and beyond.


January 2016          Report Outlining Measure Development Process: In January of 2016, CMS issued a proposed Measure Draft Plan identifying the process for developing measures. The Measure Draft Plan does not detail the measures themselves. Industry stakeholders may provide comments to CMS on the Measure Draft Plan until March 1, 2016. CMS plans to publish the final version in May of 2016.

February 16, 2016                Broadly Agreed Upon Measures Released: On February 16, 2016, CMS released the first set of potential core clinical quality measures for the new payment system for select    specialties.1 CMS’s goal was to establish broadly agreed upon core measure sets that could be utilized across both commercial and government payers. If finalized, the measures will be published in the Final Rule (discussed below). The core measures identified in the February 16 release include the following specialties:

  • Accountable Care Organizations, Patient Centered Medical Homes and Primary Care
  • Cardiology
  • Gastroenterology
  • HIV and Hepatitis C
  • Medical Oncology
  • Obstetrics and Gynecology
  • Orthopedics

Summer 2016            Proposed Rule: In the summer of 2016, CMS will issue a Proposed Rule for public comment that will summarize a list of proposed quality and efficiency measures for the 2017 performance year.

November 1, 2016            Final Rule: No later than November 1, 2016, CMS will issue a Final Rule identifying the chosen measures for the 2017 performance year.

Each year, CMS will implement the same process and provide opportunities for eligible professionals to become engaged in various parts of the process.

Practical Takeaways

It is critical for eligible professionals and employers of eligible professionals to begin to prepare for the MACRA payment adjustments now because the first performance year begins January 1, 2017 with payment adjustments for the 2017 performance year being implemented in 2019 (i.e., the 2019 bonus/penalty adjustments will be based on the 2017 performance metrics). Because the first performance year is quickly approaching, providers receiving payment under the MPFS must begin preparations for the new payment system as soon as possible.

Although the actual MIPS quality measures are not yet available, 85 percent of an eligible professional’s MIPS score will be derived from concepts that are being measured under current Programs. Therefore, now is the time to focus on developing and implementing strategies that will prepare health care organizations for the transition from volume to value. To get started, health care organizations should review current and past performance in the Programs and continue to improve internal management and performance metrics. Organizations should stay up to date with CMS announcements as quality measure discussions will be ongoing all year. Additionally, organizations should consider revising existing employment agreements, service line management agreements and/or compensation arrangements with eligible professionals to include incentives to enhance MIPS performance and to mitigate the potential for loss of MPFS revenue due to poor performance.