MACRA Explained: New World of Medicare Reimbursement

Many healthcare providers and suppliers cheered when Congress did away with the sustainable growth rate (SGR) formula by passing the Medicare Access and CHIP Reauthorization Act (MACRA). No longer did they have to worry on an annual basis if a patch to prevent double digit cuts to reimbursement will be passed. But a new reimbursement methodology under MACRA leaves many practitioners wondering if they will meet the metrics or face payment cuts. 

MACRA – New Rule

Signed into law by President Obama on April 16, 2015, MACRA replaced the 1997 SGR with the Quality Payment Program, which is part of a broader agenda of the Department of Health and Human Services (HHS) to move towards paying for quality rather than quantity of healthcare services. On April 27, 2016, the Centers for Medicare & Medicaid Services (CMS) proposed a new rule – the Quality Payment Program – to implement provisions of MACRA. CMS published the final rule on October 14, 2016.

The new rule provides 2 tracks for reimbursement: (1) MIPS – Merit-based Incentive Payment System (the default track); and (2) Advanced APMs – Advanced Alternative Payment Models.

In response to public comments, CMS attempted to ease the administrative burden on different types of clinicians by permitting a staged rule implementation approach. This regulatory flexibility allows clinicians to select their reporting pace. During the transition year (also known as the first performance period), beginning on January 1, 2017, clinicians may report in one of 3 ways: (1) submit something to avoid a negative adjustment; (2) submit a partial year of data reporting (may earn a positive or a neutral reimbursement adjustment); (3) submit full year of 2017 data (may earn a positive reimbursement adjustment). Physicians may also select to join Advanced APMs in order to become Qualifying Participants, to avoid a negative payment adjustment in 2019.

If clinicians do not report on any activity or measure in the transition year they will be subject to a full negative 4% Medicare payment adjustment.


MIPS eligible clinicians’ payment adjustment (if at all) for data submitted in the transition year will be based on a composite score of the following 4 categories: (1) quality (60% in year 1); (2) clinical practice improvement activities (also called “improvement activities”, weighted 15% in year 1); and (3) advancing care information (also called meaning use of CEHRT, weighted 25% in year 1). The fourth category, resource use (or “cost”) is weighted at 0 for the transition year. The weight of each category will be adjusted after the first (transition) year.

Other than clinical practice improvement category, which is a new program element, the other 3 categories–quality, CEHRT and cost–replace and streamline the current quality and reporting programs. For example, the quality category replaces the PQRS (physician quality reporting system and the quality component of the Value Based Modifier program); the advancing care information category replaces the Meaningful Use program, and, finally, the resource use category replaces the cost element of the Value Based Modifier Program.

Eligible Clinicians. Clinicians that can participate in MIPS are called “MIPS eligible clinicians” and will include physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and groups that include such clinicians. Clinicians allowed not to participate in MIPS are clinicians who will be newly Medicare-enrolled eligible clinicians in 2017, certain participants in advanced Alternative Payment Models, and low-volume Medicare clinicians (defined as those clinicians with less than or equal to $30,000 in Medicare Part B allowed charges or less than or equal to 100 Medicare patients). MIPS does not apply to Hospitals or facilities.

Timeline & Adjustment Amounts. Data collection for payment adjustment begins on January 1, 2017. Clinicians not ready to report on January 1, 2017, may begin reporting anytime between Jan 1 and October 2, 2017. Eligible clinicians must report their 2017 MIPS data to CMS by March 31, 2018. The first year that payment adjustments will go into effect is 2019, based on the performance data from 2017. The data collection and payment adjustment timeline as currently identified as follows:

  • 2017 – Transition Year – Data collection
  • 2018 – Data submission to CMS
  • 2019 – First Payment Year – CMS implements payment adjustment which equals up to -/+ 4%
  • 2020 – CMS implements payment adjustment which equals up to -/+ 5%
  • 2021 – CMS implements payment adjustment which equals up to -/+ 7%
  • 2022-2025 – CMS implements payment adjustment which equals up to -/+ 9%


APM is an umbrella term used to describe new payment models where providers have organized to focus on the delivery of quality of care rather than quantity and by design already receive incentives payments from Medicare for achieving certain quality and value benchmarks (and may also share in some of the risk). Examples of such payment models include CMS Innovation Center models, the Shared Savings Program, Patient Centered Medical Home, or another federal demonstration model.

MACRA does not alter how any individual APM functions or already rewards value and instead provides additional rewards for participating in APMs. For example, if a physician receives 25% of Medicare payments or sees 20% of Medicare patients through an Advanced APM in 2017, then he or she can earn a 5% incentive payment in 2019.

Specific requirements must be met to qualify as an Advanced APM. Similar to MIPS, payment incentives for APMs begin in 2019.

Data Submission. While there are various ways to report on the various performance categories, the three main methods that are available for reporting data available across all categories include qualified registry, electronic health record vendors, and qualified clinical data registry (CMS Web Interface for groups of 25 or more). The Resource Use category will rely on the Medicare administrative claims data and will not require a separate reporting from the Eligible Clinicians.

If you have questions about MACRA, MIPS, APMs, Medicare, Medicaid, enrollment, revalidation, revocation, exclusion or have other health law questions, please contact our office