MACRA Explained

Author: David Nestler, MD (@DrDavidNestler)



Heard about the “MACRA” bill in the news lately?  Here’s why, and some brief updates about it.


In April 2015 Congress passed HR-2, aka “MACRA” (the Medicare Access and CHIP Reauthorization Act). On 4/27/16, CMS released a Notice of Proposed Rulemaking as part of the implementation plan, causing a flurry of media discussion.


Most simply, MACRA replaces the long-standing sustainable growth rate (SGR) formula, which was used to calculate Medicare payments to providers.  This SGR required a yearly “fix”, and was constantly in the news.  MACRA also rolls in several existing Medicare programs used to measure quality, including Accountable Care Organizations (ACOs), the Physician Quality Reporting System (PQRS), the Value-based Modifier (VBM) Program, and the EHR Incentive Program (aka Meaningful Use, or MU).  These programs are not dead.  Rather, they are rolled into MACRA, with an opportunity to update their design.


Some key points:

  • MACRA starts affecting payments in 2019, but 2017 performance measures will be used to calculate the 2019 payment.
  • MACRA is led by CMS. It is NOT part of the Affordable Care Act, and MACRA has strong bipartisan agreement.
  • The goal of MACRA is to create a new framework to reward hospitals based on performance and health outcomes, rather than volume.
  • MACRA has two tracks: the Merit-based Incentive Payment System (MIPS); and Alternative Payment Models (APM).
  • Provider groups will be assigned to one of these two tracks. Since several details regarding how groups will quality for APMs are not released yet, more discussion has focused on MIPS.



  • Is one program with four categories: quality, resource use, clinical practice improvement and meaningful use of EHRs.
  • Can be considered a combination of MU, PQRS, and VBM
  • Will generate a single composite score once performance in each of the four categories are compiled
  • This score will be used to affect Medicare reimbursement. Composite scores above or below the mean will translate into positive or negative payment adjustments to the base rate of Medicare Part B payments accordingly
  • The potential maximum adjustment increases each year from 2019 to 2022, when the maximum adjustment is a gain or loss of 9%
  • To keep the MACRA budget neutral, it will allow the positive adjustment to be scaled up to three times greater (presumably if there are more losers than winners)
  • Therefore, the true swing will be from a 9% loss to a 27% gain



  • Only available to groups that CMS categorize as either an “APM” or “advanced APM”; details about how a group qualifies for APM status have not been released
  • For groups that quality under the Comprehensive Primary Care Plus (CPC+) model, the Next Generation ACO model, and others
  • Rewards a lump sum payment, but involves more risk for the group


So, for now, keep doing what you’re doing with quality reporting.  But be on the lookout for more MACRA information!

Is this movement to a single payer system or insurance companies “muddy mucking” health care fitter?

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