Preparing Your Organization for MACRA 1.0

flying cadeuciiWhat does the Medicare Access and CHIP Reauthorization Act (MACRA), signed into law in 2015, mean for healthcare organizations and providers? At HIMSS 2016, the CMS Center for Clinical Standards and Quality Director, Kate Goodrich, MD, stated MACRA’s goal: “to have a single, unified program with flexibility. The new Merit-Based Incentive Payment System (MIPS) will offer that flexibility and not be a one-size fits all program. The new rule will reimburse physicians based on four factors.”

Health systems are still waiting for additional details about the “four factors” Goodrich mentioned (listed in this article under “MIPS”) or how CMS will reward providers for delivering better care. We’re aware of MACRA’s general structure, but still waiting for clearly defined rules and regulations. Until then, it will be difficult to evaluate this new law.

Even though health systems are currently in a waiting period for clarifying details about the proposed MACRA regulations (with major impacts in 2019), MACRA’s base year will likely be 2017—and 2017 is just around the corner. This article provides an overview of MACRA and guidance about what health systems should do to prepare for MACRA now.

MACRA Overview

MACRA permanently replaces the unsustainable Sustainable Growth Rate (SGR) formula (created in 1997 to restrict growth in Medicare Part B spending) with a system that attempts to prioritize quality over quantity. It also replaces Medicare’s multiple quality reporting programs with a single Merit-Based Incentive Payment System (MIPS). Before MACRA, several programs such as Accountable Care Organizations (ACOs), bundled payments, and various value-based models existed for hospitals and eligible professionals.

Under MACRA, providers will receive a .5 percent annual increase until 2019, at which point they can choose between two value-based payment tracks: MIPS or Alterative Payment Models (APMs). Meaningful use will be moved under MACRA in both tracks.

Two Value-Based Payment Tracks: MIPS and APMs

Starting in 2019, providers can choose between MIPS and APMs:


MIPS will be the default system, and consolidates the existing Meaningful Use, Physician Quality Reporting System (PQRS), and Value-Based Payment Modifier (VBM) programs. Physicians that choose this track face payment reductions and increases based on performance. An overall MIPS score will be calculated according to performance in four measures (weighted by performance, with potential changes in weight by year):

  • Quality (30 percent)
  • Resource use (30 percent)
  • Meaningful use (25 percent)
  • Clinical practice improvement activities (15 percent)


The APMs track reimburses Medicare providers based on value of services rather than service volume. Providers meeting the criteria for this track cannot move to the MIPS track. Physicians receiving a significant portion of their payments through eligible APMs can be exempt from MIPS—and they receive a lump sum payment of 5 percent of covered services. By 2018, CMS wants 90 percent of payments tied to quality, with 50 percent under APMs.

The industry needs more clarification and additional details to fully understand the nuances of this track, but the general structure is apparent:

  • The eligible APM must require use of certified EHR technology and get payment based on quality measures.
  • There also needs to be financial risk or a medical home that meets certain criteria.
  • A minimum amount of revenue must be covered under an eligible APM risk arrangement.

Meaningful Use Is Still Here

In January, 2016, the CMS Acting Administrator, Andy Slavitt, tweeted about the end of meaningful use: “In 2016, MU [meaningful use] as it has existed—with MACRA—will now be effectively over and replaced with something better.” But Slavitt’s tweet was followed up with a speech and blog post in which he softened his declaration: “The focus will move away from rewarding providers for the use of technology and towards the outcome they achieve with their patients.”

Most recently, at the 2016 HIMSS, CMS officials stated that physicians can expect meaningful use to continue to be required. Indeed, MACRA will require the continuation of meaningful use for Medicare-eligible professionals, but the incentive program can be modified to achieve the results CMS wants.

CMS EHR incentive programs (designed to encourage the adoption of new technology and measure the resulting benefits for patients) have paid out $31.5 billion between January, 2011 and January, 2016. The Eligible Professionals (EP) program received $12.6 billion for approximately 465,000 unique providers. Nothing has changed in 2016. In January, 2016, more than 200,000 eligible professionals saw a decrease in their Medicare payments because they failed to meet meaningful use standards in 2014. Meaningful use isn’t going away.

Overcoming MACRA’s Administrative Burden with an EDW

The biggest challenge MACRA brings to healthcare organizations and, in particular, physicians, is administrative burden. In particular, compiling quality metrics.

A survey conducted in March, 2016 by Well Cornell Medical College and the Medical Group Management Association (MGMA) found that physicians spend an average of 15.1 hours every week processing quality metrics. The time physicians spend processing quality metrics translates to an average cost of $40,069 per physician, per year. These figures emphasize the analytics burden that needs to offset by clearly defined benefits.

Implementing an enterprise data warehouse (EDW) and providing physicians with self-service tools to analyze their performance will help providers and systems navigate the administrative burden introduced by MACRA.

The Seven Best Ways to Prepare for MACRA Today

Although 2019 seems far away, health systems need to start thinking about MACRA now. For the most part, health systems and physicians haven’t realized the impact of this shift; nor have they determined the right strategies. There are several things health systems can do to start preparing for MACRA now:

  • Outline a strategy for tackling MACRA by Q4 2016.
  • Educate providers and encourage discussion about the new regulation.
  • Identify health system thought leaders and discuss APMs (ACOs, etc.).
  • Take a look at your quality measures and identify high-performing areas.
  • Review your CMS Quality Resource and Use Report (QRUR).
  • If you did not report for PQRS or meaningful use, then evaluate the penalties and your readiness for MACRA.

Although we’ll know more about MACRA in the coming months, 2017 will most likely be MACRA’s base year, so the best time to start preparing for MACRA is today. We’ll provide a follow-up to this blog as new details about MACRA are released.