May 2018

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MACRA & MIPS: An Introduction to the New Medicare Reimbursement Program

brashearsRachael Brashears DO, MBA
University of Missouri Columbia, PM&R Chief Resident
AAPM&R PHiT Council Vice President

In the ever-evolving world of healthcare, physician reimbursement follows the changing trend. For years, the Sustainable Growth Rate (SGR) Formula was used to control the cost of physician spending in Medicare by tying physician payments to growth in the national economy.  In the late 90s, the SGR did not trigger cuts since economic growth was high and medical cost growth was low. However, this changed in 2001, when a declining GDP and increasing medical costs led to an automatic cut to physician payments in 2002, and each year thereafter (1).

CMS was able to abandon the SGR when Congress signed into law a piece of bipartisan legislation that would greatly impact Medicare reimbursement: the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 (2). This impacts the way CMS reimburses for Medicare Part B coverage. MACRA created a Quality Payment Program (QPP) that is focused on reimbursing physicians for the value and quality of care they provide over the volume of medical services rendered (2,3). It provides increased payments for high quality care and better patient outcomes and reduces payments to those clinicians not meeting set performance standards. Some of the aspects of care that are evaluated under this new program include: patient-reported outcomes, functional status, patient experience measures, care coordination measures, and service overuse measures (2).

The QPP provides two pathways for practitioners to choose from based on their specialty, practice size or location, or their patient population (3). The first path is the Merit-based Incentive Payment System (MIPS). MIPS is a new approach for clinician reimbursement based on their performance in 4 key categories: Quality, Improvement Activities, Promoting Interoperability (formerly known as Advancing Care Information), and Cost (3,4). Essentially, it acts as a performance-based payment adjustment.

For the Quality performance category, the clinician chooses 6 quality measures to report on that best fits their practice, one of which must be an outcome measure or a high priority measure (3). For each measure, data must be submitted for at least 60% of the applicable patients of that practice (5).

The Improvement Activities performance category identifies participation in activities that improve clinical practice or patient care delivery. CMS has a list of 113 improvement activities that are listed on their website that qualify for inclusion in this performance category (1). Each of these activities falls into 1 of 9 subcategories that impact clinical practice or care delivery: Expanded Practice Access, Population Management, Care Coordination, Beneficiary Engagement, Patient Safety and Practice Assessment, Participation in an Advanced Practice Model (APM), Achieving Health Equity, Integrating Behavioral and Mental Health, and Emergency Preparedness and Response (3).  Depending on the size of the healthcare practice, the clinician must attest to participating in up to 4 of these activities (3).

The Promoting Interoperability performance category encompasses the use and compatibility of health information technologies and how it impacts patient care (4). This helps coordinate care by sharing with the patient and other healthcare providers important information regarding patient test results, visit summaries, treatment plans, etc. (4). The Promoting Interoperability performance category requires clinicians to report on measures that demonstrate their use of federally certified electronic health record technology (CEHRT) to improve care processes, enhance patient engagement in care, and increase patient access to care (4).

The Cost performance category uses cost measures to gauge the clinician’s total cost for patient care compared to their peers. This is the only performance category that does not require the clinician or practice to report data to CMS; instead, CMS will use claims data analysis to automatically determine performance in Total Per Capita costs and Medicare Spending Per Beneficiary costs (6).

Each of these performance categories is weighted differently and will be used to create a MIPS Composite Performance Score for the clinician that will impact whether their reimbursement amount is increased, decreased, or maintained compared to their peers (5). The weighted value of each performance category is set to change over the next several years as implementation of this new reimbursement system takes place. For instance, the 2019 MIPS performance categories weights will be: Quality 50%, Advancing Care Information 25%, Practice Improvement Activities 15%, and Cost Performance 10% (3, 5).[1] Although the weight distribution for future years of MIPS has not yet been determined, CMS is required by law to gradually increase the weight of the cost category and to decrease the weight of the quality category.

Each weighted performance category score is then combined to calculate the total MIPS composite score. This final score then determines which reimbursement adjustment the clinician or practice will obtain. It is important to note that yearly performance data will impact reimbursement 2 years later. For instance, if the total composite score is 0-14 points in 2018, their Medicare Part B reimbursement amount can decrease by as much as 5% in 2020 (5). A total composite score of 15 points in 2018 translates into a neutral payment adjustment, meaning there will be no adjustment to Part B reimbursements in 2020 (5). Total composite scores in the 16-100 points range will be eligible for nominal to increasingly larger upward adjustments. However, since MIPS is a budget neutral program, the extent of the upward adjustments cannot be determined until CMS determines the total amount of penalties (5). For any total composite score greater than or equal to 70 points, the clinician or practice will be eligible for an Exceptional Performance Bonus (up to 10%) in addition to any upward adjustment to their reimbursement rates for 2020 (5).

In addition to the weighted adjustment of each category changing over the next several years as the implementation of MIPS takes effect, the payment adjustment is also set to change. For example, in 2019 the maximum MIPS payment adjustment is capped at -4%; in 2020 it increases to -5%; in 2021 it again increases to -7%; and from the year 2022 and on it caps at -9% (5). These yearly reimbursement adjustments are each calculated from performance data that was submitted two years prior. As noted earlier, the combined bonuses and penalties provided to clinicians through the MIPS path must be budget neutral (5,7), meaning that one clinician’s increase in performance and thus reimbursement must be offset by reducing payment to another clinician who submitted inferior performance data.

2017 was the first year of MIPS and considered a transition year, where physicians/practices could choose the level of participation they wanted to pursue and avoid a payment penalty based on very minimal action (3,5,7). CMS extended some of its transition year policies to 2018 in order to provide an on-ramp for clinicians with varying levels of readiness.  For example, CMS authorized multiple reporting and scoring accommodations for small and rural practice clinicians in 2018, as well as bonus points for clinicians who treat higher risk patients.  CMS also expanded the number of clinicians that will be automatically exempt from MIPS in 2018, by increasing what it refers to as the “low-volume threshold (8).”  Clinicians may be considered exempt from MIPS in 2018 if they are new to Medicare in the current enrollment year, a qualifying participant in an Advanced APM, or if they meet an expanded low volume threshold of 200 or fewer Medicare part B beneficiaries served, bill less than $90,000 for services for Medicare part B beneficiaries (8). Otherwise, if a clinician is not exempt and they fail to satisfy the minimum reporting requirements for MIPS, their Medicare Part B reimbursement will be cut by the full penalty percent for that given performance year.

The second pathway for the QPP is the Alternative Payment Model (APM). This pathway provides clinicians who participate sufficiently in what CMS considers an “Advanced APM” with the opportunity to earn a lump sum Medicare payment of 5% from 2019-2024 (9,10). For 2026 and beyond, clinicians eligible for this track would receive higher annual Medicare physician fee schedule updates than their counterpart (10). To qualify for this track, the clinicians must receive a significant share of their revenues, or see a significant share of their patients, through a risk-based APM that relies on CEHRT and MIPS-like quality measures (10). Currently, the following programs are the only ones that will qualify as an Advanced APM: Vermont Medicare ACO Initiative; Comprehensive ESRD Care; Comprehensive Primary Care Plus; Next Generation ACO Model; Medicare Shared Saving Program ACO’s- Tracks 1+, 2 and 3; Oncology Care Model- two-sided risk model; and Comprehensive Care for Joint Replacement Payment Model- Track 1 CEHRT (9,10). Clinicians who qualify for this track are exempt from MIPS and the lump sum bonus is provided regardless of the APMs performance. However, clinicians in these APMs are also still subject to any shared savings or shared losses experienced by the APM.  Due to the relatively strict qualification standards, it was projected that only 4-11 percent of Medicare providers would be able to participate in the APM pathway during the first year of implementation (7).  The number of models that qualify for the APM track of the QPP is expected to increase over time as CMS modifies and expands the eligibility criteria (10).

Clinicians who participate in select APMs, known as MIP APMs, do not satisfy the minimum thresholds required of the Advanced APM track of the QPP, and must still participate in MIPS (9). However, these clinicians are held to the “APM Scoring Standard,” which aims to minimize reporting burden and provide some MIPS scoring accommodations to recognize investments in quality and value already being made through the APM (9).

The only constant in healthcare is change. Over the years we have read about, witnessed, and endured many changes in healthcare reimbursement. Medicare continues to alter its reimbursement schedule with a focus on cost containment and quality improvement. Private insurance tends to follow Medicare’s trend over time. Although at times it can be overwhelming and frustrating, it is important to educate ourselves on this evolving process now so that we can best be prepared for the future. The AAPM&R has more information on MACRA and MIPS along with resources to help physiatrists navigate the reporting requirements. Visit for more information.




[1] Note that there are special circumstances under which these weights may be adjusted.