CMS Releases Proposed Rule on MACRA Implementation

Just a few days after the one-year anniversary of the passage of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), the Centers for Medicare and Medicaid Services (CMS) released its highly anticipated proposed rule which details how the Agency intends to implement the Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APM) Medicare reimbursement methodologies which will replace the Medicare Sustainable Growth Rate Formula (SGR).

MACRA, the landmark legislation responsible for replacing the SGR with the aforementioned new reimbursement systems, outlines the broad framework for how they will function but left it up to CMS to develop the granular details for how these new Medicare reimbursement methodologies will function through rulemaking. Specifically, this rule proposes the criteria, definitions and other key details that are necessary for implementing MIPS and APMs. CMS will solicit and consider stakeholder comments before issuing a final rule before the end of the year.

Merit-based Incentive Payment System (MIPS) MIPS consolidates and refines the three existing CMS quality programs, the Physician Quality Reporting System (PQRS), the Value-based Modifier, and the Electronic Health Record Meaningful Use (MU) Program. Providers will be assessed a single “Composite Performance Score” (CPS) based on their quality performance, cost reduction and resource use. Based on their CPS scores, providers can receive a positive or negative reimbursement adjustment in the predetermined year that is associated with a reporting year. CMS is proposing the 2017 calendar year as the first reporting year with 2019 as the corresponding payment adjustment year. 2019 will have a four percent (up or down) adjustment but that number will increase to nine percent (up or down) by 2022 and remain at that level for all future years.

The MIPS adjustments are budget neutral, meaning the total amount of bonus payments must be equivalent to the total amount of payment reductions. For 2019, CMS estimates that it will pay out $833 million in MIPS bonus payments, offset by an equal amount in MIPS penalty payments, to between 687,000 and 746,000 eligible providers. However, MACRA does also include an extra $500 million for performance bonuses that are not subject to the budget neutrality requirement. For comparison, CMS only estimates that somewhere between 30,658 and 90,000 eligible providers will be exempt from MIPS through their participation in APMs. For 2019, CMS estimates that it will pay out between $146 million and $429 million in APM incentive payments.

The new reimbursement systems are intended to improve quality, reduce costs and more efficiently utilize resources. For 2019, quality will be the most heavily weighted component of a provider’s MIPS score. Quality will account for 50 percent of the total MIPS score. The use of EHRs and other Health IT will account for 25 percent. 15 percent of a provider’s score would come from their implementation of clinical practice improvement activities. Providers will have the option to choose from a predetermined list of over 90 clinical practice improvement activities. The final ten percent of a provider’s MIPS score will be based on their cost. These weights will change in future years, adding emphasis to the cost component.


Providers will be able to report data through authorized third parties including registries, Qualified Clinical Data Registries (QCDR), EHR or other health IT and other authorized vendors. Providers will not need to report data for the cost component of their CPS score as it will be calculated through their claims. CMS will initially provide performance feedback to participants on an annual basis but hopes to do so more frequently in the future.

Alternative Payment Models (APM) APMs are largely uncharted territory. They already exist in some forms but until the proposed rule was published it was unclear which of the current APMs would meet the criteria for being an approved APM under MACRA. Providers who receive a significant portion of their revenue and treat a certain percent of their patients through an approved APM are eligible for an automatic five percent incentive payment based on their Part B reimbursement for each year they participate between 2019 and 2024. This payment will be made as a lump sum towards the beginning of the year following the year they qualify for the incentive payment. For all years, providers who qualify as participants in APMs are also excluded from MIPS adjustments. For 2026 and beyond, providers who are full APM participants are eligible for slightly higher fee schedule updates than those in MIPS.

CMS is proposing to call approved APMs in which Medicare is the only payer “Advanced APMs” and approved all-payer iterations as “Other Advanced APMs” although the all-payer version will not be available until 2021. Providers can be full or partial participants in an Advanced APM. Partial participants are not eligible for the five percent incentive payment but they would have the option to be excluded from MIPS adjustments.

Advanced APMs must meet three criteria to be certified as such:

  1. Require participants to use certified EHR technology;
  2. Provide payment for covered professional services based on quality measures comparable to those used in the quality performance category of MIPS; and
  3. Be either a Medical Home Model or bear more than a nominal amount of risk for monetary loses.

Almost every existing APM that is in use today will not meet the requirements to be certified as an APM. Only six out of the 24 existing Medicare APMs currently being implemented and tested by CMS would qualify as an Advanced APM under the CMS proposed criteria. They are:

  • Comprehensive ESRD Care Large Dialysis Arrangement (LDO)
  • Comprehensive Primary Care Plus (CPC+)
  • Medicare Shared Savings Program (MSSP) – Track 2
  • Medicare Shared Savings Program (MSSP) – Track 3
  • Next Generation ACO (Next Gen ACO)
  • Oncology Care Model (OCM) two-sided risk arrangement

Medical Home Models can qualify as Advanced APMs without needing to meet the nominal financial risk criteria. Many other APMs, such as the Comprehensive Care for Joint Replacement Model, meet some but not all three of the criteria. Others, such as the Million Hearts model, do not meet any. It is not much of a surprise that ACOs, CMS’ “poster child” for APMs, qualify as Advanced APMs, however it was somewhat of a shock that so few other versions qualified. APMs that do not qualify as Advanced APMs for 2019 can qualify in future years with the proper adjustments to meet the criteria.

MACRA also establishes a new type of APM that is tailored to specific medical conditions or specialties called Physician-Focused Payment Models (PFPM). MACRA leaves it to stakeholders to develop and submit proposals for PFPMs. MACRA created a PFPM Technical Advisory Committee (PTAC) made of up of outside experts and stakeholders to review PFPMs and recommend models to CMS for approval. The members of the PTAC have already been selected.

APM quality measures would be based on MIPS quality measures to make it easier for providers to transition from MIPS to APMs and so that providers who attempt to meet the threshold for APM participation but fall short will not have missed their opportunity to report under MIPS instead.

As always, ADVOCATE will keep you up to date on this and all issues impacting radiology as they become available.

Best regards,
Kirk Reinitz, CPA