MACRA Overview- Is Your Organization Prepared?

Part 1 of a 3 part series

The Medicare Access and CHIP Reauthorization Act, commonly known as MACRA, was signed into law in April of 2015.  This legislation both reflects and propels changes already underway in the healthcare industry, repealing the Sustainable Growth Rate formula and establishing a new federal program called the Quality Payment Program (QPP).

The Quality Payment Program went into effect on January 1, 2017, signaling the end of the old “fee-for-service” model and the beginning of a mandated industry-wide shift toward value-based care.  MACRA seeks to ensure Medicare’s sustainability by moving away from a reimbursement model that relies on the quantity of treatments provided by physicians, thus cutting overall Medicare costs over time.

The Centers for Medicare & Medicaid Services (CMS) has laid out six strategic objectives for the Quality Payment Program[1]

  1. Improve patient outcomes and engagement through patient-centered policy development.
  2. Enhance clinician experience by incentivizing the use of tools that make accurate data available, modernize payment systems, and provide big picture insights that will help clinicians make informed decisions that add value to their practice.
  3. Increase the availability and adoption of a diverse range of Advanced APMs to reduce overall healthcare costs and improve quality of care.
  4. Promote education, outreach, and support for patients and communities.
  5. Improve sharing of information to ensure clinicians are empowered to make decisions based on accurate, timely, and actionable EHR data from multiple sources
  6. Ensure “operational excellence” in program implementation and ongoing development.

The QPP provides a choice of two paths for Medicare reimbursement: Merit-based Incentive Payment Systems (MIPS) or the Advanced Alternative Payment Model (AAPM).

An eligible clinician may become a Qualified Professional (QP) or a Partial QP by participating in an Advanced APM in which the eligible clinicians as a group meet specific payment or patient thresholds.  During each QP Performance Period CMS would determine if an eligible clinician met one of the thresholds to become a QP or Partial QP.

MIPS combines three previous programs — the Physician Quality Reporting System (PQRS), the Medicare EHR Incentive Program (also known as Meaningful Use), and Value-Based Payment Modifier into one program that evaluates providers in four performance categories1. The categories are Quality, Cost, Improvement Activities, and Advancing Care Information.




Scores for an organization’s performance in each category will be combined into a Composite Performance Score (CPS) with 100 potential points.

The financial decision-makers at hospitals must work closely with their provider groups to determine which of the three paths, MIPS, AAPM, or Partial Qualifying APM, will yield the most return for their specific organization.


These categories are weighted for the 2017 performance period, which is also the MIPS transition year. The weights are as follows:

  1. The Quality category replaces the Physician Quality Reporting System (PQRS) and is weighted at 60% of the CPS in performance year (PY) 2017. Its CPS weight decreases to 50% in PY 2018 and 30% in PY 2019, and beyond.
  2. The Cost/Resource Use category replaces the Value-Based Modifier and will not be counted for PY 2017. It will be weighted at 10% of the CPS in PY 2018 and 30% in PY 2019, and beyond.
  3. Clinical Practice Improvement Activities (CPIA) is a new MIPS category that did not exist previously. It is weighted at 15% of the CPS in PY 2017 and beyond.
  4. The Advancing Care Information category replaces the Meaningful Use/Medicare EHR Incentive Program and is weighted at 25% of the CPS in PY 2017 and beyond.

MIPS payment adjustments occur two years after the performance year.  As such, payment adjustments will begin in 2019 for PY 2017.  While Advanced APMs have a fixed bonus incentive of 5% through 2024, MIPS payment adjustments are variable.  Depending on how well a group’s Composite Performance Score ranks against scores nationwide, physicians can see no adjustment at all, a positive adjustment, or a negative adjustment up to a determined percentage each year.


It’s very possible that these weights will change over time, but right now, these are the weights that we’re working with.


Organizations that fail to prepare for MACRA may be faced with the financial stress of a negative payment adjustment in an already harsh economic climate.

Once the financial decisions have been made about which path is most suitable and which measures should be reported on, the organization must develop and implement a strategy for gathering that data in an accurate, timely, and cost-efficient manner.

MACRA compliance calls for a high level, strategic reevaluation of IT systems and processes. Hospitals and APM entities that have fallen behind the MACRA schedule must take immediate action to assess their organizational needs and develop a strategy that will drive both financial and quality of care growth under MACRA.



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