Preparing for MACRA: Top 3 priorities for 2016

Mark Hefner
Mark Hefner, Chief Executive Officer, Infina Connect

Medicare payments for physician services are about to change drastically. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) was passed to replace the flawed Medicare Sustainable Growth Rate in April of 2015 with overwhelming bipartisan support, but very little attention or fanfare. However, with the release of the long-awaited proposed rule on April 27, 2016, healthcare organizations are beginning to realize the profound implications of this sweeping legislation.

The Department of Health and Human Services has set a goal of tying over half (50 percent) of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models (APMs), such as Accountable Care Organizations (ACO’s) and bundled payments, by the end of 2018. This is the first time in the history of the Medicare program that HHS has set explicit goals for alternative payment models and value-based payments, and the MACRA legislation will serve as the mechanism to achieve this aggressive goal. MACRA is required to be budget neutral, but payments to providers will be increased and decreased based on their quality and value. And the resulting scores will be publicly reported, affecting providers’ reputation with patients and other payers.

What are MACRA, Advanced APMs and MIPS?

At nearly 1,000 pages, the MACRA proposed rule is complex. When the final rule is released later this year, eligible clinicians may have only a few months of preparation before the year one reporting period begins on January 1, 2017 so the time to understand it and get prepared is now. MACRA repeals the sustainable growth rate formula, streamlines multiple quality programs (Physician Quality Reporting Program, Value Based Modifier, and Meaningful Use), and links the majority of fee for service payments to value and quality. MACRA applies to most clinical providers of Medicare Part B services (including physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists), and establishes two payment tracks – Advanced Alternative Payment Models (Advanced APMs) and the Merit-Based Incentive Payment System (MIPS). The proposed rule narrowly defines Advanced APMs as downside risk-bearing models such as Medicare Shared Savings Program Track 2 and Track 3, Next Generation ACOs, Comprehensive Primary Care Plus and a few others, and they must meet minimum thresholds. Advanced APMs receive a 5 percent payment bonus and are not subject to MIPS, since they are already exposed to risk in their payment arrangements. With very few APMs expected to qualify as Advanced APMs, the vast majority of eligible clinicians will be subject to MIPS.

Under MIPS, eligible clinicians will be scored and ranked against each other nationally. Clinician scores during calendar year 2017 will determine payment adjustments in 2019, and this approach rolls forward each year as follows:

  • 2017 Score determines 2019 Payment Adjustment of +4 percent to -4 percent;
  • 2018 Score determines 2020 Payment Adjustment of +5 percent to -5 percent;
  • 2019 Score determines 2021 Payment Adjustment of +7 percent to -7 percent; and
  • 2020+ Score determines 2022+ Payment Adjustment of +9 percent to -9 percent.


In addition, the bottom quartile (25 percent) of clinicians will automatically receive the maximum penalty each year. Despite the penalty risks, the good news is that MIPS offers substantial upside to providers that perform well. The top quartile of clinicians will receive a 10 percent bonus in addition to their positive payment adjustment. There is also the potential for up to an eighteen percent additional bonus for top performers, however this is subject to budget neutrality and funded by surplus only. The potential payment adjustment delta between top performers and low performers could therefore be as much as twenty six percent in 2019, and forty six percent in 2022 and beyond.

Scores are based on quality, resource utilization (cost), advancing care information, and clinical practice improvement as follows.   

  • Quality is 50 percent of score in 2017, and drops to 30 percent in 2019;
  • Cost (resource utilization) is 10 percent of score in 2017, and increases to 30 percent in 2019;
  • Advancing Clinical Information is 25 percent of score; and
  • Clinical Practice Improvement is 15 percent of score.


For APMs subject to MIPS (MIPS APMs) that are already directly tied to beneficiary attribution, quality measurement, or cost/utilization measurement under the APM, there are different scoring standards that weight the four performance categories differently depending on the APM. This allows APM entities and their eligible clinicians to focus on the goals and objectives of the APM to improve quality and lower costs of care, while avoiding duplicative reporting and misalignment of performance goals. For example, for APMs whose payment incentive on performance is already tied to cost/utilization, the weight of the resource performance category will be zero. 

Gaining a competitive edge

In addition to capitalizing on the strong upside potential, eligible clinicians subject to MIPS should start preparing now in order to ensure they are not subject to negative payment adjustments. But where should clinicians focus? The best strategy is to focus on the areas of the MIPS score that will differentiate high and low performers. For example, CPI is the least likely to be differentiating, as there are many ways to maximize scoring. Since ACI is based on Meaningful Use (MU), which the majority of providers have been participating in for a number of years, this is also unlikely to be an area of significant differentiation among top performers. The most important areas to focus on therefore are quality and cost.   

At fifty percent of the score in the first year, quality is certainly a top priority. It is reasonable to expect some initial differentiation in quality, but scores will quickly become more similar and its weighting is reduced in the second and third years. Cost is by far the most difficult to control and also the area that clinicians have the least experience with, and it is expected to be the most highly differentiating category. While MIPS APMs and Advanced APMs won’t receive a Cost score, their Cost performance will directly drive their shared savings and at-risk revenue. The capabilities needed to perform well in this category extend beyond the practice to proactively caring for the patient and coordinating their care across the community when needed, and many clinicians will need time to improve. Clinicians that are able to get ahead of their peers in the cost category are likely to stay ahead, and will therefore become the strongest performers under MIPS in years two and three of the program. They also will be the best prepared to succeed under APM and Advanced APM models, paths that offer greater financial reward for increasing cost reductions.

The bottom line is that regardless of which payment mechanism a provider or group falls under, risk is now unavoidable and long term success requires continuous improvement in the cost and quality of care.

Top 3 priorities for success

In order to optimize payments under Advanced APMs, MIPS, and MIPS APMs, eligible clinicians should focus their efforts on these three areas immediately:

1. Join an APM team, and fully participate

Not surprisingly, solo practitioners and smaller clinics are projected to be the hardest hit by negative payment adjustments. Controlling cost and quality is a team sport across multiple providers, not just your practice. By coming together, clinicians can pool risk, pool resources to implement improved processes and technology, and participate in co-management agreements that will help to improve care coordination for all of your attributed patients. Care coordination is absolutely critical to scoring well and improving outcomes. Additionally, eligible clinician scores will be reported publically either individually or as a group under a tax identification number (TIN), or under an APM. If you “go it alone” and don’t score well, it may become very difficult to join an APM. The basic economics at play here drive the strategy to join an APM now. And every APM should prepare to take on risk as quickly as possible and evaluate a transition to an Advanced APM over the next two to three years.

2. Take control of downstream spend by coordinating referred care with high value referral partners

The average primary care physician makes one thousand referrals every year, thereby influencing ten million dollars in downstream healthcare spend.* That means that a group of 100 primary care physicians influences one billion dollars of healthcare spend every year, and may have over 16,000 patients in the process of receiving care elsewhere at any given time. On average, up to half of this spending may be on Medicare patients. All of this begs the question – how can you successfully manage cost if you don’t know where your patients are? 

The single most overlooked opportunity to control both cost and quality is the referral, because it is both the trigger point that money is about to be spent and an early indicator of a decline in health. Only by placing patients with the highest value provider and maintaining visibility into that patients care across the continuum can providers effectively manage both cost and quality. According to “Adopting Accountable Care: An Implementation Guide for Physician Practices”, Engelberg Center for Health Care Reform at Brookings, developing a high value referral network is critical to success. Closed-loop referral management allows clinicians to refer within their high value referral network, make sure referrals are appropriate and complete so diagnosis and treatment are expedited, coordinate and collaborate with other providers within that network, and maintain visibility into the status of patients while they are being cared for by others. By coordinating referred care for their patients across the community, clinicians are able to maintain control of the downstream quality and cost of care, thereby maximizing their MIPS score and/or APM revenue.

3. Participate in Medicare’s Chronic Care Management Program (CCM)

The aforementioned paper, “Adopting Accountable Care: An Implementation Guide for Physician Practices”, Engelberg Center for Health Care Reform at Brookings, also sites managing high risk patients as a key to success in accountable care. Given that 93 percent of Medicare fee-for-service spend is on people with multiple chronic illnesses**, the importance of proactive and frequent care management of poly-chronic patients cannot be overstated under MACRA. An effective way to address these high risk patients is via the CMS CCM program (CPT 99490), which provides monthly non-face-to-face clinical support between office visits for patients with 2 or more chronic conditions. Through CCM, CMS is both subsidizing the necessary infrastructure and resource investments to be successful under MACRA and helping to fund preventive care management of the most costly segment of the population. Take advantage of it. 

While the final rule won’t be known until late in the year, we know enough now to take action in the right direction. Those that do will have a much higher probability of avoiding penalties. And those that start sooner will also have a first mover advantage that is hard to catch up to. Regardless of how the final rule shakes out and whether or not the start of the performance period is delayed, the strategies outlined above will prepare clinicians to be successful in the new world of risk-based payments.


*Health Reform and Physician-Led Accountable Care: The Paradox of Primary Care Physician Leadership. Farzad Mostashari, MD, MPH; Darshak Sanghavi, MD; Mark McClellan, MD, PhD. JAMA. 2014;311(18):1855-1856. doi:10.1001/jama.2014.4086

**Chronic Conditions Among Medicare Beneficiaries, Chart Book 2012. [PDF – 4.85 MB] Baltimore, MD: Centers for Medicare & Medicaid Services; 2012. Accessed November 18, 2014



Alternative Payment Models, APMs, CCM, Chronic Care Management Program, Infina Connect, MARCA, Medicare Access and CHIP Reauthorization Act of 2015, Merit-based Incentive payment system, MIPS, “Adopting Accountable Care: An Implementation Guide for Physician Practices”


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