MACRA/O Level Changes Coming with MIPS and APMs: An In-Depth Look at Medicare’s Proposed Physician Payment System Reform

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1. Executive Summary

With the dirt barely settled on the unmourned grave of the Medicare sustainable growth rate (SGR) methodology for updating physician fee schedule payments, CMS published a proposed rule that would represent the most fundamental change to Medicare’s philosophy for compensating physicians since it implemented its Resource-Based Relative Value Scale fee schedule beginning in 1992.

On May 9, 2016, CMS published in the Federal Register a proposed rule (the “Proposed Rule”) that would implement the numerous and far-reaching changes to the Medicare physician reimbursement system mandated by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which was signed by the President on April 16, 2015.

Among other things, MACRA repealed the SGR and established a two-track payment system designed to implement the bi-partisan goals shared by Congress and the President of moving substantial proportions of Medicare payments away from pure fee-for-service (FFS) reimbursement and towards payments that encourage quality patient care and efficient resource utilization.

Under the Proposed Rule, Medicare participating physicians and other clinicians would generally continue to receive payments under the Medicare Physician Fee Schedule, but those payments would be subject to adjustments under one of two main quality payment programs:

  • The Merit-Based Incentive Payment System (MIPS), with possible upward or downward adjustments starting at 4 percent in 2019 and increasing to 9 percent by 2022; or
  • The Advanced Alternative Payment Model (APM) path, with the potential for incentive payments of up to 5 percent on top of existing incentive payments that are available to clinicians as part of the underlying APM models in which they participate.

Because both the MIPS and APM models depend heavily on measuring patient quality of care and costs, much of the Proposed Rule focuses on the types of information clinicians must report under the models and the mechanisms for data submission. In response to loudly expressed concerns from stakeholders gathered by CMS in preparing the Proposed Rule, CMS took pains to attempt to limit additional administrative and data reporting burdens on providers in the design of the programs. As such, the Proposed Rule would eliminate the distinct existence of the current Physician Quality Reporting System, the Value-Based Payment Modifier, and the Medicare EHR Incentive Program (with respect to eligible professionals). These programs, along with their data reporting requirements, will sunset and be consolidated into the MIPS.

MACRA represents the latest, and perhaps the most specific and focused, attempt to reform Medicare payments towards value-based reimbursement and away from FFS. While Medicare has implemented numerous programs in recent years designed to accomplish this goal, the changes mandated by MACRA and contemplated by the Proposed Rule stand out for several reasons:

  • They were based on broad bi-partisan support both in the Congress and the President’s administration.
  • The reforms are comprehensive within the reimbursement system for physicians and other clinicians, rather than demonstration or limited-scope projects.
  • The proposal at least attempts to build on and consolidate the current hodgepodge of value-based reimbursement programs, rather than add yet another novel payment experiment.

The Proposed Rule aims to replace the current complicated patchwork of value-based payment programs with a unified program that will be at least as complex as the current state of affairs. Whereas many of the current Medicare value-based payment projects for physicians are voluntary, all physicians and clinicians will at least be subject to MIPS measures and payment adjustments, whether they like it or not, and whether they decide to actively engage in the process or not. For many physicians and groups, particularly those already participating in APMs, the Proposed Rule may represent a real and significant opportunity to be rewarded financially for their efforts. For many more physicians and groups, however, the default MIPS payment track may represent both a large new administrative burden and potentially punishing downside reimbursement risk.

CMS has embarked, at the direction of Congress, on an ambitious reform in which it has sought to limit administrative burdens on physicians and other clinicians to the extent possible. In fact, the Proposed Rule includes both lower reporting requirements and support resources for smaller physician groups that CMS has recognized may not be well-positioned to make the transition to MIPS or APM incentives. Due to the complexity of the proposed payment system, the many existing programs with which it interacts and its general application to all Medicare physicians and clinicians, however, CMS and the provider community face yet another potentially difficult transition driven by new Medicare regulations.

Comments on the Proposed Rule are due on June 27, 2016.

2. The Merit-Based Incentive Payment System

One of two tracks proposed under MACRA to pay physicians under Medicare FFS, MIPS categorizes certain clinicians depending upon the extent of their participation in APMs and places their FFS payments at risk as determined by the clinicians’ performance in four value-based incentive categories. The incentive categories include Quality Clinical Practice Improvement (CPIA), Resource Use, and Advancing Care Information. CMS will measure performance in one year increments, a composite score will be calculated and, based on two-year-old data, CMS will make adjustments to payments, either upward, neutral or downward. While concessions are made for certain clinicians, including those in existing APMs and physicians in small, independent practices, MIPS poses a number of challenges to the majority of clinicians in terms of available resources for coordination, patient engagement and electronic infrastructure and may influence their decision-making as to integration with other clinicians and/or health systems.

MIPS Category Measures and Activities

MIPS “eligible” clinicians and groups must submit data on measures and activities for Quality CPIA and Advancing Care Information performance categories, but not for the Resource Use performance category. Individual clinicians and groups may choose to submit their quality CPIA and Advancing Care Information data using a qualified registry, Qualified Clinical Data Registries (QCDRs) or EHR submission mechanism, or via a health IT vendor. Individual clinicians may elect to report Quality information via Medicare Part B claims, and their CPIA and Advancing Care information data through attestation. Groups may also elect to submit their CPIA or Advancing Care Information data through attestation. Groups electing to include the Consumer Assessment of Healthcare Providers and Systems (CAHPS) as a quality measure must use a CMS-approved survey vendor to submit the CAHPS. CMS proposes various submission deadlines according to the method of submission used.

MIPS Definitions

MIPS Eligible Clinicians

The MIPS adjustment factors are applicable only to individuals who qualify as MIPS eligible clinicians for the applicable year, even if non-eligible clinicians voluntarily report measures under MIPS. A “MIPS eligible clinician” means a physician, physician assistant, nurse practitioner, clinical nurse specialist, certified registered nurse anesthetist, or a group that includes such professionals.1

MIPS will include alternative performance measures and requirements for non-patient-facing MIPS eligible clinicians, defined as individual MIPS eligible clinicians or a group that bills 25 or fewer patient-facing encounters during a performance period. Non-patient facing clinicians include radiologists and anesthesiologists. The Proposed Rule includes telehealth services in the definition of patient-facing encounters. A proposed list of patient-facing encounter codes will be published on a CMS website.

MIPS Eligible Clinician Identifier

CMS proposes to use multiple identifiers – a combination of billing TIN/NPI – that allow MIPS eligible clinicians to be measured as an individual or collectively through a group’s performance. The same identifier should be used for all four MIPS performance categories. For group reporting, the group’s billing TIN will be the MIPS identifier. If a group is submitting information collectively, then it must be measured collectively for all four MIPS performance categories.

The Proposed Rule defines “group” for MIPS purposes as consisting of a single TIN with two or more MIPS eligible clinicians (as identified by their individual NPIs) who have reassigned their billing rights to the TIN. In order to have its performance assessed as a group, the group must meet the proposed definition of a group at all times during the performance period.

Exclusions from MIPS

The following categories of clinicians would be excluded from the definition of “MIPS eligible clinician” and not subject to the MIPS adjustment: (1) professionals who first become Medicare-enrolled eligible clinicians during the performance period for the applicable year and who have not previously submitted claims as a Medicare-enrolled eligible clinician; (2) Qualifying APM Participants and Partial Qualifying APM Participants; and (3) clinicians that do not exceed the low-volume threshold, meaning that during the performance period they have Medicare billing charges less than or equal to $10,000 and provide care for 100 or fewer Plan B beneficiaries.

MIPS Performance Period

The MIPS adjustment applies to payment for items and services furnished on or after January 1, 2019. The proposed performance period under MIPS is the calendar year (January 1 through December 31), which is two years before the year in which the MIPS adjustment is applied. For example, the performance period for the 2019 MIPS adjustment would be the full calendar year 2017. Individual MIPS eligible clinicians and group practices with fewer than 12 months of performance data to report will be required to report all performance data available from the performance period.

Quality Performance Category

MACRA requires CMS to develop a methodology for assessing the total performance of each MIPS eligible clinician according to performance standards and, using that methodology, to calculate a composite performance score (CPS) for each MIPS eligible clinician. The chart below describes the percentages of CPS allocated to the Quality performance category, which will decline over time:

2019 MIPS Adjustment Year


2020 MIPS Adjustment Year


2021 and Future Adjustment Years


Individuals and groups submitting data via any mechanism except for CMS Web Interface or CMS-approved survey vendors for CAHPS must report at least six measures, including one cross-cutting measure, at least one outcome measure and a specialty measure set. As an alternative to reporting an outcome measure, clinicians and groups may elect to report at least six measures including one cross-cutting measure and one high-priority measure, which includes outcome, appropriate use, patient safety, efficiency, patient experience, and care coordination measures. CMS proposes that non-patient-facing MIPS eligible clinicians will not be required to report a cross-cutting measure, but will be required to meet the otherwise applicable submission criteria.

The CAHPS for MIPS survey consists of the core CAHPS Clinician & Group Survey developed by the Agency for Healthcare Research and Quality. Groups may register and voluntarily elect to participate in the CAHPS for MIPS survey, which will have a six-month lookback period. The CAHPS for MIPS survey will count as one cross-cutting and one patient experience measure. Additionally, a group must choose another submission mechanism to submit at least five other Quality measures.

CMS proposes different “completeness criteria” according to the submission method used. MIPS eligible clinicians and groups who do not meet these proposed reporting criteria will fail the MIPS Quality component.

Selection of Quality Measures for Individual MIPS Eligible Clinicians and Groups

Annually, the Secretary will issue a “Call for Quality Measures” through a notice for proposed rule-making to establish a list of quality measures available for selection by MIPS eligible clinicians. Eligible clinician organizations may identify and submit quality measures for the list which, to the extent practicable, must address all “quality domains.” MACRA defined “quality domains” are interpreted by CMS to include the six following domains: (1) patient safety; (2) person and caregiver-centered experience and outcomes; (3) communication and core coordination; (4) effective clinical care; (5) community/population health; and (6) efficiency and cost reduction. MACRA requires the Secretary to submit new measures for publication in applicable specialty-appropriate, peer-reviewed journals before including such measures in the final annual list of quality measures.

Resource Use Performance Category

The Resource Use performance category, otherwise known as the “Cost” Category, will account for 10 percent of the MIPS score in the first year, and not more than 15 percent in the second year. This category replaces the Value-Based Modifier (VBM) Program; however, the Cost category will draw from the VBM program’s current standards for measures of reliability, patient attribution, risk adjustment, and payment standardization with an enhanced methodology through clinician input. As CMS calculates scores based on Medicare claims, no additional reporting requirements for clinicians under this category would be required.

In conjunction with using total per capita costs for all attributed beneficiaries (the “total per capita cost measure”), this category would use over 40 episode-specific cost measures, each worth 10 points, for populations with specific conditions that require high-cost procedures, have high variability in resource use, or are for high impact conditions. The episode-specific cost measures account for differences among specialties. All measures would be adjusted for geographic payment rate adjustments and beneficiary risk factors and a specialty adjustment would be applied to the total per capita cost measure.

To be scored, clinicians must see a sufficient number of patients, generally a minimum of 20 patients. The average of all cost measures attributable to a particular clinician will equal that clinician’s cost score. For example, if a clinician has only three cost measures with sufficient patient volume to be scored, then the total number of points that clinician may earn is 30, and the clinician’s score would be the number of points earned divided by the 30 possible points. If a clinician does not have the patient volume for any cost measures, then a cost score is not calculated. In this case, CMS will rewrite the Resource Use performance category to zero, and adjust the other MIPS performance category scores to make up the difference in the total MIPS score.

Clinical Practice Improvement Activity Category

The CPIA category accounts for 15 percent of the MIPS score in the first year. This category focuses on using a patient-centered approach to program development. CPIA means “an activity that relevant eligible clinician organizations and other relevant stakeholders identify as improving clinical practice or care delivery, and that the Secretary determines, when effectively executed, is likely to result in improved outcomes.” Included in the CPIA category are baseline requirements that will become more stringent in future years, laying the groundwork for expansion towards continuous improvement.

Specifically, under this category MIPS would reward CPIAs that clinicians would select from a list of more than 90 options across the following categories: (1) Expanded Practice Access; (2) Beneficiary Engagement; (3) Achieving Health Equity; (4) Population Management; (5) Patient Safety and Practice Assessment; (6) Emergency Preparedness and Response; (7) Care Coordination; (8) Participation in an APM, including a Medical Home; and (9) Integrated Behavioral and Mental Health.

Clinicians’ scores would be determined by weighing the reported activities. The highest potential score would be given to a MIPS eligible clinician or group certified during a performance period as a patient-centered medical home or comparable specialty practice, as determined by the Secretary. For additional activities, CMS would use a differentially weighted model with two performance categories—medium and high. Highly weighted activities, worth 20 points, would include those activities that support the patient-centered medical home, as well as activities that support transformation of a clinical practice or a public health priority (for example, follow-up on patient experience or seeing Medicaid patients in a timely manner). Medium weighted activities would be worth 10 points.

To receive CPIA credit, MIPS clinicians must perform CPIAs for at least 90 days during the performance period. Non-patient facing clinicians (for example, pathologists or radiologists) must report on only one activity. Small clinical practices (15 or fewer clinicians) and practices in rural areas will be afforded special consideration allowing submission of a minimum of one activity to achieve partial credit or two activities to achieve full credit.

Paralleling the Quality measures’ annual call for measures, nomination and acceptance, CMS plans a call for measures and activities process for future years, allowing relevant stakeholders to recommend activities for potential inclusion on an inventory of CPIAs.

Advancing Care Information Category

The Advancing Care Information category, formerly “Meaningful Use,” would account for 25 percent of the MIPS score in the first year. CMS intends for the requirements of this category to continue supporting the foundational objectives of the Health Information Technology for Economic and Clinical Health Act, and to encourage continued progress on key uses such as health information exchange and patient engagement to improve care coordination.

For the first MIPS performance period, January 1, 2017, through December 31, 2017, MIPS eligible clinicians may use Electronic Health Record (EHR) technology certified to either the 2014 or 2015 ONC Health IT Certification Program Editions to report a customizable set of measures reflecting use of EHR technology in day-to-day practice. But, beginning in 2018, MIPS eligible clinicians may use only the 2015 Edition certified technology.

The overall Advancing Care Information score would be a base score and a performance score, each accounting for 50 points. Clinicians may achieve the maximum score in the Advancing Care Information category via multiple paths.

Base Score

Clinicians must provide a numerator (of at least one) and denominator or a “yes/no” statement (only a “yes” statement would qualify for credit) for each objective and measure to receive the base score. The six objectives and their measures that require reporting for the base score are as follows: (1) Protect Patient Health Information (yes/no); (2) Patient Electronic Access (numerator/denominator); (3) Coordination of Care Through Patient Engagement (numerator/denominator); (4) Electronic Prescribing (numerator/denominator); (5) Health Information Exchange (numerator/denominator); and (6) Public Health and Clinical Data Registry Reporting (yes/no). CMS places greater importance on the Protect Patient Health Information Objective. The response to this objective must be a “yes,” or the clinician will not receive any score in the Advance Care Information category.

Performance Score

Eligible clinicians may earn additional points above the base score for performance of the following: (1) Patient Electronic Access; (2) Coordination of Care through Patient Engagement; and (3) Health Information Exchange. Under the three performance objectives, eight associated measures each would be assigned a total of 10 possible points. In other words, for each measure, a MIPS eligible clinician may earn up to 10 percent of his or her performance score. Therefore, the performance score accounts for up to 80 points towards the total Advancing Care Information category score. Note the score can exceed 100 points, but anyone who scores 100 points or above will receive only the maximum 25 points towards the MIPS score. As these measures focus on promoting health behaviors by patients, CMS believes the approach for achievement above a base score would provide MIPS eligible clinicians a flexible and realistic incentive toward the adoption and use of certified EHR technology.

Public Health Registry Bonus Point

Up to one bonus point of the total Advancing Care Information category may be earned by clinicians choosing to report on more than one public health registry beyond the immunization category. The base score, performance score and bonus point (if applicable) are added together for a total of 131 points. If clinicians earn 100 points or more, they receive the full 25 points in the Advancing Care Information category. If fewer than 100 points are earned, the overall score in MIPS declines proportionately. Scoring is not all or nothing.

Since the above objectives and measures are inapplicable to all MIPS eligible clinicians (such as hospital-based clinicians or those in a rural practice without sufficient internet access), CMS proposes to reweight the Advancing Care Information performance category to zero for these clinicians and adjust the other MIPS performance category scores accordingly.

APM Scoring Standard for MIPS Eligible Clinicians Participating in MIPS APMs

To reduce the reporting burden on APM participants, the proposed rule would eliminate the need to submit data for both MIPS and the corresponding APM. For purposes of this APM scoring standard, an APM participant would include “an entity participating in an APM under an agreement with CMS that may either include eligible clinicians or be an eligible clinician and that is directly tied to beneficiary attribution, quality measurement, or cost/utilization measurement under the APM.” As discussed below, qualifying APM participants, as well as partial qualifying APM participants (unless they choose otherwise), are not MIPS eligible clinicians and are thus excluded from MIPS payment adjustments. All other eligible clinicians participating in APMs are MIPS eligible clinicians and are subject to MIPS reporting requirements and payment adjustments. Assessment of eligible groups of clinicians will be made based upon their collective performance as an APM Entity group. To avoid misaligned standards, the APM scoring standard will be used for MIPS/APM participants meeting the criteria in the proposed rule.

The performance period for MIPS/APM participants would match the generally applicable performance period for MIPS. The APM scoring standard as a MIPS CPS would be generated by aggregating all scores for MIPS/APM participants. For purposes of using the APM scoring standard, MIPS eligible clinicians will be considered part of an APM Entity group only if they are listed as MIPS/APM participants on December 31 of a performance period. One MIPS CPS for each APM Entity group would be calculated and applied to all MIPS eligible clinicians in the group. Going forward, the participating clinicians would be provided relevant year-to-year feedback.

Shared Savings Program & Next Generation ACO Model

For the first MIPS performance period, MIPS/APM participants (Shared Savings Program, Next Generation ACO Model ACOs and APMs other than Shared Savings Program and Next Generation ACO Model) will not be assessed under the Resource Use performance category, and this category’s weight will be redistributed.

MIPS eligible clinicians participating in the Shared Savings Program would submit data as follows:

  • Quality measures – ACO submits quality measures to CMS Web Interface for MIPS eligible clinicians.
  • CPIA and Advancing Care Information performance categories – Through their respective APM Entity group or through group billing TINS (instead of through the Shared Savings Program ACO).

MIPS/APM participants in a Next Generation ACO Model would submit data as follows:

  • CPIA and Advancing Care Information performance categories - Individual level data to MIPS (then all individual data would be aggregated and averaged for an ACO score).
  • Quality measure data under their respective MIPS APM as usual. No data submission under MIPS. Note: MIPS APMs are already required by CMS to use either the CMS Web Interface or other data submission mechanisms to submit data on quality measures. No change to these methods is proposed.

All APMs Other than Shared Savings Program and Next Generation ACO Model

MIPS/APM participants not in either the Shared Savings Program or Next Generation ACO Model would submit data as follows:

  • No APM entity assessment on quality as the group would submit quality measures to CMS as required by the APM.
  • CPIA and Advancing Care Information performance categories – Individual level data to MIPS (then all individual data would be aggregated and averaged for an APM Entity score).

MIPS Composite Performance Score Methodology

Scoring the Quality Performance Category

The scoring methodology will be consistent regardless of how the data is submitted—each measure will be assigned one to 10 points based on comparison to benchmarks. Failure to submit a required measure results in zero points for that measure. Measures submitted but failing to meet the case minimum will not be scored. The quality performance category score is:

Sum of All Points assigned for scored measures required in the category


Bonus Points (subject to the cap) for high-priority measures that impact beneficiaries including outcome, appropriate use, patient safety, efficiency, patient experience, and care coordination measures.

Divided By

Sum of Total Possible Points

Generally, the total possible points for the Quality performance category would be 90 points (for eligible groups reporting via CMS Web Interface, it is 210 points and for small groups of fewer than 10, it is 80 points). Factoring in year-to-year improvement is also being considered; the proposed rule offers three potential methods of incorporating this measure.

Scoring the Resource Use Performance Category

A score of one to 10 point measures would be assigned based on performance compared to a single set of benchmarks. For each set of benchmarks, the decile breaks would be based on measure performance during the performance period. Points for a measure will be assigned based upon the benchmark decile range into which the MIPS eligible clinician’s performance falls. The result is that lower costs represent better performance. Each Resource Use measure would have a 20 case minimum. If the case minimum requirement is not met for a particular measure, that measure will not be scored. The Resource Use performance category score will be calculated by averaging all the scores of the measures in this category attributed to the MIPS eligible clinician, weighted equally.

Scoring the CPIA Performance Category

MIPS eligible clinicians in a practice certified as a patient-centered medical home or comparable specialty practice during a performance period would receive the highest potential score for the CPIA performance category. MIPS/APM participants would earn a minimum score of one-half of the highest potential score for the CPIA performance category in a performance period. Points would be assigned based on patient-centered medical home participation and the CPIAs reported by the MIPS eligible clinician. Performance will be evaluated by comparing the clinician’s reported CPIAs to the highest possible score. Points will be assigned for each reported activity within two categories: medium weighted (10 points) and high weighted (20 points). High-weighted activities are those that support the patient-centered model home and those that involve the performance of multiple actions. For small practices (15 or fewer professionals), practices located in rural areas and in health professional shortage areas, and non-patient facing MIPS eligible clinicians, the weight for any activity selected would be 30 points. A MIPS eligible clinician reporting no CPIA would receive a zero in this performance category. A perfect score of 60 out of 60 points equals 100 percent. The score in this category is capped at 100 percent even if the points scored exceed 60 points.

Scoring the Advancing Care Information Performance Category

This category will score points for both participation (the “base score”) and performance (the “performance score”). To earn points toward the base score, a MIPS eligible clinician or group must report the numerator and denominator (or “yes/no” statement as applicable) for certain measures adopted by the EHR Incentive Programs in the 2015 EHR Incentive Programs Final Rule; fully reporting earns all available points for the base score.

The performance score would use a decile scale to calculate additional points based on performance in the objectives and measures for Patient Electronic Access, Coordination of Care through Patient Engagement, and Health Information Exchange. The performance score is then added to the base score, each worth 50 percent of the total score for this category. The total available performance score would be 80 percent, which in combination with the base score of 50 percent, is greater than the total possible category score of 100 percent. A MIPS eligible clinician or group’s score is capped at 100 percent.

The Composite Performance Score

The CPS is a composite assessment (on a scale of zero to 100) for each MIPS eligible clinician for a specific performance period. The CPS is calculated by multiplying the score for each performance category by the assigned weight for the performance category and then adding these weighted scores together to create a single score. The statute specifies weights for the performance categories as follows: 30 percent for Quality performance, 30 percent for Resource Use performance, 25 percent for Advancing Care Information performance, and 15 percent for CPIA performance. However, these weights are adjusted for the first year and are flexible in situations when clinicians do not receive scores in every category.

Converting Measures and Activities into Performance Category Scores

CMS believes that the unified scoring system will enable MIPS eligible clinicians, beneficiaries, and stakeholders to understand what is required for a strong performance. CMS cites the following measures for its conclusion:

  • For the Quality and Resource Use performance categories, all measures would be converted to a 10-point scoring system to make for easy comparison among measures.
  • When feasible, measure and activity performance standards would be published before the performance period begins.
  • “All-or-nothing” reporting requirements are generally not included for MIPS.
  • MIPS eligible clinicians and groups may submit information via multiple mechanisms, but the same identifier must be used for all performance categories and only one mechanism may be used per category.
  • For each MIPS payment year, the baseline period would be two years prior to the corresponding performance period.
  • Baseline period performance will be used to set benchmarks for the Quality performance category.
  • For the Resource Use performance category, benchmarks will be set using the performance period, rather than the baseline period.

Table 1 below summarizes the categories of MIPS as proposed.

Table 1: Summary of MIPS Performance Categories

Performance Category

Points Need to Get a Full Score per

Performance Category 1

Maximum Possible Points per Performance Category

Quality: Clinicians choose six measures to report to CMS that best reflect their practice. One of these measures must be an outcome measure or a high-quality measure and one must be a cross-cutting measure. Clinicians also can choose to report a specialty measure set.

80 to 90 points depending on group size

50 percent

Advancing Care Information: Clinicians will report key measures of interoperability and information exchange. Clinicians are rewarded for their performance on measures that matter most to them.

100 points

25 percent

Clinical Practice Improvement Activities: Clinicians can choose the activities best suited for their practice; the rule proposes over 90 activities from which to choose.

Clinicians participating in medical homes earn full credit in this category, and those participating in Advanced APMs will earn at least half credit.

60 points

15 percent

Cost: CMS will calculate these measures based on claims and availability of sufficient volume. Clinicians do not need to report anything.

Average score of all resource measures that can be attributed.

10 percent

“Quality Payment Program,” Centers for Medicare and Medicaid Services, Table 1, available here.

MIPS Payment Adjustments

Prior to the applicable year, MIPS eligible clinicians will receive negative, neutral or positive adjustments to their Medicare payments based on their CPS and whether it is below, at or above, respectively, the annually established performance threshold. The performance threshold will be the mean or median CPS of all MIPS eligible clinicians from the prior year. Those with a CPS that is one quarter or less of the performance threshold will receive the maximum negative payment adjustment (4 percent in 2018, 5 percent in 2020, 7 percent in 2021 and 9 percent in 2022 and subsequent years) and those closer to the performance threshold will receive decreasing negative payment adjustments.

Positive payment adjustments are for those with a CPS above the threshold and will be calculated with a scale adjustment such that positive adjustments are made in a budget neutral manner, solely funded by money saved from negative adjustments. An additional incentive payment adjustment of up to 10 percent, which will be paid out of a $500 million pool and thus not subject to the negative adjustment funding restriction, will be available to those MIPS eligible clinicians who exceed the additional performance threshold by a certain percentage, with larger payments for better performers.

Review/Correction of MIPS

MIPS eligible clinicians may seek an informal review of their MIPS payment adjustment. Any decisions on this review will be final. The methodology used to determine CPS or adjustment factors will not be subject to review, but the distribution of the weight of the various performance categories, a performance category score, or the inclusion of a clinician in MIPS are examples of items that might be reviewed. Additionally, CMS proposes selective, yearly auditing of MIPS eligible clinicians which would require audited clinicians to provide any requested data within a specified timeframe such as 10 business days, with such data to include any substantive, primary source documents such as claims, medical records or other resources.

Third-Party Data Submission

MIPS eligible clinicians may use CMS-approved third-party intermediaries such as qualified registries, QCDRs, health IT vendors and CMS-approved survey vendors to collect and/or submit their data. Such data would concern measures, activities or objectives with respect to three MIPS performance categories: Quality, CPIA and Advancing Care Information (for those physicians using certified EHR technology). While data inaccuracies affecting 5 percent or more of the total number of MIPS eligible clinicians submitted could result in disqualification from participating the following year, third-party intermediaries with data inaccuracies between three and 5 percent will be placed on probation for the subsequent MIPS performance period and have a notation on their CMS profile that they provided poor quality data. The failure to reduce the data error rate below 3 percent the following performance year would result in another year of probation and disqualification from participating in the third performance year.

Public Reporting – Physician Compare

Physician Compare, a website used to provide information about approved Medicare professionals, will post information for individual MIPS eligible clinicians and groups regarding CPS, performance category scores and breakdown of clinicians participating in APMs. General MIPS information regarding the ranges of composite scores and performance score for all MIPS eligible clinicians will also be posted on Physician Compare as well as the total Part B services and associated charges and payments. No information, however, will be posted to Physician Compare unless it meets regulatory public reporting standards, the most salient of which mandate that all data resonate with and be accurately interpreted by consumers. Consequently, while performance measures (Quality, Resource Use, CPIA and Advancing Care Information) will be available for public reporting on Physician Compare, most will be provided as subsets of the applicable data on profile pages or in a downloadable database.

3. Advanced Alternative Payment Model Incentives

The Proposed Rule also outlines CMS’s plans for implementing MACRA’s incentive payments to providers who participate in Advanced Alternative Payment Models (Advanced APMs) after an initial year in which all providers are reimbursed under MIPS. Advanced APMs are healthcare organizations in which providers take on more of the risk (and reward) for providing efficient, coordinated, and high-quality care to Medicare beneficiaries. Next generation ACOs, comprehensive ESRD care models, and Medicare shared savings programs are all Advanced APMs identified by the agency. In the Proposed Rule, CMS discusses the criteria for an entity to be designated an Advanced APM; how physicians and other practitioners qualify for incentive payments for participating in an Advanced APM; and how the incentive payments will be calculated and paid to such providers.

Designation as an Advanced APM

In the Proposed Rule, CMS fleshes out MACRA criteria for an entity to qualify as an Advanced APM. To receive Advanced APM designation, an entity must be a CMS Innovation Center model, the Shared Savings Program, or a demonstration project established by law; require participants to use certified electronic health record technology; provide for payment of services based on quality measures; and either bear risk for monetary losses of more than a nominal amount or be a Medical Home Model. CMS stresses that Advanced APM determinations are a matter of design, not an assessment of participant performance.

Certified Electronic Health Record Technology

For 2017, CMS proposes that at least 50 percent of eligible Medicare clinicians in an APM must use certified electronic health record technology to document and communicate clinical care with patients and other healthcare professionals in order for the APM to be considered an Advanced APM. After the initial year in 2017, the certified electronic health record technology use requirement would increase to 75 percent of eligible Medicare clinicians. CMS invites comment on whether it should require higher thresholds for clinician populations with higher-than-average adoption of certified electronic health record technology and lower thresholds for clinician populations with lower-than-average adoption of certified electronic health record technology.

Quality Measures

Under the Proposed Rule, Advanced APMs must provide for payment of covered professional services based on quality measures that are evidence-based, reliable, and valid. At least one of the quality measures on which the Advanced APM bases payment is required to be a MIPS-comparable measure. CMS does not want to limit the ability of Advanced APMs to test new quality measures that do not fall into the MIPS-comparable standard. Thus, while at least some payments must be based on MIPS-comparable standards, not all of them must be.

Financial Risk

CMS explains in the Proposed Rule that Advanced APMs must bear some financial risk that is “greater than a nominal amount” when actual expenditures exceed expected expenditures. CMS believes that a greater-than-nominal amount of risk is one that is “lower than optimal but substantial enough to drive performance.” CMS will enforce the finance risk element of Advanced APMs through three mechanisms: the withholding of payments, the reduction of payments, or the owing of payments. For Medical Home Models, CMS also proposes the additional mechanism of losing the right to participate in the program. CMS proposes this additional mechanism because medical homes are generally smaller in size and are often unable to bear the substantial financial risk that might otherwise come with the loss of Medicare revenue that other Advanced APMs would face.

CMS would consider an entity’s financial risk to be greater than nominal if:

  • The maximum amount of losses possible under the Advanced APM is at least 4 percent of expected expenditures;
  • The percentage of actual expenditures above expected expenditures for which the Advanced APM would be responsible is at least 30 percent; and
  • The percentage by which actual expenditures can exceed expected expenditures before the Advanced APM bears responsibility for losses is not greater than 4 percent.

This three-pronged standard will not apply to medical homes. Instead, the amount that would be withheld or reduced by CMS or owed to CMS would be a percentage of Medicare Parts A and B revenue. In 2017 the percentage would be 2.5 percent. In 2018, it would rise to 3 percent and then increase by one percentage point until 2020.

CMS plans to release its initial set of Advanced APM determinations by January 1, 2017. After that date, such determinations will be made on an ad hoc basis.

Qualified Participant Determination

Under MACRA, a physician or other practitioner will only qualify for incentive payments for participating in an Advanced APM once they reach a certain “significant participation” level in the entity. Providers who reach this participation level will be considered a Qualified participants (QP) in the Advanced APM, making them exempt from the MIPS payment system (under which their reimbursement may be adjusted up or down) and qualifying them for an incentive payment. Each year, CMS would re-determine which providers are QPs for the previous year. In the Proposed Rule, the Agency expands on how it intends to calculate a provider’s participation level and the thresholds it proposes for the “significant participation” necessary to be designated a QP.

Participation Level Calculations

CMS proposes two different metrics for determining a provider’s level of participation in an Advanced APM: one based on the number of patients the provider treats through the Advanced APM (the “Patient Count” method) and the other based on the amount of payment the provider receives for services rendered through the Advanced APM (the “Payment Amount” method). Because the organization of different entities will lend itself to different measures, CMS would perform both calculations and then select the most favorable participation level for a provider. In 2019 and 2020, CMS would consider only Medicare beneficiaries and payments in conducting its calculations of a provider’s participation level. Beginning in 2021, however, CMS would include patients with coverage other than Medicare, such as private insurance, to the calculations.

CMS recognizes that providers—particularly those in an integrated system of care typical in Advanced APMs—often work together to treat the same patients and provide the same services. Accordingly, in the vast majority of cases, CMS would calculate the average participation level for a group of providers. If the average level is above the “significant participation” threshold, then each member of the group is designated a QP. The agency would allow for one notable exception to this approach: In the case of a provider who participates in multiple Advanced APMs, the provider would be considered independently.

Participation Level Thresholds

CMS proposes the following thresholds for providers to qualify for incentive payments:







Percentage of Payment for Services Provided in an Advanced APM







Percentage of Patients Treated in an Advanced APM







Partial QPs and Provider Choice

In an effort to encourage providers to increase their participation in Advanced APMs, CMS proposes to re-determine whether a provider meets the requirements for QP status each year. Providers will have the option of being considered for both MIPS and Advanced APMs. Providers who participate in an Advanced APM, but whose participation level falls below the relevant threshold for an incentive payment, will nonetheless see that participation reflected through credits toward their MIPS score in the Clinical Practice Improvement Activities category.

Incentive Payments

Finally, the Proposed Rule specifies the method and timing CMS would use to calculate the Advanced APM incentive payments for the QPs. For years 2019 to 2024, the Advanced APM incentive payment would be a lump sum of 5 percent of the estimated aggregate payment amounts for Part B covered professional services furnished by the provider for the prior year. For years 2026 and thereafter, a QP will receive a higher fee schedule than non-QPs. The incentive payment base period will include the previous calendar year of claims with a three-month claims run-out period from the end of the calendar year. Incentive payments will be made no later than one year from the end of the incentive payment base period.

Composition of Aggregate Payment

MIPS and additional payment adjustments, as well as financial risk payments, will be excluded from the calculation of the estimated aggregate payment amount for covered professional services upon which the APM incentive payment amount will be based. Additionally, in calculating the aggregate payment amount, CMS will use the payment amounts that would have occurred for Part B covered professional services if cash flow mechanisms were not in place. However, supplemental service payments that meet certain criteria will be included in the basis for the Advanced APM incentive payment amounts.

Payment Method

CMS will make incentive payments to the TIN affiliated with the Advanced APM entity through which the eligible clinician met the threshold during the QP performance period. If none of the Advanced APM entities with which an individual eligible clinician participates meets the QP threshold, CMS will assess the eligible clinician individually and make payments proportionally across all of the clinician’s TINs associated with Advanced APM entities. CMS will provide a general public notice that its calculations have been completed for the year and will send APM incentive payment amount notifications directly to QPs that include the amount of the payment and the TIN to which the payment will be made. CMS will monitor Advanced APM entities and eligible clinicians for non-compliance with conditions of participation for Medicare and the terms of the applicable Advanced APMs in which they participate.

Physician-Focused Payment Models

The Proposed Rule also describes the process for individual and stakeholder entities to propose physician-focused payment models (PFPMs) to the Physician-Focused Payment Model Technical Advisory Committee. A PFPM is defined as an Advanced APM wherein Medicare is a payer, although other payers may be included. While a PFPM may meet the criteria to be an Advanced APM, there is no requirement that it do so. A PFPM must meet criteria organized into three categories: payment incentives, care delivery, and information availability. A PFPM proposal must incorporate a payment methodology for paying Advanced APM entities that furthers these criteria and must differ from current payment methodologies and encourage use of health information technology. A proposal must also aim to solve a payment policy issue by expanding the CMS Advanced APM portfolio or include Advanced APM entities with previously limited opportunities to participate.

1 Section 1848(q)(1)(C)(i) of the Act, as added by section 101(c)(1) of MACRA.