MIPS, MACRA & MU — The Next Evolution of Healthcare Payment Reform

Insights 01
Apr 07, 2016

MIPS, MACRA & MU — The Next Evolution of Healthcare Payment Reform

Written by Dan Golder

Category: Meaningful Use - Regulatory

“The meaningful use program as it has existed will now be effectively over.”

— CMS Acting Administrator Andy Slavitt
J.P. Morgan Annual Health Care Conference, Jan. 11, 2016

Well…not quite.

While many stakeholders in the healthcare IT industry have applauded CMS Acting Administrator Andy Slavitt’s recent announcement regarding the end of the meaningful use (MU) program, MU is not going away. Rather, it is evolving–no longer will it be called “Meaningful Use”, and no longer will it be a distinct program, standing on its own right.

Instead MU will become one of four components of the new Merit-Based Incentive Payment System (MIPS), which itself is part of the Medicare Access and CHIP Reauthorization Act or “MACRA”. But there’s much more to MACRA and MIPS than MU–and we’ll examine its relationships and implications in this blog.

MACRA in a Nutshell

  • MACRA amends section 1848(a)(8)(A) of the Social Security Act affecting the quality reporting programs, and consolidates current quality programs under the single MIPS program
  • MACRA creates the Merit-Based Incentive Payment System (MIPS), along with incentive payments for participation in eligible Alternative Payment Models (APMs) beginning in 2019
  • MIPS replaces the Sustainable Growth Rate (SGR) formula
  • MACRA changes the way that Medicare rewards clinicians, focusing on value over volume

Convergence of Existing Quality Programs

MIPS essentially represents a harmonization of existing CMS quality programs (including Meaningful Use), the Physician Quality Reporting System, and Value-Based Payment Modifiers. This is an attempt by CMS to bring together the multiple, diverse quality programs currently in place (all with slightly different metrics) into a single, uniform clinical quality standard.


MIPS compliance will be measured by a “MIPS Composite Performance Score”, which will be comprised of four sections: EHR Use, Quality, Resource Use, and Clinical Improvement. Each of these sections are given different weights to create a composite score, with Clinical improvement being 15 percent, Quality and Resource Use each at 30 percent, and EHR Use standing at 25 percent.


At just a quarter of the total MIPS Composite Performance Score, EHR use (i.e. Meaningful Use) becomes less of a threat to providers’ reimbursement, although it must be recognized that the weight given to each of the sections of the MIPS score can change. For example, if a high number of providers perform well on the EHR component, CMS can change the weight of that score, possibly lowering it, to increase the weight of other element(s) and focus improvement elsewhere.

CMS is planning to leave the door open to future “tweaks” to the weights of the different MIPS Score components, likely on an annual basis, as future rule-making adapts to provider behavior (and hopefully improved patient outcomes).

MIPS’ “Carrot” and “Stick”

MIPS gives providers an opportunity for significant financial incentives, but also represents significant payment adjustments (penalties) for non-compliance. There is potential from 2019 through 2024 for providers to share in a $500M annual bonus pool.


Providers can be excluded from MIPS if:

  • They are a qualifying APM participant (see the following section for a description of APMs)
  • They are a partial qualifying APM participant
    • They have not met the minimum payment percentage(s) for an APM but have met a reduced threshold:
      • 2019-2020 – 20%
      • 2021-2022 – 40%
      • 2023 and subsequent years – 50%
    • Note that if a partial qualifying APM participant reports to MIPS they will be included in MIPS (not excluded).
  • They are beneath the low-volume threshold measurement
    • A minimum payment percentage, representing the minimum number of items and services furnished (allowed charges) to individuals enrolled by an EP during the performance period
  • They are in their first year of Medicare participation

*Note that MIPS does not apply to hospitals or facilities.

APMs–the “Second Half” of MACRA

Alternative Payment Models (APMs) represent an alternative to MIPS. APMs provide financial incentives and exemptions from MIPS, but come with an increased burden of downside (revenue) risk and quality measurement.

Most physicians and practitioners who participate in APMs will be subject to MIPS, but will receive favorable scoring under the MIPS clinical practice improvement activities performance category.

However, those who participate successfully in the most advanced APMs may be determined to be Qualifying APM participants (“QPs”), who:

  • Are not subject to MIPS
  • Receive 5% lump sum bonus on MPFS (Medicare Physician Fee Schedule) payments for years 2019-2024
  • Receive a higher fee schedule update for 2026 and onward

To qualify, providers must meet increasing thresholds for the percentage of their revenue they receive through eligible APMs:

  • 2019-2020:
    • 25% of Medicare revenue must be received through eligible APMs
  • 2021-2022:
    • 50% of Medicare revenue or
    • 50% of all-payer revenue along with 25% of Medicare revenue must be received through eligible APMs
  • 2023 and beyond:
    • 75% of Medicare revenue or
    • 75% of all-payer revenue along with 25% of Medicare revenue must be received through eligible APMs

Types of APMs include:

  • Medical Homes (under 1115A)
  • Share Savings Programs (under section 1899)
  • Demonstration (under section 1866C)
  • Demonstration (required by Federal law)

*Note that some demonstrations and models are excluded (e.g., health care innovation award).

Potential Financial Rewards Summary: MIPS vs APMs vs Eligible APMs


And the best part…none of this is written in stone (yet)!

Unfortunately the “Final Rule” for MACRA has not yet been finalized by CMS. It is scheduled to be available “Spring 2016” (so hopefully very soon). Until that Final Rule is published, much of the details of MIPS and MACRA will be somewhat speculative, and significant unknowns will remain about how Meaningful Use, MACRA and MIPS will evolve.

What is clear is the goal of MIPS and MACRA to refocus providers from merely using technology towards providers leveraging technology to improve outcomes. This was one of the noted weaknesses in MU, where many providers simply wanted to “check the box” in order to reach MU thresholds, foregoing the larger opportunity to improve care. While CMS’ original goals of MU may have been unrealized (Stage 1 was “get data in”, Stage 2 was “share data with someone else” and Stage 3 was “improve outcomes”) the mantle for “moving the outcomes bar” has clearly been passed to MIPS / MACRA.

MIPS / MACRA Timeline

The following is the published timeline from CMS. While it’s a bit confusing, some important facts should be noted:

  • MIPS / MACRA / APMs all begin in 2019. Until then, Meaningful Use (and its associated incentives / penalties) remain in play.
  • Payments (and adjustments) will be indexed beginning in 2019, and will increase each year to a maximum of 9%.
  • All components of MACRA (including dates, incentives and penalties) can be adjusted/amended by the publication of the Final Rule, due out sometime early in 2016.


Want more?

Here are some helpful links for more information on MIPS / MACRA / APMs:

And of course, we’ll be reviewing the MACRA Final Rule as soon as it comes out! Stay tuned!