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CMS releases comprehensive MACRA rules: New law poised to shape payment and delivery reform in the future

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) fundamentally changes how physicians and other clinicians are reimbursed under the Medicare Physician Fee Schedule (PFS) and establishes new incentives that will drive payment and delivery reform efforts across the health care payor mix. The law will allow clinicians to develop new care models and encourages new collaborations between plans and hospitals to enter into new payment and delivery models. Importantly, the law was passed with overwhelming bipartisan support and continues to enjoy strong support from Republicans and Democrats in Congress, all but ensuring its continued implementation regardless of the outcome of the November elections.

The Administration this week issued its first major regulation under MACRA: late in the afternoon of April 27, 2016, the Centers for Medicare and Medicaid Services (CMS) released the long-awaited proposed rule1 on the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the law. Taken together, CMS is now referring to the two payment tracks as the Quality Payment Program (QPP).

MIPS and the APM incentive were created under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which fundamentally changed the way Medicare pays clinicians under the PFS in an effort to move away from the traditional fee-for-service reimbursement model and more closely link payments to quality and outcomes. MACRA repealed the previous Sustainable Growth Rate (SGR) formula for PFS updates.

Under MACRA, clinicians paid under the PFS can qualify for APM incentive payments from 2019 through 2024 and higher payment updates beginning in 2026 if they achieve certain revenue thresholds through advanced APMs. Clinicians who do not achieve the APM incentive thresholds will generally participate in MIPS, which provides positive, negative or neutral payment adjustments based on performance in four categories: quality, resource use, clinical performance improvement activities (CPIA), and advancing care information.

In the proposed rule, CMS estimates that between approximately 30,658 and 90,000 eligible clinicians would qualify for APM incentive payments in 2019, while between approximately 687,000 and 746,000 eligible clinicians would receive payment adjustments through MIPS in 2019. CMS expects the number of clinicians qualifying for APM incentives to increase over time.

High-level detail of key issues related to MIPS and APM incentives addressed in the proposed rule are provided below. A Deloitte Health Policy Brief with further detail and analysis is forthcoming.


For MIPS, CMS proposes a MIPS performance period of one calendar year (January 1 to December 31) for all measures and activities applicable to the four performance categories. The Administration proposes using 2017 as the performance period for the inaugural payment adjustment occurring in 2019. This would leave less than seven months from the proposed rule’s scheduled date of publication to the beginning of the first performance period for clinicians under MIPS.

As required by the statute, the proposed rule addresses measures, activities, reporting and data submission standards across the four performance categories. Key takeaways for each performance category include:

  • Quality: CMS proposes that most MIPS-eligible clinicians would be required to report on at least six quality measures, including at least one cross-cutting measure (for patient-facing MIPS-eligible clinicians) and an outcome measure if available.
  • Resource use: The proposed rule suggests continuing two measures from the current Value-based Modifier program: total costs per capita for all attributed beneficiaries and Medicare spending per beneficiary (MSPB) with minor technical adjustments. The Administration also proposes including measures based on episodes of care, as applicable to a MIPS-eligible clinician.
  • CPIA: In the proposed rule, CMS regulators say they “generally encourage but are not requiring a minimum number of CPIAs.” Clinicians may select activities that match their practices’ goals from a list of more than ninety options, including activities focused on care coordination, beneficiary engagement, and patient safety.
  • Advancing care information (a change in terminology from meaningful use of certified electronic health record (EHR) technology): The proposed rule indicates that MIPS-eligible clinicians would choose to report customizable measures, with a particular emphasis on interoperability and information exchange. Unlike the existing Meaningful Use program, this category would not require all-or-nothing EHR measurement and is intended to eliminate redundant quality reporting.

The proposed rule suggests giving a MIPS-eligible clinician flexibility to submit information individually or via a group or an APM entity group, provided that the MIPS-eligible clinician use the same identifier for all performance categories.

CMS estimates that MIPS payment adjustments for eligible clinicians in 2019 will be approximately evenly distributed between negative adjustments totaling $833 million and positive adjustments totaling $833 million. The maximum payment adjustment will be +/- 4% in 2019, increasing to +/- 5% in 2020, +/- 7% in 2021 and +/- 9% in 2022 and for all subsequent years.

APM incentives

The proposed rule calls for two types of Advanced APMs through which clinicians can qualify for incentive payments under MACRA: Advanced APMs and Other Payer Advanced APMs.

To be an Advanced APM, an APM must:

  1. Require participants to use certified electronic health record technology
  2. Provide payment for covered professional services based on quality measures similar to those used in the quality performance category of MIPS
  3. Bear more than a nominal amount of risk for monetary losses or be a medical home model that CMS has expanded

To be an Other Payer Advanced APM, an APM similarly must:

  1. Require participants to use certified EHR technology
  2. Provide payment for covered professional services based on quality measures similar to those used in the quality performance category of MIPS
  3. Bear more than a nominal amount of risk for monetary losses or be a Medicaid Medical Home model comparable to a medical home model that CMS has expanded

Clinicians can qualify for APM incentives through Other Payer Advanced APMs beginning in 2021, based on performance in 2019.

CMS proposes the first performance period for APM incentives begin no later than January 1, 2017. CMS proposes the following APMs as Advanced APMs through which clinicians could qualify for incentive payments in 2019:

  1. Comprehensive End-Stage Renal Disease (ESRD) Care (CEC) – Large Dialysis Organization (LDO) arrangement
  2. Comprehensive Care Plus (CPC+)
  3. Medicare Shared Savings Program (MSSP) Track 2
  4. MSSP Track 3
  5. Next Generation Accountable Care Organization (ACO) Model
  6. Oncology Care Model (OCM) two-sided risk arrangement (available 2018)

Notably, CMS did not include Bundled Payment for Care Improvement initiatives or MSSP Track 1 – the Medicare ACO initiative with the greatest number of participants – in the list of APMs expected to be considered Advanced APMs. MSSP Track 1 features only shared savings and no risk for monetary losses.

CMS proposes identifying individual eligible clinicians by a unique APM participant identifier using a combination of the individual’s tax identification number (TIN) and National Provider Identifier (NPI).

With regard to risk for monetary losses, CMS proposed:

  • Marginal risk levels – the percentage of the amount by which actual expenditures exceed expected expenditures for which an APM entity would be held liable under the APM – be at least 30%
  • A minimum loss rate – the percentage by which a clinician’s expenditures may exceed expected expenditures without triggering financial risk – cannot exceed 4% of expected expenditures
  • Total potential risk be at least 4% of expected expenditures

To achieve the EHR standard for an advanced APM in the first performance year, at least 50% of clinicians in the APM must use certified EHR technology.

CMS estimates the APM incentive payments in 2019 will be between $146 million and $429 million.

Next steps

The proposed rule is scheduled for publication in the May 9, 2016, Federal Register, and comments are due by June 27, 2016. MACRA set a statutory deadline of January 1, 2017, for HHS to issue a final rule on MIPS and APM incentives, creating a tight timeline for the regulators and health care stakeholders alike.

For more information on MACRA and its impact, please contact Deloitte’s US National Health Care Regulatory Team.

1 Proposed Rule, Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models, April 27, 2016

This post originally appeared on Deloitte’s Reg Pulse blog.

Author bio

Anne Phelps is the US Health Care Regulatory Leader and a Principal with Deloitte & Touche LLP. She has over twenty-five years of health care policy experience having worked in federal agencies, the US Senate, the White House, and in consulting firms. She serves as a strategic business advisor to numerous health care stakeholders – including providers, health plans, employers, and life sciences companies – helping them navigate the complex health care regulatory environment and how it will impact their organizations.