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February 16, 2017

The ACA May Be in Jeopardy, but MACRA Isn’t Likely to Go Away

By Diane Moes

The Trump administration is expected to bring many changes to the health care industry, but it is unlikely to derail the implementation of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The reforms outlined in MACRA are a significant shift toward value-based payments for physician services and away from traditional fee-for-service (FFS) Medicare reimbursement. MACRA replaces the Sustainable Growth Rate formula with the Quality Payment Program, which creates a framework for paying clinicians who bill for Medicare Part B services based on the value and quality of the services they provide, rather than the volume of those services. The Quality Payment Program is applicable to primary care physicians and specialists, as well as many non-physician practitioners, such as physician assistants and nurse practitioners.

Unlike the Affordable Care Act, Congress passed MACRA with broad, bipartisan support for MACRA’s framework to drive Medicare cost savings, making a repeal of the legislation unlikely. Moreover, Secretary of Health and Human Services (HHS), Tom Price, voted in favor of MACRA. Secretary Price also submitted comments to the Centers for Medicare & Medicaid Services (CMS) regarding the proposed rule to implement MACRA, many of which CMS adopted in the final rule published on November 4, 2016. There is some risk that the new administration could defund the Centers for Medicare & Medicaid Innovation, which would impact the development of new payment and delivery models. Nevertheless, MACRA’s value-based payments for Medicare Part B services are most likely here to stay for 2017 and beyond.


MACRA’s Quality Payment Program has two distinct tracks for value-based Medicare Part B reimbursement: the Merit-Based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs).

MIPS more closely resembles the existing FFS Medicare reimbursement system, but adds a penalty and reward structure to incentivize quality, cost-effective care. Participation in the MIPS program involves reporting four categories of information to CMS: quality, advancing care information, improvement activities, and, beginning in 2018, cost. The MIPS program will make positive or negative payment adjustments based on the data reported for a twelve-month “performance period” that takes place two years prior to the payment year. The first performance period began on January 1, 2017, and CMS will begin making payment adjustments in 2019. CMS will use composite performance scores to calculate payment adjustments, and the magnitude of potential upward and downward adjustments will gradually increase between 2019 to 2022.

Advanced APMs represent a more dramatic shift away from FFS reimbursement. To qualify as an Advanced APM, an alternative payment program, such as an accountable care organization (“ACO”), must meet the following criteria: (1) require its participants to use certified electronic health record (EHR) technology, (2) provide payment based on quality measures comparable to MIPS quality measures, and (3) require that participating APM entities assume more than a “nominal amount” of downside financial risk. A clinician enrolled in an Advanced APM must receive 25% of Medicare B payments through an Advanced APM or see 20% of Medicare patients through an Advanced APM to meet the definition of a Qualified APM Participant (QP), which results in an exemption from the MIPS program and a 5% bonus payment on Part B reimbursements. Clinicians who receive 20% or more of their Medicare Part B payments through an Advanced APM or receive 10% of their Medicare Part B patients through an Advanced APM in 2017 are Partial Qualifying APM Participants (Partial QPs), and will have the option of deciding whether to participate in MIPS but will not receive an automatic bonus. Only a small percentage of alternative payment models qualify as Advanced APMs for 2017, meaning that the overwhelming majority of providers who receive Part B payments will need to participate in the MIPS program or face a penalty this year.

Next Steps

The Quality Payment Program is logistically complex, and will require a significant investment of time and resources from Medicare Part B providers, who had little time to digest the final rule before the commencement of the Quality Payment Program on January 1, 2017. MIPS-eligible clinicians working in small and solo practices who do not meet the low-volume threshold will bear the biggest burden, but even larger organizations will be faced with choices and obstacles in transitioning to MACRA. The good news is that stakes are relatively low in the 2017 “transition” year. Clinicians that bill for Medicare Part B services, and entities that employ them, should take advantage of the transition year to learn more about the program and begin to plan for future years when the risks and rewards will be greater.

1. Review Measures: One of the first steps to participating in MIPS is to choose among the hundreds of quality measures and dozens of improvement activities available. MIPS-eligible clinicians should review measures, specialty measure sets, and activities, and decide which are most applicable to their practice and specialty. CMS finalized specialty measure sets for over twenty medical specialties, such as cardiology, gastroenterology, pediatrics, and mental and behavioral health, and indicated that it plans to develop measure sets for additional specialties and subspecialties in the future. CMS also made a concerted effort to make the Quality Payment Program website informative and user-friendly. The website allows MIPS-eligible clinicians to review measures and specialty measure sets and learn more about the program.

2. Determine How to Report: MIPS-eligible clinicians can submit performance data to CMS in multiple ways, but must choose a single reporting mechanism for each of the four performance categories. Health information technology (IT), such as electronic health records (EHRs) and electronic registries, will play a pivotal role in enabling MIPS-eligible clinicians to more efficiently gather data and report measures in the future, but the health IT industry needs time to adapt products to the requirements of the MIPS program. Some EHR vendors may not be able to support submission for the 2017 performance year, and others will only be ready to support reporting in some categories. CMS is offering the option of submitting an attestation in lieu of performance measures in the advancing care information or improvement activities categories. MIPS-eligible clinicians who are unable to report sufficient quality measures using health IT can report using a claims submission mechanism by appending certain billing codes to eligible claims to indicate to CMS that the required action occurred.

3. Evaluate Health IT: MIPS-eligible clinicians who currently use an EHR system can verify on the Quality Payment Program website that the system is certified by the Office of the National Coordinator for Health Information Technology, and is therefore ready to capture and report some information for the 2017 performance year. Generally, later editions will support additional reporting. Some EHR vendors now employ MACRA Quality Payment Program specialists. MIPS-eligible clinicians should not hesitate to contact their vendors for additional information regarding changes to their products to promote MIPS reporting.

Practices that have not purchased or begun using an EHR system should consider investing in technology that will support their successful participation in the MIPS program. Before choosing a vendor, MIPS-eligible clinicians should consult with their affiliated hospital or provider network to inquire about EHR systems currently in use in the community to ensure appropriate interface. MIPS-eligible clinicians should also ask about the MIPS tracking and reporting functions and support services that will be available and when those functions and services will be available. In negotiating purchase contracts, MIPS-eligible clinicians should seek representations and warranties regarding MACRA compatibility and functionality.

4. Choose What to Report: CMS is allowing MIPS-eligible clinicians to “pick their pace” of participation in 2017 from the following options:

  • Report nothing and receive an automatic 4% payment reduction;
  • “Test” the program by choosing one measure or activity to report on for the 2017 performance period, which will result in a neutral payment adjustment and avoid a penalty in 2019;
  • Report more than one quality measure, more than one improvement activity, or more than the base measures for the advancing care information category for any 90-day period in 2017 to be eligible to receive a small, positive payment adjustment; or
  • Fully report under the quality, improvement activities, and advancing care information categories for at least a 90-day period to be eligible for a larger adjustment.

Of course, MIPS-eligible clinicians should participate to the greatest extent feasible to maximize their potential reward. Those who are overwhelmed by the MIPS program, such as those who did not participate in the reporting programs that MIPS replaces such as the Physician Quality Reporting System and the EHR incentive program, should be aware that CMS set a low bar for participation in 2017. Identifying and reporting a single “test” measure to avoid a 4% reduction in 2019 Medicare Part B reimbursements will undoubtedly be worthwhile.

5. Review Provider Contracts: Entities that compensate physicians and other types of MIPS-eligible clinicians using value-based measures should consider reviewing employment contracts and ensuring that their incentive structures are compatible with MACRA’s measures and incentives. Similarly, entities that currently compensate MIPS-eligible clinicians based on productivity, through a combination of volume of services and revenue generation, should consider shifting toward offering value-based incentives to align compensation with reimbursement for services.

6. Consider Practice Consolidation and Provider Network Participation: Although CMS has offered flexibility in 2017, MIPS-eligible clinicians in small practices and solo practices may find that the administrative burden associated with the Quality Payment Program is too significant to withstand in future years. As the MIPS program rewards and penalties grow larger, joining forces with other MIPS-eligible clinicians may lessen the load of capturing, tracking, and managing measures, and may also provide opportunities for improved scores and higher reimbursement.

MIPS-eligible clinicians who are determined to avoid complete consolidation, however, should be aware that the MACRA legislation provides for the creation of “virtual groups” to assist small practices by allowing them to pool resources and report jointly. CMS has left the specifics of virtual groups to future rulemaking, but Secretary Price has expressed his support for the virtual group concept, which will hopefully be implemented for the 2018 performance period. This may create opportunities for provider networks to expand the services they provide to their participating providers or to expand their networks by adding value to non-participating providers.

Check back for updates regarding additional Quality Payment Program regulatory and sub-regulatory guidance from CMS.

Quality Payment Program Website:

About the Author

Diane Moes

Diane Moes is a partner at Barrett & Singal where she provides general business and corporate legal services to healthcare clients including hospitals, physicians and other healthcare providers, faculty practice plans and provider networks.


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