CMS Finalizes New Medicare Quality Payment Program: "Flexibility" and "Pick Your Pace" Key Themes

by Pierce Atwood LLP

After receiving roughly 4,000 comments to its proposed rule, the Centers for Medicare and Medicaid Services (CMS) on October 14, 2016 released its final rule for implementing the Medicare Access and CHIP Reauthorization Act (MACRA). MACRA replaced the sustainable growth-rate formula for physician reimbursement with a new methodology to transition providers from volume to value-based reimbursement. This new approach to payment – called the Quality Payment Program – is a major departure from traditional fee-for-service reimbursement in that it rewards the delivery of high-quality care through Advanced Alternative Payment Models (Advanced APMs) and the Merit-based Incentive Payment System (MIPS) for “eligible clinicians” and groups. 

MIPS will consolidate components of three existing programs: the Physician Quality Reporting System, the Physician Value-based Payment Modifier, and the Medicare Electronic Health Record (EHR) Incentive Program for Eligible Professionals (EPs), and will continue to focus on quality, cost, and use of certified EHR technology (CEHRT) in a cohesive program that avoids redundancies. The proposed rule generated a multitude of comments and concerns, many of which were addressed in the final rule. Notably, CMS addressed concerns about the impact on small practices by increasing the threshold for exemption from $10,000 to $30,000. The final rule also offers flexibility in 2017 in an effort to meet providers where they currently are in their journey from volume to value-based reimbursement.

Significant Changes from Proposed Rule

The final rule made several changes including:

  • Bolstering Support for Small and Independent Practices. For 2017, many small practices will be excluded from the new requirements due to the low volume threshold that is set at less than or equal to $30,000 in Part B allowed charges or fewer than or equal to 100 Medicare patients.  Further, $100 million in technical assistance will be available to MIPS eligible clinicians in small practices, rural areas, and health professional shortage areas (HPSAs) through contracts with quality improvement organizations. In addition, the Government Accountability Office will submit a report to Congress by 1/1/2017 examining whether entities that pool financial risk, such as independent risk managers, can play a role in supporting physician practices.
  • Strengthening the Movement toward Advanced APMs by Offering New Opportunities Such as ACO Track 1+. This track, once finalized, would begin in 2018 and would be voluntary for Accountable Care Organizations (ACOs) currently participating in Track 1 of the Medicare Shared Savings Program (MSSP) or ACOs seeking to participate in MSSP for the first time. This track would have more limited financial risk than Tracks 2 or 3 in MSSP. 
  • Securing a Strong Start to the Program with a Flexible, Pick-Your-Own Pace Approach to the Initial Years of the Program. The final rule creates a “transition year”, i.e., 2017, during which:
    • Eligible clinicians can maximize their opportunity to earn a positive adjustment by reporting for a full 90-day period or preferably, the full year. Further, MIPS eligible clinicians who are outstanding performers in MIPS based on the practice information they submit, are eligible for an additional positive adjustment for each of the first six years of the program.
    • Eligible clinicians can decide to report to MIPS for a period of time less than the full year performance period 2017, but for at least a full 90-day period. They can report more than one quality measure, more than one improvement activity, or more than the required measures in the advancing care information performance category in order to avoid a negative MIPS payment adjustment and to potentially receive a positive MIPS payment adjustment.
    • Eligible clinicians can elect to report one measure in the quality performance category, one activity in the improvement activities performance category, or report the required measures of the advancing care information performance category and avoid a negative MIPS payment adjustment.
    • Eligible clinicians can choose to not report even one measure or activity, but will receive the full negative four percent adjustment.
    • Eligible clinicians can participate in Advanced APMs, and if they receive a sufficient portion of their Medicare payments or see a sufficient portion of their Medicare patients through the Advanced APM, they will qualify for a five percent bonus incentive payment in 2019.
  • Creating One Uniform Program that Supports Clinician-Driven Quality Improvement.   The final rule simplifies the prior “all or nothing” requirements in the use of certified EHR technology and establishes a Medical Home Model Standard that promotes care coordination.

CMS estimates that over 90 percent of eligible MIPS clinicians will receive a positive or neutral payment adjustment and that at least 90 percent of clinicians in small/solo practices will receive a positive or neutral payment adjustment. The 2017 performance period will determine the 2019 payment adjustment.   

Rule Finalizes Two Types of APMs

  1. Advanced APMs: These payment arrangements a) require participants to use CEHRT, b) provide payment for covered professional services based on certain quality measures, and c) require participants to bear more than nominal financial risk or be a Medical Home Model.  Applicable in payment year beginning in 2019.  The initial set of Advanced APMs will be released by 1/1/2017.
  2. Other Payor Advanced APMs (Medicaid, commercial).  Similar to Advanced APMs, these payment arrangements, a) require participants to use CEHRT, b) provide payment for covered professional services based on certain quality measures, and c) require participants to bear more than nominal financial risk or be a Medicaid Medical Home Model.  Applicable in payment year 2021. Participants must participate in a Medicare Advanced APM. 

Final Rule Defines MIPS Participants as “MIPS Eligible Clinicians,” Replacing “MIPS EPs”

  • Includes physicians, physician assistants, nurse practitioners, clinical nurse specialists, CRNAs, and groups that include such clinicians who bill under Medicare Part B.
  • Exclusions from MIPS include, for example, newly-Medicare enrolled MIPS-eligible clinicians, and clinicians that fall below the low-volume threshold.

Four Performance Categories

The four performance categories are: Quality, Cost, Improvement Activities, and Advancing Care Information.

  • Eligible clinicians can report as an individual or as part of a group and do not have to submit data for the same 90-day period in 2017 for the measures/activities.
  • For 2017, eligible clinicians can choose to report a minimum of a single measure in the quality performance category, a single activity in the improvement activities performance category, or the required measures in the advancing care information performance category to avoid negative payment adjustment.
  • For full participation, eligible clinicians or groups need to do one of the following: 
  1. For a minimum of a continuous 90-day performance period, the MIPS eligible clinician or group must report at least six measures, including at least one outcome measure, if available. If fewer than six measures apply to the eligible clinician/group, only report those.
  2. For a continuous 90-day period, the eligible clinician/group can report one specialty-specific measure set or the measure set defined at the subspecialty level, if applicable. If the measure set has fewer than six measures, then report all available measure within the set. If six or more measures are in the set, then choose six or more to report. Also need to report one outcome measure. If none are available, then report another high-priority measure (e.g., patient experience).
  • In 2017, the cost category will be weighted at zero, but will increase from zero to 30 percent by 2021.


The final rule has received positive feedback for meeting practitioners where they are and offering flexibility for 2017 while continuing to move the needle toward outcomes measures to achieve value-based reimbursement goals. Practitioners should evaluate the impact of the final rule on their planning objectives and strategize accordingly.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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