Preparing for MACRA and MIPS: The Time Is Now

Preparing for MACRA and MIPS: The Time Is Now

Posted December 5, 2016


The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) was released on October 14, 2016. It repealed the Sustainable Growth Rate (SGR) formula for updates to the Medicare physician fee schedule and provided payment updates for all future years. It also created a framework for transitioning from fee-for-service to value-based care, and for reimbursing Qualified Providers based on quality, outcomes and cost of care. In doing so, CMS combined the Physician Quality Reporting System (PQRS), Meaningful Use and Value-Based Payment (VBP) initiatives into one comprehensive program.

Now that MACRA is out, how should a health system executive or a practice leader prepare?

The first step is to clearly understand how it will impact your organization. Qualified Providers must participate in one of two Quality Payment Programs (QPPs):

  1. MIPS (The Merit Based Payment System), and
  2. APMs (Alternative Payment Models).

MACRA has significant financial implications. Qualified Providers can receive penalties or incentives of up to 4% of Medicare part B fees in 2017 (applied to 2019 reimbursements) for achieving or failing to comply with MIPS performance requirements. This will increase to 9% in 2022. Thus, the delta between top performing systems and bottom performing systems will be 8% in 2017 and increase to 18% in 2022. This creates a very significant incentive for health systems and physician practices to perform well.  For APMs, a flat incentive of 5% is possible depending upon the APM selected.

The chart below clarifies the payment incentive structure:


Executives will need to decide whether MIPS or APMs are most suited to their organizational goals and to lead them organization to success. This will entail strategic planning and execution across the enterprise involving key members of the financial, quality, clinical and information technology teams. Each team will need to understand the four weighted performance categories of MIPS which contribute to a total composite score of 100%:

  1. Quality
  2. Advancing Care Information
  3. Clinical Practice Improvement
  4. Resource Use

In the MACRA proposed rule, Resource Use initially accounted for 10% of the MIPS composite score in 2017. After receiving feedback during the MACRA proposed rule comment period, CMS decided to place additional weight on the cost component starting in 2018 and remove its weight in 2017. Since the overall goal of the program is to deliver quality services with reduced costs, the Resource Use category weight will increase to 30% by 2019. The image below illustrates how category weights will fluctuate in the coming years:


Pick Your Pace

As the program is new and quite transformational, and providers have varying resources and capabilities, CMS is allowing them to “Pick their Pace” to implement MIPS in 2017. There are four options available:

  1. Do nothing: Providers will get a 4% payment reduction in 2019
  2. Report some data (one measure or one clinical activity for one quarter in 2017): This gets providers off the hook for a payment reduction and will entail a zero incentive. This option provides an opportunity to test data and resources, but will only minimally prepare you for full year reporting in 2018.
  3. Report a complete data set for a quarter: Providers receive a modest positive adjustment. This option will also help providers to better direct investments or workflow changes in 2017.
  4. Report for the full year: Providers can receive up to a 4% incentive. Since this is a cost neutral program, depending upon how other health systems perform the incentive could reach 12%.


Preparing for MIPS

Keep in mind that for 2018 you will be reporting for the entire year. So don’t give up the chance to practice and learn from CMS in 2017!

Here are some key ways in which a health system should prepare for MIPS:

  1. Involve finance, quality, clinical, information technology and other departments
  2. If possible, undertake a MIPS readiness assessment. This will help your organization understand how well- prepared it is for MIPS reporting. Additionally:
    1. Work with a team that allows you to select the measures for reporting.
    2. Review your PQRS measures and scores (If you’ve been diligently reporting for PQRS, that will provide a good start).
  3. Track results per MIPS eligible provider, not by GPRO
  4. Evaluate current resources vs. expected costs and resources needed for MIPS
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