How MACRA, MIPS, and APMs will impact your Medicare payments

Capitol 2

The Medicare Access and CHIP Reauthorization Act (MACRA) has been a newsworthy topic since it was signed into law in April 2015 for more reasons than one. Not only does this progressive piece of legislation permanently repeal the flawed Sustainable Growth Rate (SGR) formula for determining Medicare payments for clinicians’ services, but it also establishes a new framework that rewards physicians for value over volume and streamlines other existing quality reporting programs into one new system.

Beginning in 2019, the Centers for Medicare and Medicaid Services (CMS) will implement a new two-track reimbursement system under which providers will be rewarded for delivering high-quality, cost-effective care and encouraged to shift toward alternative payment methodologies. Because these sweeping changes will have a major impact on physician organizations and other Medicare providers, it is important to understand what to expect over the next few years as payment reform changes the face of Medicare.

Track 1: Merit-Based Incentive Payment System (MIPS)

This new CMS program can be thought of as an enhanced fee-for-service model and will replace three current Medicare quality and payment programs: the Physician Quality Reporting System (PQRS), the Value-Based Payment Modifier (VBPM), and the Medicare EHR Incentive Program (Meaningful Use). MIPS combines the efforts of these three programs into a single consolidated program with four weighted performance categories:

  • Quality (30%)
  • Resource Use (30%)
  • Meaningful Use of Certified EHR Technology (25%)
  • Clinical Practice Improvement Activities (15%)

Based on their performance in each of the above four categories, providers would receive a composite performance score that ranges from 0 to 100. Like current Medicare quality programs, MIPS will incorporate penalties and bonuses, which will be based on performance scores that are above or below annual thresholds will be on a sliding scale. Maximum penalties under MIPS will top out at 4% in 2019 and reach up to 9% in 2022 and beyond.

Physicians and other eligible providers with scores above the threshold in years 2019 through 2024 will receive proportionally larger incentive payments up to three times the annual cap for negative payment adjustments. A second threshold for exceptional performance set at the top 25% ensures that the highest performing physicians are eligible for additional payments. It is important to note that the MIPS payment track under MACRA is budget neutral, which means that while some participants will see major financial upsides, a large number of providers in the system will be paid less.

Track 2: Alternative payment model participation

As an alternative to MIPS participation, which is largely rooted in fee-for-service reimbursements and will have relatively flat reimbursement increases over the next 10 years, providers who have a significant Medicare population can participate in a second track that focuses on alternative payment models (APMs), which offer significantly higher financial returns for taking even greater risk. Physicians participating in approved APMs will not be subject to MIPS adjustments and will instead receive lump sum incentive payments. Qualifying APMs are innovative payment models that meet the following criteria:

  • Uses quality measures comparable to measures under the MIPS
  • Uses certified electronic health record (EHR) technology
  • Bears more than nominal financial risk OR is a medical home expanded under the Centers for Medicare and Medicaid Innovation (CMMI) model
  • Has increasing percentage of payments linked to value through Medicare or all-payer APMs

To encourage physicians to participate in APMs and to help offset investments or other costs they may incur, the legislation provides 5% bonus payments from 2019 to 2024 for physicians and physician organizations that join new models. Qualification for this incentive is based on receiving a portion of Medicare revenue through an APM. To earn the 5% incentive payment in 2019 and 2020, at least 25% of Medicare revenues must be through an APM. This percentage increases in 2021 and 2022 to 50% of Medicare revenues through an APM in order to receive the 5% incentive bonus.

The APM incentive payment is available to physicians in addition to the opportunities for increased revenues that many APMs provide if the physician practice generates savings. One advantage of participating in this MACRA payment track is that physicians would only be subject to the quality reporting requirements for their APM; they would be exempt from the MIPS program.

Preparing for MIPS and APMs right now

Many of the details for how MACRA will be implemented have yet to be finalized through federal rulemaking. CMS has requested information from the public and is in the process of working with stakeholders from the physician community to ensure that each component is finalized with feedback from those whom it will effect. However, as we wait for more regulatory details to emerge, physicians should be taking steps to prepare, including:

  • Participate in PQRS by reporting quality measures through a qualified registry
  • Document prescriber NPI on all Medicare Part D claims
  • Begin using a certified EHR or take steps to ensure that EHR documentation is a regular part of your physician’s workflow so that this data can be leveraged for quality measure performance
  • Stay informed of new information about MACRA, MIPS, and APM implementation as they emerge by signing up for our newsletter

For more information on MACRA, read our next post outlining other important provisions beyond MIPS and APMs.

Further reading:
How using the MIPS 90-day reporting period will increase your 2017 Composite Score
Avoiding a penalty in 2018 MIPS: the nuts and bolts

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