MACRA 2016 Final Rule

V. Key Issues: Population Health >> H. Quality/Satisfaction >> General Approaches >> Pay-for-Performance  >> Medicare Access and CHIP Reauthorization Act (MACRA) >> MACRA 2016 Final Rule (last updated 1.25.18) 
Lead Editor: Dana Beezley-Smith, Ph.D.


On October 14, 2016, the Centers for Medicare and Medicaid Services (CMS) released the final rule for implementation of MACRA, adding more flexibility than provided by the April 2016 proposed rule. Although many had hoped for a delay, regulations were still imposed on January 1, 2017, the beginning of what CMS calls the “transition year.” The rule finalizes parameters of the Advanced Alternative Payment Models (APMs) and Merit-Based Incentive Payment System (MIPS) collectively referred to as the Quality Payment Program (QPP). It also provides for guidance and financial support for smaller practices, expands the definition of Alternative Payment Models (APMs), lowers performance standards to make it easier to earn financial incentives, and simplifies prior ‘all or nothing’ requirements for the use of electronic health record technology.

Billy Wynne writes at Health Affairs (10.17.16) that “highlights of the rule include, first, formalization of the ‘transition year’ during calendar year (CY) 2017 that significantly modifies the reporting requirements of the QPP for that year. Second, CMS took steps to weaken the thresholds by which providers may participate. Third, CMS reduced the amount of measures required for reporting under the Advancing Care Information and other MIPS categories. Finally, the Agency softened the degree of risk providers must accept in Advanced APMs, though it preserved the requirement that such entities face downside risk (i.e., the possibility of losing money due to poor performance). We’ll catch a few additional changes along the way.”

Merit-based Incentive Programs (MIPS)

CMS lowered the cost performance category to 0 percent in the 2017 transition period and gave clinicians three reporting options under MIPS and one under Advanced Alternative Payment Models (APMs).

  • Option one: Report to MIPS for a full 90-day period or full year on quality, clinical performance improvement activities (CPIA) and advancing care (EHR), and maximize the chance to qualify for positive payment adjustments.
  • Option two: Report less than a year, but for the full 90-day period on one quality measure, more than one CPIA or more than the required measures in advancing care information to avoid penalties and receive a possible positive update.
  • Option three: Report one quality measure, one CPIA or report measures of advancing care to avoid penalty.
  • Option four: Join an Advanced APM.

2017 Incentives

  • No participation will result in an automatic 4 percent negative payment adjustment.
  • Submission of a minimum amount of data — i.e. one quality measure — yields a neutral payment adjustment.
  • Submission of 90 days of data potentially yields a small positive payment adjustment or a neutral adjustment.
  • Submission of a full year of data offers the potential to earn a moderate positive payment adjustment.

CMS will provide additional information in 2017 regarding payment adjustments for 2020 and beyond.

Impact on Small Practices

According to Oncology Live (10.16.16), the Final Rule “eases the pressure on small, rural practices to meet reporting and performance standards and explains more about the intentions behind the recently announced 2017 transition year, which is intended to make it easier for all practices to gradually move away from fee-for-service style billing… MACRA also allows for small practices to pool financial risk and join as ‘virtual groups’ in order to combine their MIPS reporting. CMS said virtual groups won’t be allowed in 2017 and that it wants to be sure that this system will be workable before implementation.”

  • Support for Small Practices. “In the final rule, CMS assured small, independent practices that they are making it a goal to meet their unique needs. The final rule excludes small practices from reporting requirements in 2017 due to low-volume threshold, which has been set at less than or equal to $30,000 in Medicare Part B allowed charges or less than 100 Medicare patients. It provides $100 million in education and technical assistance to small and rural practices in 2017.” (American Gastroenterological Association, October, 2016)
  • How Will Small Practices be Able to Participate? Reflecting feedback from providers, CMS made adjustments to the proposed rule to help small, independent practices participate. Those who fall below the requirements of at least $30,000 Medicare Part B charges or 100 Medicare patients are exempt from participating in 2017. CMS estimates this represents 32.5 percent of clinicians, but accounts for only 5 percent of Medicare spending. CMS is also offering an option for small practices and solo physicians to join together in virtual groups and submit combined MIPS data. The final rule also allots $20 million a year for five years for training and education of physicians in practices of 15 or fewer and those who work in underserved areas. (Becker’s Hospital Review, 10.14.16)

Advanced Alternative Payment Models (APMs)

The final rule establishes standards for Advanced APM financial risk to encourage additional participation, and establishes criteria for Other Payor Advanced APMs, which recognizes private payor initiatives and provides an opportunity to qualify under APMs. CMS estimates this will allow more clinicians to participate in APMs

The final rule identifies the following as advanced APMs for 2017:

  • Comprehensive ESRD Care Model (LDO and non-LDO two-sided risk arrangements)
  • Comprehensive Primary Care Plus Model
  • Medicare Shared Savings Program, Tracks 2 and 3
  • Next Generation ACO Model

On October 25,2016, CMS included the Oncology Care Model with two-sided risk as an Advanced APM beginning in the 2017 performance year.

On December 20, 2016, CMS announced it was adding the Comprehensive Care for Joint Replacement (CJR) Model as an Advanced APM; the ACO Track 1+ model will be a new Advanced APM in 2018.

Final Rule Resources