MACRA Final Rule should ease providers’ fears for now

October 17, 2016

By: Alex Mitchell, Practice Value and News Coordinator

At long last, the Medicare CHIP and Reauthorization Act (MACRA) Final Rule has been released upon us, and lo and behold, the sky has not fallen. Our initial analysis shows that all the hand-wringing and apocalyptic proclamations were a bit overstated given that we now know providers who are currently engaged in some form of quality reporting will be able to easily avoid penalties to their Medicare reimbursements for the foreseeable future without being burdened with new reporting requirements.

Quick Hits:

  • The “Cost” category of the Merit-Based Incentive Payment System (MIPS) will not have an impact on a clinician’s MIPS score for the 2017 performance year.
  • Pathways offering clinicians the opportunity to avoid Medicare penalties altogether in 2019 by reporting limited or full data sets during an abbreviated window in 2017 were finalized.
  • The low-volume threshold at which clinicians are required to participate under MACRA was raised from $10,000 in annual Part B payments to $30,000 or 100 Medicare patients.
  • More alternative payment models (APMs) are being reviewed by CMS in hopes of expanding the pool of “advanced” APMs that exempt clinicians from MIPS reporting.

Perhaps the most important change CMS announced was its decision to finalize a proposal to offer multiple pathways that will allow providers to choose their own reporting pace and level of participation during the 2017 reporting year.


Other changes from the proposed rule include the elimination of the “cost” category for the 2017 reporting year, the establishment of a higher threshold for low-volume providers to qualify for participation, and an expansion of what qualifies as an “advanced” alternative payment model under MACRA.

Let’s breakdown the major changes:

2017 “Transitional” Year:

Before we dig into the minutiae of the change put forth in the final rule, providers should be sure they fully understand just how low CMS has set the bar for satisfactory participation during MACRA’s inaugural year. Clinicians who will be fulfilling their MACRA requirements by participating in the Merit-Based Incentive Payment System will only need to report one quality measurement, one practice improvement activity or fulfill the requirements of the Advancing Care Information category in order to completely avoid a negative adjustment of up to 4 percent of their Medicare Part B reimbursements in 2019. This massive change from the proposed rule that was released in April partially came about as a result of the thousands of comments CMS received, many of which pointed out that a significant portion of MIPS-eligible providers wouldn’t be ready to fully participate next year.

That being said, the minimal reporting requirement should only be considered by providers who have been ignoring the Physician Quality Reporting System (PQRS), Value-Based Modifier (VBM) and Electronic Hospital Record Meaningful Use (EHR MU) reporting to this point. CMS appears to have offered this route as a concession for these latecomers in hopes that they’ll become full participants in later years. The vast majority of providers who have already been engaged in some form of quality or cost reporting should instead consider either reporting during a reduced 90-day window in order to be eligible for a small Medicare boost in 2019, or attempt to report for the full 2017 calendar year in hopes of receiving a full 4 percent bonus (and possibly more if they display exceptional performance). Deciding the correct route for your practice will require you to take a hard look at your past quality reporting to determine at what level you can comfortably succeed.

Another new development is CMS’s announcement that the 2018 performance year will also be a considered a “transitional” period. While details of what that could look like aren’t expected to be fully fleshed out until next year, it will likely involve increased reporting requirements that still fall short of forcing providers to provide information for the full reporting year.

More APMs

While the proposed rule offered very few options in the way of APMs deemed eligible to allow their participants to avoid MIPS participation, we now know CMS is reviewing additional APMs in an attempt to expand that pool prior to next year. The agency has said these models must use certified EHR technology, feature payments tied to quality metrics similar to those measured by MIPS and requires participants to bear some financial risk for reimbursement. CMS has already announced the Accountable Care Organization 1+ model will now be included, and a handful of others are being considered for potential inclusion for the 2017 performance year.

In order to avoid MIPS reporting, a clinicians must receive at least 25 percent of their Medicare Part B payments through a qualified APM or see at least 20 percent of their Medicare patients through the APM. Those who meet this requirement during the 2017 performance year will automatically receive a 5 percent incentive payment in 2019.

Below are the other APM models CMS previously announced will meet the qualification:

  • Track 2 and Track 3 Medicare Shared Savings Program (MSSP) accountable care organizations (ACOs)
  • Pioneer ACOs
  • NextGen ACOs
  • Oncology Care Model two-sided risk arrangements
  • Comprehensive Primary Care Plus
  • Comprehensive ESRD Care

Considerations for Small Practices

With many small and rural practices expected to struggle with MIPS early on, CMS chose to address concerns through a number of adjustments designed to ease the burden on these clinicians. Chief among those was the decision to substantially raise the threshold at which an individual or group becomes required to participate under MACRA. A solo practitioner or group must now have more than $30,000 in allowed charges for the year and see more than 100 Medicare patients in order to be required to report MIPS, a threshold that CMS says will exempt roughly a third of all clinicians billing Medicare Part B services.

Because of the reporting difficulties small practices may face, CMS said it will set aside $20 million annually for the first five years of the program to be used to train and educate Medicare clinicians in small practices of 15 clinicians or fewer and those working in underserved areas. Beginning December 2016, local organizations will offer free training specialized help to small practices using this funding. Priority will be given to medically underserved areas, practices located in areas determined to be rural based on zip codes, those who initially perform poorly under MIPS and clinicians who are transitioning to an APM.

CMS also announced it will allow solo providers or small groups to band together as virtual groups of up to ten members to allow them to combine their MIPS reporting during the 2017 transition year.

Small Bonus Pool

One significant item of note in the final rule is the substantially reduced estimate of the total amount of bonuses CMS expects to pay out in 2019 based on 2017 performance. Given that bonuses will be paid from a pool of payments withheld from poor performers in order to maintain budget neutrality, CMS has announced it expects to pay out just $199 million in Medicare Physician Fee Schedule payments in 2019, down from the $833 million figure initially put forth. This change results from the decision to offer an extremely low bar for participants to avoid a penalty; if very few are penalized, that doesn’t leave much room to pay large bonuses to strong performers.

That being said, those who are ready to hit the ground running with their MIPS reporting can aim to be among the highest achievers who will be eligible to receive additional bonus payments from a $500 million pot that will be created by a CMS allocation.

More Analysis to Come

These are just a few of the major changes put forth in the final rule. Later this week (after we’ve had a chance to more thoroughly review the 2,400-page final rule), we’ll be taking a more in-depth look at MIPS performance categories and the available reporting options for each, as well as exploring how MACRA and its value-based payments are expected to evolve in future years. Stay tuned with and for more analysis as it becomes available.

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