Practice Management

Making sense of MACRA: MIPS and Advanced APMs


Several months into 2017, physicians around the country are preparing for the first benchmark year of MACRA, the Medicare Access and CHIP Reauthorization Act. Passed in 2015, MACRA is the bipartisan health care law responsible for eliminating the Sustainable Growth Rate and it promises to continue to fundamentally alter the way providers are paid. This year determines reimbursement in 2019.

Under the law, physicians must report performance under one of two pathways: MIPS, the Merit-based Incentive Payment System, or participation in a qualified Advanced Alternative Payment Model, or Advanced APM. The first, MIPS, replaces the Physician Quality Reporting System, Meaningful Use and the Physician Value-Based Payment Modifier and is the track most providers can expect to follow, at least initially, because most will not meet the requirements for Advanced APMs.1,2

This is especially true for hospitalists, most of whom are not yet participating in qualifying alternative payment models.2

The MIPS track is budget neutral, which means for every physician or physician group that receives a boost in reimbursement, another will receive a cut. Others will receive a neutral adjustment. All physicians see an annual 0.5% increase in payment between 2016 and 2019 and MIPS clinicians receive a 0.25% annual boost starting in 2026. Providers participating in Advanced APMs will also receive an annual 5% payment bonus between 2019 and 2024, and a 0.75% annual increase in payments beginning in 2026.1

Both pathways are complex and will affect different clinicians in unique ways, particularly hospitalists.

Dr. Kavita Patel, Brookings Institution

Dr. Kavita Patel

“A large percentage of hospitalists are actually employed... and the question is whether there is a change in their compensation structure as a result of a negative score,” said Kavita Patel, MD, a practicing internist and nonresident fellow of the Brookings Institution. “That’s why MACRA is complicated: It’s not just that hospitalists are different, it’s that they’re compensated differently as well.”

Some health policy experts, like Robert Berenson, MD, FACP, Institute Fellow of the Health Policy Center at the Urban Institute, say MACRA could actually drive more hospitalists into employment to avoid the costs associated with complying with the law.

Regardless, there is much about MACRA that hospitalists should familiarize themselves with this year. The CMS has announced 2018 will also be a transition year and, as such, additional rules are forthcoming.

Dr. Robert Berenson, Health Policy, Urban Institute

Dr. Robert Berenson

“It’s not an easy piece of legislation to understand and there are still areas that need to be clarified in the coming months,” said Nasim Afsarmanesh, MD, SFHM, a hospitalist and member of the Society for Hospital Medicine’s Public Policy Committee.

Here is what to know for now:


All providers who receive Medicare Physician Fee Schedule payments and do not participate in an Advanced APM will fall into MIPS, and reporting applies to all patients, not just Medicare beneficiaries.3 There are, however, exemptions: providers in their first year of Medicare, those billing Medicare Part B less than $30,000 annually, and those who see 100 or fewer Medicare patients.4

Under MIPS, physicians are scored on a scale of 1 to 100 based on performance across four weighted categories: Quality (60%), Advancing Care Information (25%), Improvement Activities (15%), and Cost (not included for 2017). Hospitalists who provide 75% or more of their services in hospital inpatient or outpatient settings, or in the emergency department, are exempt from Advancing Care Information, which replaced meaningful use. As a result, the Quality category will make up 85% of the overall score in 2017.

The CMS also announced added flexibility for 2017 with regard to reporting under MIPS, intended to give providers who need it extra time to prepare.5 Physicians and physician groups can report for a full year, starting January 1, 2017, or report for just 90 days, to be eligible for a positive payment adjustment. To avoid a negative adjustment, they can simply submit more than one quality measure, improvement activity, or advancing care information measure (for those not exempt). Or, providers can choose to report nothing and incur a negative 4% payment.

The approach to MIPS in 2017 will vary widely among SHM members, said Joshua Boswell, SHM’s director of government relations.

“Some are looking to do just the bare minimum, not because of their lack of readiness, but for at least this year, to avoid the time, resources, and cost associated with reporting.” he said. “Other groups are considering jumping in with both feet and fully reporting, their thinking being that they can’t lose, and if there is money on the table for high performers, they might as well go for it.”

For 2017, providers who score 70 or more points are eligible for a performance bonus, drawn from a $500 million pool set aside by CMS. The minimum point threshold defined by CMS is three, which a clinician can earn by submitting just one of the six required quality measures.4

Dr. Ron Greeno

Dr. Ron Greeno

The CMS has defined 271 total quality measures under MIPS, 13 of which are designated as hospitalist specialty measures. However, SHM believes just seven are applicable to hospitalists. Public Policy Committee chair and SHM president Ron Greeno, MD, MHM, says most clinicians will only be able to reliably report on four.

“We’re working to ensure the program is structured so that providers can confidently report on just the measures applicable to them, even if it’s fewer than six,” he said. To ensure physicians are not penalized or disadvantaged for being unable to report the required number of measures, Dr. Greeno said CMS is working to develop a validation test, though it has not yet released details.

The measures most applicable to hospitalists include two related to heart failure (ACE inhibitor/angiotensin receptor blocker for left ventricular systolic dysfunction [LVSD] and beta-blocker for LVSD), one stroke measure (DC on antithrombotic therapy), advance care planning, prevention of catheter-related bloodstream infection (central venous catheter insertion protocol), documentation of current medications and appropriate treatment of methicillin-resistant Staphylococcus aureus bacteremia.

Dr. Nasim Afsarmanesh of the Society of Hospital Medicine Public Policy Committee

Dr. Nasim Afsarmanesh

“This isn’t one of those things that will impact everybody equally,” said Dr. Afsarmanesh. For example, most hospitalists should be able to easily report on advanced care planning and medication documentation, she said, but in some hospitals the stroke measures may be captured in the emergency department; many hospitalists may not achieve enough reportable stroke management cases.

However, Dr. Afsarmanesh expects hospitalists will shine in the improvement activities category. “It’s part of our DNA,” she said. “Improvement activities... have become part of the core responsibilities for many of us within hospitalist groups, hospitals, and health systems.”

In 2017, CMS requires providers to report four improvement activities, which include: implementation of antibiotic stewardship programs, connecting patients to community chronic-disease management programs, and integrating pharmacists into a patient care team. Dr. Afsarmanesh suggests hospitalists visit SHM’s Quality and Innovation guide for ideas, implementation toolkits, and more.

In the cost category, “for the most part, hospitalists aren’t acquainted with cost and there is not a lot of cost transparency around what we do... In general, medical care needs to be discussed between physicians and patients so they can weigh the cost-benefit,” she said, which includes not just dollars and cents, but the impact associated with procedures, like radiation exposure from a CT scan.

However, Dr. Afsarmanesh acknowledges this is challenging, given the overall lack of cost transparency in the American health care system. “It is disjointed and we don’t have any other system where the professionals who do the work are so far-removed from the actual cost,” she said. “The good thing is, I think we are heading toward an era of more cost-conscious practice.”

In addition, hospitalists are poised to help with overall cost-reduction in the hospital. “I could imagine something relevant around readmissions and total cost,” said Dr. Patel. “But risk-adjustment is key.”

This category will increase to 30% of a provider’s or group’s overall score by payment year 2021, CMS says. It will be determined using claims data to calculate per capita costs for all attributed beneficiaries and a Medicare Spending per Beneficiary measure. The CMS also says it is finalizing 10 episode-based measures determined to be reliable and that will be made available to providers in feedback reports starting in 2018.4

Clinicians may report MIPS data as individual providers (a single National Provider Identifier tied to a single Tax Identification Number) by sending data for each category through electronic health records, registries, or qualified clinical data registries. Quality data may be reported through Medicare claims.

Hospitalists who report through a group will receive a single payment adjustment based on the group’s performance, using group-level data for each category. Groups can submit using the same mechanisms as individual providers, or through a CMS web interface (though groups must register by June 30, 2017).5

The SHM has also asked CMS to consider allowing employed hospitalists to align with and report with their facilities, though Dr. Greeno says this should be voluntary since not every hospitalist may be interested in reporting through their hospital. Dr. Greeno says CMS is “very interested and receptive” to how it could be done.

“We are trying to create the incentive for everybody to provide care at lower costs,” Dr. Greeno said. “There are two goals: Create alignment, and decrease the reporting burden on hospitalist groups.”

Additionally, CMS recognizes the potential burden MIPS imposes on small practices and is working to allow individuals and groups of 10 or fewer clinicians to combine to create virtual groups. This option is not available in 2017.4

The CMS has also authorized $100 million, dispersed over 5 years, for certain organizations to provide technical assistance to MIPS providers with fewer than 15 clinicians, in rural areas and those in health professional shortage areas.4

According to Modern Healthcare, projections by CMS, released last May, show that 87% of solo practitioners and 70% of physician groups with two to nine providers will see their reimbursement rates fall in 2019. Meanwhile, 55% of groups with 25 to 99 providers and 81% of those with 100 or more clinicians will see an increase in reimbursement.7

“I think it’s going to be pretty tough unless you’re big enough to commit the resources you need to do it right,” Dr. Greeno said. “If I was just a really small group with very little overhead, no infrastructure to support, I’d consider taking the penalty and just living with it because I don’t have many costs and just pay my own salary. But it’s still a hard road.”

Dr. Afsarmanesh says SHM continues to look across the board and advocate for all its members.

In 2019, physicians reporting under MIPS will see up to a 4% increase and as low as a 4% decrease in reimbursement. This rises to plus-or-minus 5% in 2020, 7% in 2021 and 9% thereafter.2

Dr. Patel and many others say it appears to be the intention of CMS to move providers toward alternative payment models. A January 2015 news release from the U.S. Department of Health and Human Services announced a goal of tying 50% of Medicare payments to Accountable Care Organizations (ACO) by the end of 2018 (it’s worth noting this was pre-MACRA, and not all ACOs qualify as Advanced APMs).8

“The awkwardness and clunkiness of MIPS needs to be addressed in order to make it successful because many people will be in MIPS,” Dr. Patel said. “I think it’s the intention to move people into Advanced APMs, but how long it takes to get to that point – 3-5 years, it could be 10 – physicians have to thrive in MIPS in order to live.”

One of the most important things, she and Dr. Berenson said, is adequately capturing the quality and scope of the care physicians provide.

“I know hospitalists complain how little their care is reflected in HCAHPS (the Hospital Consumer Assessment of Healthcare Providers and Systems) and the quality measures they have now, and readmission rates don’t reflect what doctors do inside the hospital. My colleagues are telling me they want something better,” Dr. Patel said.

Advanced APMs

Physicians who participate in Advanced APMs are exempt from MIPS. Advanced APMs must use Certified Electronic Health Record Technology (CEHRT) and take on a minimum amount of risk. For 2017 and 2018, providers must risk losing the lesser of 3% of their total Medicare expenditures or 8% of their revenue.9 They are paid based on the parameters of their particular model.

Additionally, for the 2019 payment year, 25% of a provider’s or group’s Medicare payments or 20% of their patients must be through the Advanced APM. This increases to 50% of payments and 35% of patients for 2021 and 2022, and in 2023, to 75% of payments and 50% of patients.

In 2017, APMs that meet the criteria for Advanced include: Comprehensive End-Stage Renal Disease Care, Comprehensive Primary Care Plus, Next Generation ACO Model, Shared Savings Program Tracks 2 and 3, Comprehensive Joint Replacement Payment Model Track 1, the Vermont Medicare ACO Initiative, and the Oncology Care Model. (APMs that do not qualify must report under MIPS.)5

The CMS also says that services provided at critical access hospitals, rural health clinics, and federally qualified health centers may qualify using patient counts, and medical home models and the Medicaid Medical Home Model may also be considered Advanced APMs using financial criteria.4

At this time, SHM is unable to quantify the number of hospitalists participating in Advanced APMs, and some, Dr. Greeno said, may not know whether they are part of an Advanced APM.

Currently, BPCI (Bundled Payments for Care Improvement) is the only alternative payment model in which hospitalists can directly take risk, Dr. Greeno says, but it does not yet qualify as an Advanced APM. However, that could change.

Prior to the passage of MACRA, Brandeis University worked with CMS to create the Episode Grouper for Medicare (EGM), software that converts claims data into episodes of care based on a patient’s condition or conditions or procedures. The American College of Surgeons (ACS) has since proposed an alternative payment model, called ACS-Brandeis, that would use the diagnostic grouper to take into account all of the work done by every provider on any episode admitted to the hospital and use algorithms to decide who affected a particular patient’s care.

“Anyone who takes care of the patient can take risk or gain share if the episode initiator allows them,” said Dr. Greeno.

For example, if a patient is admitted for surgery, but has an internist on their case because they have diabetes and heart failure, and they also have an anesthesiologist and an infectious disease specialist, everybody has an impact on their care and makes decisions about the resources used on the case. The risk associated with the case is effectively divided.

The ACS submitted the proposal to PTAC (the Physician-Focused Payment Model Technical Advisory Committee) in 2016 and SHM submitted a letter of support.

“In this model, everybody’s taking risk and everybody has the opportunity to gain share if the patient is managed well,” said Dr. Greeno. “It’s a very complicated, very complex model... Theoretically, everybody on that case should be optimally engaged – that’s the beauty of it – but we don’t know if it will work.”

The SHM got involved at the request of ACS, because it would not apply solely to surgical patients. Dr. Greeno says ACS asked SHM to look at common surgical diagnoses and review every medical scenario that could come to pass, from heart failure and pneumonia to infection.

“There’s bundles within bundles, medical bundles within surgical bundles,” he said. “It’s fascinating and it’s daunting but it is truly a big data approach to episodes of care. We’re thrilled to be invited and ACS was very enthusiastic about our involvement.”

Dr. Patel, who sits on PTAC, is heartened by the amount of physician-led innovation taking place. “Proposals are coming directly from doctors; they are telling us what they want,” she said.

For Dr. Greeno, this captures the intent of MACRA: “There is going to be a continual increase in the sophistication of models, and hopefully toward ones that are better and better and create the right incentives for everyone involved in the health care system.”


1. S. Findlay. Medicare’s new physician payment system. Published April 21, 2016. Accessed March 6, 2017.

2. The Society of Hospital Medicine. Medicare physician payments are changing. Accessed March 6, 2017.

3. A. Maciejowski. MACRA: What’s really in the final rule. Blog post published November 15, 2016. Accessed March 6, 2017.

4. Department of Health and Human Services, Centers for Medicare and Medicaid Services. Quality Payment Program executive summary. Published Oct. 14, 2016. Accessed March 6, 2017.

5. Department of Health and Human Services, Centers for Medicare and Medicaid Services. Quality Payment Program: Modernizing Medicare to provide better care and smarter spending for a healthier America. Accessed March 6, 2017.

6. D. Barkholz. Potential MACRA byproduct: physician consolidation. Published June 30, 2016. Accessed March 6, 2017.

7. United States Department of Health and Human Services. Better, smarter, healthier: In historic announcement, HHS sets clear goals and timeline for shifting Medicare reimbursement from volume to value. Published January 26, 2015. Accessed March 6, 2017.

8. B. Wynne. MACRA Final Rule: CMS strikes a balance; will docs hang on? Published October 17, 2016. Accessed March 6, 2017.

9. United States Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation. Documents for Public Comment: Physician-Focused Payment Model Technical Advisory Committee. Proposal for a Physician-Focused Payment Model: CAS-Brandeis Advanced Alternative Payment Model, American College of Surgeons. Published December 13, 2016. Accessed March 6, 2017.

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