MACRA 101: Physician Fee Schedule Adjustments and the New Pick Your Pace Options

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


In this article, we will cover the anticipated reimbursement scheme for both MIPS and APMs, as well as briefly discuss two new reporting paths recently revealed to be available to clinicians in 2017.

One of the most attractive pieces of the proposed MACRA rule is that it repeals the Sustainable Growth Rate formula.  MACRA provides for adjustments to the Medicare Physician Fee Schedule to replace the current Sustainable Growth Rate.  For calendar years 2016-2019, physicians will see a .5% increase in the fee schedule per year.  Physicians will begin receiving payments based off of MACRA performance scores beginning in 2019.  For years 2020-2025, the physician fee schedule will remain at the 2019 levels however, physicians will be receiving adjustments based off of their performance in either the MIPS or APM tracks.  Beginning in 2026 and beyond, physicians in the MIPS track will receive an increase of .25% annually and those in the APM track will see a .75% increase annually.  CMS has incorporated significant incentives for physicians to move towards value-based care and encourages participation in Advanced Payment Models.


Eligible clinicians will be required to start reporting data under the MACRA framework beginning in 2017.  This 2017 data will be used to calculate payment adjustments for year 2019.  Payment adjustments will continue to reflect clinicians’ performance scores from 2 years prior.

Payment Adjustments for MIPS:

The payment adjustments for those physicians in the MIPS track will see a varying degree of positive, neutral, or negative adjustments to their Medicare payments each year beginning in 2019.  The MIPS program is budget neutral, meaning that CMS is anticipating that the lower performing clinicians will subsidize the higher performers.  The MIPS Composite Score will combine all four reporting categories (quality, resource use, advancing care information, and clinical improvement activities) into a nationally measured, overall score between 0 and 100.

Clinicians with an average composite score, when compared nationally, will see no adjustment in their payments.  Those with high or low composite scores will see a positive or negative adjustment, respectively.  The maximum positive or negative adjustments each year are as follows: 4% in 2019, 5% in 2020, 7% in 2021, and 9% for 2022 and beyond.  Exceptional performers, those in the 25th percentile, are eligible to receive additional positive adjustments for years 2019-2024.  On the other hand, those clinicians that fall in the bottom 25% performers will automatically receive the maximum negative adjustment for that year.

Eligibility and Payment Adjustments for APMs:

As a refresher on APM requirements and eligibility, see the first article in our MACRA series.  One benefit of being eligible for an APM is that clinicians will not have to report data under the MIPS categories, nor will they see a fluctuating payment adjustment like MIPS clinicians.  Rather, APM eligible clinicians will see a 5% lump sum bonus for years 2019-2024 and then enjoy a higher fee schedule annual increase beginning in year 2026.

MACRA will also provide some flexibility for other value-based arrangements that do not meet these thresholds.  Some clinicians may be eligible to participate as a Partially Qualifying APM which has slightly lower thresholds for participation.  Those who choose to take the Partially Qualifying path will not have to report under MIPS, but will also not receive the 5% lump sum bonus or the greater annual increase in the fee schedule that qualifying APM clinicians will receive.  The benefit of this path is that clinicians will have fewer reporting requirements and will also not be subject to potential negative adjustments under MIPS.  Partially Qualifying APM clinicians will not have any payment adjustments until 2026 when they will begin receiving the .25% annual increase in their fee schedule.

A second flexible model is called the All Payer APM model.  Beginning in performance year 2019 (reimbursement year 2021), participation in non-Medicare APMs will count towards APM participation eligibility.  Certain thresholds of participation are required in order to be eligible for this payment model.  Clinicians who qualify under the All Payer model will begin receiving incentive payments in 2021.


NEW Pick Your Pace Reporting:

On Thursday, September 8, Acting Administrator of CMS, Andy Slavitt, announced that clinicians will be able to choose from four levels of participation for the first reporting year of MACRA.  This announcement follows many months of feedback from physicians and other industry stakeholders who have voiced concern over the reporting burden imposed upon physicians in the first performance year, 2017.  This “Pick Your Pace” approach will allow those physicians who may not have the manpower to be fully ready for MACRA on January 1st to participate in a limited capacity without being penalized.  In addition to the original MIPS and APM tracks in the proposed rule, CMS is adding two new tracks for providers:

  1. Test the Quality Payment Program

This option will allow physicians to test their own reporting system to ensure they are prepared for full implementation in subsequent years.  Physicians need only submit some data to the Quality Payment Program to avoid a negative adjustment to their 2019 payments.

  1. Participate for part of the calendar year

This option would allow physicians to submit data for a reduced number of days, potentially making the start date later than January 1st.  This may be a good option for smaller practices because there is still potential for a positive payment adjustment.

Both of these options for 2017 show that CMS is listening to interested parties’ comments and concerns.  Smaller practices can now participate in MIPS at a level they feel comfortable doing so, whether that be fully involved or just minimally involved.  These intermediate paths will certainly help the transition to MACRA be smoother for all concerned clinicians.