Care Redesign 2016

The MACRA Final Rule: Five Crucial Questions Asked and Answered

Article · November 30, 2016

“How many of you feel comfortable with the MACRA [rules] that were finally approved?”

Tim Kuruvilla, Co-founder of Viewics, a California health care data analytics firm, posed this question in late October to a group of about 500 people in a hotel ballroom steps from Capitol Hill. Most of the crowd comprised health care executives, physicians, attorneys, and consultants. Most possessed decades of professional experience.

Not a single hand was raised.

Aside from the wildly improbable presidential campaign that just wrapped up, no other element in the health care sector has created as much unease this year as the upcoming implementation of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Many believe this replacement to the Sustainable Growth Rate formula will not only alter in many ways how physicians are paid by the Medicare program, but also how they will be institutionally organized to practice medicine.

“I would argue that for doctors, it will be much bigger than Obamacare,” says Michael Ivy, MD, Chief Medical Officer for Connecticut’s Bridgeport Hospital, part of the Yale-New Haven Health system. Yet he acknowledges that “we barely know anything about it.”

As MACRA likely begins taking hold in the coming months, what should the nation’s clinicians expect?

Will MACRA’s Fate Change Due to Donald Trump’s Election?

Republicans have railed against the Patient Protection and Affordable Care Act (ACA) for the past half-dozen years, and now with control of the White House and both houses of Congress, they could move to repeal the reform law entirely. But generally, MACRA is expected to survive, no matter what happens to the rest of the ACA.

“Don’t forget that MACRA may be the only piece of major bipartisan legislation passed over the past eight years. Because of . . . overwhelming bipartisan support in both the House and Senate, we can expect MACRA to continue to be implemented as it was designed in the recent final rule,” says Farzad Mostashari, MD, the former National Coordinator for Health Information Technology. He’s now Founder and CEO of Aledade, a Maryland-based company that helps physician groups operate accountable care organizations.

Ivy concurs. The law “has the political backing of both parties, so it’s positioned well in that sense. No one [said], ‘I will repeal MACRA if we win the election,’” he notes. “To my ears, that means we’re going to have to figure out if it works.”

But Jim Lott, former longtime Executive Vice President of the Hospital Association of Southern California who teaches health care policy at California State University, Long Beach, is less sanguine.

“It will probably be easier for Trump to get rid of MACRA given the way it has been received by the doctors, in that they wholly disapprove of it,” says Lott, who adds he recently met with a physician who plans to keep his Medicare population under the thresholds required to participate in MACRA.

What Changed Between the Proposed Rule and Final Rule?

The Centers for Medicare & Medicaid Services (CMS) made significant changes to MACRA’s final rules, providing what acting Administrator Andy Slavitt says is more flexibility.

“Compared with the proposed rule, the final rule embraces transitional payment methodologies, and by building in additional models, allows physicians to continue to provide their patients with quality care while mitigating potential financial risk,” says James S. Gessner, MD, President of the Massachusetts Medical Society (MMS) in a statement. “It also alleviates the administrative burden for participating physicians by reducing the number of reporting requirements and utilizes 2017 as a transition period.” (MMS owns NEJM Group, publisher of NEJM Catalyst and the New England Journal of Medicine.)

One of the biggest changes is that the participation threshold for physicians was lifted from a minimum $10,000 in Medicare revenue to $30,000 (or fewer than 100 Medicare patients). According to The Advisory Board, a consulting firm in Washington, D.C., that change handed MACRA exemptions to 124,000 clinicians, and cut the number required to participate in MACRA or experience reimbursement cuts from 836,000 to 712,000 — a reduction of 15%. Altogether, some 384,000 active clinicians won’t be participating in MACRA due to low volumes of Medicare patients.

CMS also eased the quality reporting restrictions during the first year. It introduced a “pick your pace” option for the first year of implementation in 2017. That essentially allows doctors or practices to submit data on only a single practice measure or improvement activity and not experience a reimbursement cut. (Practices still have the option of submitting a minimum of 90 days of continuous data to qualify for incentive payments.)

“We know there are challenges under the new system, but the recent announcement of the ‘pick your pace’ reporting options indicates not only that the CMS is responsive to the AMA’s advocacy on behalf of physicians, but that it is working to give physicians a fair chance to be successful in the new payment framework,” says American Medical Association President Andrew Gurman, MD, in a statement.

CMS also relaxed regulations for advanced alternative payment models (APMs) and allowed another pathway, a Medicare Shared Savings Program (MSSP) Track 1 Plus, which is open to current participants in the MSSP Track 1 Plus. CMS estimates these changes could bump up APM participation from around 5% of practices to 20% or slightly more, but many observers have expressed skepticism such numbers would be met.

“The final rule is very different from what we thought it was going to be,” Ivy says. “I thought they were going to be tougher, but it looks like it’s going to be okay in the first year. That was certainly not what the preliminary rule suggested.”

How Are Physician Practices Preparing for MACRA?

For the most part, physician groups are still familiarizing themselves with what is required under MACRA.

“A vast majority have no idea what is in it at this point. Their first idea is, ‘Where can I find shelter from the storm?’” says Lisa Bielamowicz, MD, The Advisory Board’s Chief Medical Officer. That reaction applies primarily to physicians who have not yet begun exploring options for merging or seeking employment with a larger group or hospital, she says. She has performed a couple dozen onsite meetings with physicians and medical groups to get them up to speed.

Louis Goodman, CEO of the Texas Medical Association (TMA), one of the most active state lobbies regarding the development of MACRA rules, says his organization has developed a five-step checklist on how to prepare. It includes learning about MACRA through sources on the TMA website and others; evaluating how well one’s practice has performed in Medicare’s current quality programs; weighing the list of clinical practice improvement activities; and perhaps most importantly, contacting an electronic health records vendor. The TMA site also offers an interactive calculator to determine if participation in MACRA is worthwhile. The American Medical Association (AMA) site offers similar tools.

What Might Be Unintended Consequences of MACRA?

The biggest unintended consequence may be the merging of smaller practices with larger ones, or their acquisition by hospitals and health care systems. Both trends have become pronounced in recent years, but the consensus is this will accelerate.

“There will be plenty of people who will want to join bigger groups, but [those groups] will be selective, particularly if they’re a dominant force in the area,” Ivy says.

Valinda Rutledge, a consultant with Sg2, a consulting firm in Skokie, Illinois, is also concerned about mergers, but notes that physician groups could seek less formal affiliations with hospitals in order to obtain crucial services, such as inputting data.

Mostashari fears that consolidation could lead to many areas being dominated by larger medical groups, perhaps even ones fully integrated with hospitals. “Payment reform is not going to work without competition,” he says. “If a provider is that dominant vertically and horizontally, they cannot do anything. They just demand rent from everyone else.”

Another possible unintended consequence is that fewer physicians may choose to participate in MACRA than envisioned, and instead retire, particularly those in their late 50s or early 60s. “We are starting to see doctors who have four or five years left in their careers retiring earlier, particularly those who don’t want to be employed by large systems,” Goodman says. “They say this is the only answer.”

One of Goodman’s biggest concerns is that there may be too much pressure on rural practices to comply with all MACRA measures, even though they may not have the resources to do so. Another concern: Too much pressure regarding proper data reporting through EHR vendors. Angie Ybarra, TMA’s Director of Clinical Advocacy, recalls a member practice that should have received a bonus under the Physician Quality Reporting System (PQRS, which has been combined into MACRA). The EHR vendor submitted the data, which CMS accepted. However, the agency did not mention that there were errors in the data. The client didn’t find out until months later that instead of receiving an expected bonus, it was subjected to a negative technical error — a roughly $100,000 shift in revenue. Ibarra says similar outcomes occurred with several other practices in Texas that used the same vendor.

How Is MACRA Positioned for Success?

“We believe that the final rule has the potential to meet its goal of maintaining high standards of value-based patient care while transitioning health care providers to a new payment framework if they choose,” says Massachusetts Medical Society’s Gessner. “We’re working hard with CMS to educate independent physicians and small practices so that they can transition to the new payment system as seamlessly as their larger, well-resourced counterparts.”

Rutledge, who is concerned about the impact on smaller and rural practices, notes that CMS has set aside $100 million to provide technical assistance to those practices. That the agency has provided more flexibility on the final rules — and is gathering comments on them as well – suggests to her more changes are coming.

“They see this as an evolutionary process,” she says. “They are putting it out in front and will be making modifications as they go along. We have to anticipate it evolving.”

Mostashari concurs with this view: “CMS’ response to bipartisan and private-sector calls for more to be done to support independent primary care practices is an encouraging sign of opportunities ahead.”

New Call for Submissions ­to NEJM Catalyst


A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »

More From Care Redesign 2016

Poor Care Is the Root of Physician Disengagement

When physicians and health care executives disagree over the purpose of medicine, disengagement is the inevitable result.

Population Health: The Ghost Aim

We are finally at a moment in the history of health care when we know what to do to achieve better health, who should do it, and how to get it done.

Health Reform and the Changing Safety Net in the United States

How the coverage provisions of the ACA are affecting safety-net health systems, responses of these systems to payment reform, and future directions in scaling up improvements and innovation in delivery systems.

Rethinking the Primary Care Workforce — An Expanded Role for Nurses

In the primary care practice of the future, the physician’s role will increasingly be played by nurse practitioners.

Survey Snapshot: How to Achieve Post-Acute Care Coordination

Commentary from NEJM Catalyst Insights Council members on preferred post-acute networks and the importance of communication.

A Memo to the Brilliant

Top-down regulation of physicians may have been a factor in Democrats’ defeat. Blind commitment to specific models of payment reform has put much into jeopardy, unnecessarily.

Care Redesign Survey: Strengthening the Post-Acute Care Connection

Ties between health systems and post-acute care facilities are on the rise, but much work remains to truly coordinate care.

The Hard Work of Health Care Transformation

Experience shows that although a changed market may be a helpful precondition to local performance improvement, it hardly guarantees effective operational change.

Creating the Optimized Surgical Journey

Results from the implementation of an enhanced recovery pathway (an “Optimized Surgical Journey”) for patients undergoing cystectomy at MD Anderson Cancer Center.

An Operational Standard for Transitioning Pediatric Patients to Adult Medicine

Transitioning young adults from pediatrics to adult medicine can be cumbersome, patchy, and confusing. A standard operational framework that leverages the right organizational resources could be just the solution primary care needs to reduce frustration, gaps in care, and loss of patients.


A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »


Four Ingredients for Engaging Physicians in…

A former physician network leader offers tips on building an environment conducive to change.

Coordinated Care

90 Articles

Data Graphic: Real-Time Communication Is Key…

The NEJM Catalyst Insights Council weighs in on the best opportunities for post-acute care transitions.

Primary Care

118 Articles

Four Ingredients for Engaging Physicians in…

A former physician network leader offers tips on building an environment conducive to change.

Insights Council

Have a voice. Join other health care leaders effecting change, shaping tomorrow.

Apply Now