MACRA 101: A Series on MACRA

Alanna J. Kroeker
Executive Editor
Loyola University Chicago School of Law, JD 2017


The Medicare Access and CHIP Reauthorization Act (MACRA) was signed into law by President Obama back in April 2015 and one year later, the Centers for Medicare and Medicaid Services (CMS) released the highly anticipated proposed rule.  This 962-page rule is set to significantly alter how Medicare pays for physician services and potentially also how those services are delivered. MACRA aims to align reimbursement with quality and outcome measures and to incentivize providers to move away from fee-for-service towards risk bearing, coordinated care models.  The MACRA Quality Payment Program framework will replace the current Sustainable Growth Rate formula.  Beginning on January 1, 2017, the first reporting period for all Medicare Part B clinicians will commence, which will have a direct impact on reimbursement rates for year 2019.

The MACRA Basics:

MACRA will only affect Medicare physician payments, leaving hospital and Medicaid payments untouched. MACRA will divide eligible clinicians into two different payment tracks based on certain characteristics: the Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs).  Clinicians will be evaluated on an individual basis, thereby binding clinicians to their performance based on specific measurements.


MIPS will replace what we currently think of as the fee-for-service model and streamlines multiple quality reporting programs into this single payment system.  CMS expects that the overwhelming majority of clinicians will start out in MIPS.  MIPS is a budget neutral program which means that CMS expects lower performers to subsidize the higher performers for a neutral budget adjustment.

MIPS will streamline Medicare’s current quality measures into one composite score. The composite score will determine whether reimbursement to a clinician will be positive, neutral, or negative based on the clinician’s performance. The payment adjustments will be based on the composite score from 4 reporting categories: Quality, Resource Use, Advancing Care Information, and Clinical Practice Improvement.  The Quality category will replace the current Physician Quality Reporting System and will make up 50% of the composite score in the first year.  Resource Use will replace the current Value Modifier Program and will account for 10% of the first year’s composite score.  Advancing Care Information is replacing Meaningful Use and will makeup 25% of the composite score in the first year.  Lastly, Clinical Practice Improvement is a new category, accounting for 15% of the score in the first year, and will reward practices for implementing practices to promote beneficiary engagement, care coordination, etc. The first year of performance will be measured in 2017 for payments that will be paid out in 2019.


APMs will reward physicians based on positive outcomes and not for the volume of care provided, like the current fee-for-service model. APMs incentivize new approaches to paying for medical care based on quality and value. Physicians participating in qualifying APMs will be eligible for bonus payments based on meaningful participation. A qualified clinician must have significant participation in an APM to be eligible to be a Qualifying APM Participant (QP). This means that the clinician must have a specific percentage of payments or patients coming through an eligible APM.  Clinicians who qualify as an APM participant are not subject to the MIPS reporting requirements.

Not every risk-based payment model will meet the requirements of an APM.  Physicians participating in an APM must meet three primary criteria to qualify as a QP. First, the clinician must use a certified electronic health records (EHR) system in their practice. Second, the clinician must receive payments based on reliable and valid quality measures, similar to those assessed under MIPS. Finally, the clinicians must bear more than a nominal amount of risk for the monetary losses.

What Now?

Until the final rule is released this fall, organizations who may be subject to MACRA should begin internal discussions with key enterprise stakeholders on how MACRA may impact them.  Furthermore, organizations should begin performing impact assessments to help understand how MACRA implementation may impact different aspects of their organization.  MACRA will likely affect strategic, financial, clinical, technological, operational, and organizational priorities.  It is paramount for organizations to plan and prepare for these changes and make informed strategic choices around moving in a responsible manner towards these MIPS and APM programs.

This article is the first in a series of articles that will be published on MACRA.  Each article will examine a different aspect of the proposed rule in detail.  Additionally, the articles will provide our suggestions on ways your compliance program can adapt and prepare for this change.