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Medicare Access and CHIP Reauthorization Act (MACRA): Final Rule

Medicare Access and CHIP Reauthorization Act (MACRA): Final Rule

In an effort to effectively direct the transition towards value-based principles, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) is a bipartisan legislation that was signed into law on April 16, 2015. The enactment of MACRA in 2015 provided a defined construct as to the eligibility, performance measurement, payment rates, and penalties associated with the provision of services to Medicare beneficiaries. Notably, the initial release of this transformative policy also resulted in numerous unanswered questions specific to overall model design and implementation implications.

Recognizing the magnitude of this change, the Department of Health and Human Services (HHS) has made a concerted effort to gather and utilize stakeholder feedback throughout the development process. Despite dedicated engagement with clinicians, patients, and other stakeholders, the announcement of the proposed rule was met with negative feedback regarding key components of the program. For example, several stakeholders were of the opinion that the Quality Payment Program needed to more closely align with clinical workflows to be effective. To that end, the Advanced Alternative Payment Models (Advanced APMs) and Merit-based Incentive Payment System (MIPS) offers a level of application flexibility to reward value and outcomes. However, stakeholder feedback revealed that users were unclear as to what qualifies as an advanced APM, the level of complexity associated with the administration of the MIPS program was overly burdensome, and that the program was cumbersome to navigate.

In response to the feedback received through extensive outreach initiatives and comments received, the final rule for MACRA was released publicly October 14, 2016. The changes included under the final rule were an attempt to streamline the model to effectively reduce administrative burden, improve flexibility, and to promote a seamless transition to a value-based approach.

We distilled this down to three key elements of the final rule that organizations will need to embrace and/or be cognizant of for successful transition to value-based practices under the policy changes associated with the final rule:

  1. Timeline:  The final rule established that 2017 will be a transition year, which applies to the 2019 payment year. Performance data will need to be reported to CMS by March 31, 2018. The date reported in the initial performance year will be used to subsequent payment adjustments.
  2. Promoting a Smooth Transition Experience:  To reduce the overall administrative burden associated with such a substantial change, the final rule allows practices to establish the rate at which they transition to MACRA. More specifically, the final rule allows for multiple data submission options which will allow the physician practice to self-select which approach aligns best with their capabilities.
  3. Qualifications and Considerations for Smaller Practices: Any physician, physician assistant, certified nurse anesthetist, nurse practitioner, or clinical nurse specialist (provider) that either bills in excess of thirty thousand dollars ($30,000) or provides a level of service to more than one hundred (100) Medicare beneficiaries are eligible for MACRA. Recognizing the disparity between smaller practices, those not meeting the aforementioned qualification criteria, practices with 15 or fewer providers, and/or practicing in underserved areas are exempt from participation. Alternatively, CMS is providing unique opportunities for smaller practices to participate through collaborative data reporting and the utilization of “virtual groups.”

While change and uncertainty is nothing new to the healthcare industry and care delivery organizations, each time it occurs new dynamics emerge and trends evolve. High-performing organizations are committed to understanding the impact and implications of being reimbursed less per increment of service under the traditional fee-for-services model and assuming a greater proportion of risk managing the health of a population and qualitative outcomes. In our experience, we are finding that many organizations employing physicians may pass a level of risk on to the physicians through their compensation models. This sharing of risk helps maintain alignment with reimbursement and operational financial viability.

A critical aspect of remaining competitive, repeatedly recruiting and retaining top clinical talent, reducing compensation inequities, and appropriately rewarding desired performance in a value-based environment is understanding market-based, specialty-specific, incentive dynamics. To that end, we encourage organizations to consider the following practical applications to maximize their effectiveness while navigating this tumultuous transition period:

  • Develop a Compensation Philosophy:  A physician compensation program philosophy is instrumental as it not only outlines the competitive positioning, peer group, and structure of the plan, but it effectively addresses issues such as affordability, regulatory compliance, and collaboration throughout the practice as it relates to the provision of care
  • Know Your Organization’s Capabilities:  It will be critical to select measures that are within the scope of the organization’s ability to reliably track and measure; failure to do so may result in lack of buy-in and readiness to support the transition to Value-based reimbursement

The latest CMS Value-Based Program information and supplemental resources can be found at:

If you have any questions or would like to discuss MACRA and how it can affect your physician compensation plan, please contact Ali Moin at

Ali  Moin

Ali Moin is a Consultant with the Physician Services practice of Integrated Healthcare Strategies, a division of Gallagher Benefit Services, Inc.  Mr. Moin specializes in supporting clients in the areas of Fair Market Value and reasonableness assessments of physician services agreements, management service agreements, physician employment, and medical directorships. 

Prior to joining Gallagher Integrated, Mr. Moin served as a healthcare administrator for large integrated healthcare systems, critical access and community hospitals, and independent practice settings. With ...

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