Breaking Down The MACRA Proposed Rule

The mother ship has landed. On Wednesday, April 27, the Centers for Medicare and Medicaid Services (CMS) released the highly anticipated proposed rule that would establish key parameters for the new Quality Payment Program, a framework that includes the Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs). These policies were established by the latest, permanent ‘doc fix,’ the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).

For additional background, please refer to recent Health Affairs Blog posts on MACRAMIPS, and APMs, as well as a comprehensive brief on MACRA. This post briefly outlines the key elements of the proposed rule.


The proposal defines which eligible clinicians will initially participate in the Quality Payment Program via MIPS, with CY 2017 proposed as the first performance period on which CMS plans to base the CY 2019 payment adjustment. Eligible clinicians include physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and groups that include such clinicians.

As outlined in MACRA, the proposal would consolidate three currently disparate Medicare quality programs into MIPS: (1) the Physician Quality Reporting System; (2) the Value-Based Modifier Program; and, (3) the ‘Meaningful Use’ of electronic health records. CMS proposes that eligible clinicians receive a composite score relative to their performance in each of four categories. Quality measures for these core domains will be selected annually, with the data regarding clinician performance on the measures made available via the Physician Compare website.

The four performance categories are:

  1. Quality: 50 percent of total score in year 1;
  2. Advancing Care Information: 25 percent of total score in year 1, formerly EHR Meaningful Use;
  3. Clinical Practice Improvement Activities: 15 percent of total score in year 1, this is essentially the “new” domain added to the previously existing other three; and,
  4. Cost or Resource Use: 10 percent of total score in year 1, based on Medicare claims data – no reporting necessary.

Importantly, in an accompanying blog post, CMS delineates changes made to the Meaningful Use program, as incorporated into MIPS as the “Advancing Care Information” domain identified above. The Advancing Care Information proposal aims to “support the vision of a simpler, more connected, less burdensome technology,” CMS states. The proposal will, among other things, “[a]llow physicians and other clinicians to choose to select the measures that reflect how technology best suits their day-to-day practice” and will “[r]educe the number of measures to an all-time low of 11 measures, down from 18 measures, and no longer require reporting on the Clinical Decision Support [CDS] and the Computerized Provider Order Entry [CPOE] measures,” the agency states.

Finally, in an important parallel policy thread that continues to unfold, CMS cites ongoing work to assess the issue of risk adjustment for socioeconomic status (SES) on quality measures, with a report due to Congress on this front by October 2016. CMS notes that it “will closely examine the [SES] recommendations” and incorporate them to the degree feasible and appropriate via future rulemaking.


CMS proposes an approach to implementing the MACRA APM pathway through which eligible clinicians can become “qualifying participants” and earn statutorily specified incentives for participation. Advanced APMs must meet three proposed requirements deriving from the MACRA statute:

  1. Required use of certified EHRs;
  2. Payment for covered professional services based on comparable quality measures; and,
  3. Either being an enhanced medical home or bearing more than “nominal risk” for losses.

A key element stakeholders have been looking for CMS to define is the degree of risk an APM must bear to quality. CMS proposes a “generally applicable financial risk standard” that requires APMs to include provisions that, if actual expenditures exceed expected expenditures, CMS can withhold payment, reduce payment rates, or require the APM to incur a debt to CMS. The risk must be more than nominal, which CMS defines—in true Goldilocks fashion—as “meaningful for the entity but not excessive.” If you want to know more here, check Table 28 in the proposal.

Additionally, to qualify clinicians for enhanced payments under MACRA, APMs must be compulsory, have a clear “thesis” that they are testing, and require participants to have a formal agreement with CMS. If APMs offer multiple tracks varying the degree of financial risk or tailoring participation to different types of organizations, CMS would “assess the eligibility of each such track or option within the APM independently.” CMS proposes that the agency will notify the public online of the APMs qualifying as Advanced APMs prior to each performance period, which will begin no later than January 1, 2017. Table 32 has a preliminary list.

MACRA requires CMS to establish criteria to be used by a Physician-Focused Payment Model Technical Advisory Committee (PTAC – aka, the doctor voice in all of this) to make comments and recommendations on proposed physician-centric APMs.

The proposed criteria are organized into three categories:

  • Criteria that promote payment incentives for higher-value care;
  • Criteria that address care delivery improvements that promote better care; and,
  • Criteria that address improvements to the availability of information to guide decision-making (through the use of Health IT, e.g.).

Back To The Big Picture

CMS estimates that in 2019, the first year in which there will be a payment consequence for MIPS performance, $500 million in “exceptional performance payments” will be distributed to eligible clinicians. Further, the agency will make around $200 million in APM incentive payments that year.

CMS plans to post additional information relative to the proposal on its MACRA MIPS/APM landing page here. Comments on the proposed rule are due on or around June 27, depending on the date of formal publication in the Federal Register. Enjoy.

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