What is MACRA? The Medicare Access and CHIP Reauthorization Act of 2015, commonly referred to as MACRA, introduces a new Medicare physician payment system. MACRA replaces the Sustainable Growth Rate (SGR) payment formula, establishes a framework for a quality-based system, streamlines current quality reporting programs into one system and reauthorizes two years of funding for the Children’s Health Insurance Program. MACRA also creates stability for Medicare payments by mapping out payment updates for ten years and beyond – stability that was severely lacking under the SGR formula.

How Did We Get Here? For decades, under the flawed SGR system, a fee-for-service payment model meant that higher performing physicians had no ability to be rewarded for outcomes. Health care reform initiated a gradual transition from a volume-based payment system to one that incentivizes clinicians for providing quality care. The pinnacle of this transition was passage of MACRA into law, a culmination of over two years of close collaboration with members of Congress on both sides of the aisle and a broad array of stakeholders, including the ACC.

Medicare Payment and the SGR

How Are Clinicians Currently Paid Under Medicare?

Services provided by physicians and advanced practice professionals, such as physician assistants and nurse practitioners, are billed to Medicare Part B. To determine the payment rates for these services, the Centers for Medicare and Medicaid Services (CMS) releases the annual Physician Fee Schedule. Each service is assigned relative value units (RVUs), which are based on the amount of work, time, practice expense and liability costs associated with that service. The RVUs are multiplied by the current year’s conversion factor to arrive at the Medicare Part B payment rate to the clinician.

What Was the SGR?

The SGR formula was created by the Balanced Budget Act of 1997 as a means to control Medicare spending by tying Medicare clinician payments to increases in the gross domestic product (GDP). When health care spending outpaced the GDP, this resulted in negative payment adjustments to the conversion factor. Congress passed 17 legislative patches to prevent cuts of over 20 percent from being implemented.

Why Was the SGR Flawed?

The SGR created a cycle of annual payment instability and uncertainty. Congress often worked until the final hour to pass legislation that would prevent large payment cuts resulting from the SGR from becoming reality. As a result, over the course of two decades, clinicians would come dangerously close to substantial payment cuts based on the flawed formula. This also sometimes created delays with claims processing as CMS and its contractors had to wait on whether or not the SGR cut would go into effect before finalizing annual payment updates in their systems. This cycle continued until MACRA was passed in 2015.

MACRA Structure

Who Does MACRA Impact? The new payment system has implications for physicians and advanced practice professionals, including physician assistants, nurse practitioners, and clinical nurse specialists in both practice and hospital settings.

How Is MACRA Structured? The Quality Payment Program, initiated by MACRA, is comprised of two pathways in which clinicians will participate in order to receive Medicare payment: The Merit-Based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (Advanced APMs). Most clinicians will participate in MIPS, which bundles the Physician Quality Reporting System (PQRS), the Value Modifier and the Electronic Health Record (EHR) Incentive Program into one program. Advanced APMs open up new methods of paying providers under Medicare.

How Will Physicians Be Measured? Regardless of which pathway a clinician participates in, he/she will be measured on four core components: Quality, resource use, clinical practice improvement and meaningful use of certified EHRs. In MIPS, these components make up the composite score. Advanced APMs are designed to incorporate these elements into the model framework.

When Will MACRA Be Implemented? Beginning July 1, 2015, clinicians began receiving a 0.5 percent payment increase to Medicare payments. This payment increase will continue annually until Dec. 31, 2018. Payment based on the two payment pathways of the MACRA Quality Payment Program (MIPS and APMs) will begin in 2019, based on 2017 performance. As the MIPS is implemented, performance-based bonuses and penalties will be phased in, starting with a maximum incentive or bonus of 4 percent in 2019. Starting in 2026, annual payment updates will be determined by the eligible professional’s participation in eligible APMs or traditional Medicare reimbursement linked to quality.

How Can I Prepare? As with many laws, MACRA is written with broad directions that will be implemented through more specific regulation by the federal agencies. On April 27, 2016, CMS released a proposed rule to implement MACRA, which introduced a plethora of acronyms and provisions and laid the groundwork for a final rule expected in fall 2016. Similar to the current reporting programs, MACRA does not require immediate data reporting; however, in order for clinicians to understand how their performance impacts their payments, it is important to understand the new system and begin preparations now. For most clinicians, this will mean evaluating your current PQRS, Value Modifier and EHR Incentive Program participation.


What Is MIPS? MIPS is essentially a continuation of the current fee-for-service payment structure linked to quality. Clinicians will still be paid according to the Medicare Physician Fee Schedule amounts for their services. However, based on how they perform across four categories – quality reporting, resource use (cost), advancing care information (Meaningful Use of EHRs) and clinical practice improvement, practices will be eligible for bonuses or subject to penalties on their Part B payments.

Is MIPS Budget-Neutral? Yes, the MIPS program is budget neutral, meaning that bonuses will be funded by the penalties collected from clinicians performing below the set benchmark performance score. Those at or closer to the benchmark will see neutral payment or small incentives. These incentives will increase with the highest performers earning the highest bonuses. CMS has the authority to increase the bonus amounts to achieve budget neutrality or to incentivize higher performance. However, the maximum penalty amounts cannot be changed.

How Much Does Each MIPS Category Weigh? Starting with the 2019 payment period/2017 performance period, for most clinicians, 50 percent of the MIPS score will be based on quality, 25 on advancing care information (Meaningful Use), 15 percent on participation in clinical practice improvement activities, and 10 percent on resource use (cost).

When Does MIPS Begin? Based on the legislation and CMS’ proposed rule, MIPS payment adjustments will be applied to payments starting on Jan 1, 2019. However, CMS proposes to base these adjustments on performance between Jan. 1, 2017, and Dec. 31, 2017.

Will I Participate in MIPS? CMS estimates that most cardiologists will participate in MIPS, at least in the initial years of MACRA implementation. If you are currently participating in PQRS and are not part of a Medicare Accountable Care Organization (ACO) or other CMS model reporting ACO-level quality measures, it is likely that you will participate in MIPS.

Will Anyone Be Exempt From MIPS? Yes, certain clinicians such as those seeing a low volume of Medicare beneficiaries and those participating in an Advanced APM may be exempt from MIPS reporting. Those meeting the Advanced APM exception may still be subject to reporting requirements under their model.

I Am in a Small Practice. Does MIPS Offer Any Flexibility For me? CMS proposes flexibility for small practices and those in rural or health professional shortage areas. For example, CMS proposes that these practices can participate in fewer clinical practice improvement activities and still achieve a full score in that category.

Where Can I Find the Rules on MACRA? The legislation (H.R. 2) was passed and signed into law in April 2015. CMS is currently in the process of creating the detailed policies and regulations implementing the law. The first proposed policies for the 2019 payment year/2017 performance year were released in the spring. Hundreds of individuals and organizations, including the ACC, submitted comments on the proposed policies. CMS will consider the stakeholder feedback and finalize the first set of policies by Nov. 1, 2016. As with the current quality programs, CMS will engage in additional rulemaking to continue to implement and refine MIPS. As the implementation timeline progresses, CMS will continue to issue additional policies and the ACC will continue to engage CMS in discussions on how to implement policies that best support quality cardiovascular care.

How Can I Prepare For MIPS Participation? The first step to preparing for MIPS is to figure out how you and your practice are currently participating in the Medicare quality reporting programs (PQRS, the Value Modifier and the EHR Incentive Program.) You may be able to obtain this information through your practice administrators or hospital administrators. If you are successful in these current programs, you may be well positioned to transition to MIPS.