Table.

Anatomy and Pathology of MACRA

DESCRIPTION	PROBLEMATIC FEATURES
The Merit-based Incentive Payment System (MIPS)
Quality domain: Provider performance is assessed based on 6 quality measures. The scoring system for the quality domain encourages reporting on high-priority measures, limits gains from choosing “topped out” measures, and grades clinicians on a curve relative to others reporting on the same measure.	Performance is assessed on only 6 measures—far fewer than the 33 in Medicare ACO models. Providers can choose the measures from a set of about 300 measures, with no restrictions on the domains covered, except one must be an outcome or high-priority measure. Performance is judged against national benchmarks, and minimal adjustments for patients’ clinical and social characteristics have been advanced so far for most measures. Because practices much smaller than ACOs are exposed to the MIPS, patient risk is pooled to a lesser extent, causing greater differences in patient risk factors between providers.
Clinical Practice Improvement Activities (CPIAs) domain: Providers must submit data attesting to 2–4 CPIAs in any of 9 categories: expanded practice access, population management, care coordination, beneficiary engagement, patient safety and practice assessment, participation in an advanced payment model, achieving health equity, integrating behavioral and mental health, and emergency preparedness and response. Different activities carry different weights in the scoring of the CPIA domain.	Providers can choose activities from an approved list of over 90 CPIAs.
Advancing Care Information domain: Providers are assessed on their use of certified electronic health record technology and achievement of various functionalities, including protection of patient health information, electronic prescribing, patient electronic access, coordination of care through patient engagement, health information exchange, and public health and clinical data registry reporting.	Exemption of clinicians practicing in hospital outpatient departments from the Advancing Care Information domain could accelerate price-increasing consolidation between physicians and hospitals.(9,10)
Resource Use domain: For Medicare beneficiaries attributed to providers through a claims-based algorithm, providers are assessed on total Medicare spending per beneficiary and spending per episode for clinical episodes relevant to specific specialties.	Resource Use measures are given a weight of zero in the scoring initially, rising to a maximum of only 30% by 2021. The contribution of total per-beneficiary spending to the composite is further diluted by combining it with other episode-based measures. Thus, reductions in total spending translate into proportionately much smaller bonuses, and providers will have opportunities to obtain bonuses without substantially lowering total spending by focusing on episode-based measures and measures in the other three domains. Performance is judged against national benchmarks, with standard adjustments for patients’ clinical characteristics that may be inadequate. No adjustment for patients’ social characteristics has been advanced thus far.
Bonuses/penalties based on Composite Performance Score: The composite score is calculated as a weighted average of scores in the four domains. The Quality domain receives the greatest weight (50% in 2017). Providers with a composite score below a set threshold (and those failing to meet reporting requirements) receive a negative adjustment to their Part B reimbursement rates 2 years later, with the adjustment growing from −4% in 2019 to −9% in 2022 and beyond. Clinicians with scores above the threshold receive zero or positive adjustments, with higher scores meriting higher adjustments. Because of supplemental bonuses for the top quartile of performers and a budget neutrality provision that inflates base adjustments up to 3-fold if more clinicians are penalized than bonused, the maximum adjustment will be as high as 22% in 2019 and will grow to 37% in 2022 (base adjustment of 9% x 3 + 10% high-performer bonus).	The MIPS threatens to introduce wide variation in physician payment rates within the next 5 years (up to a 46% spread). MIPS bonuses are structured as rate increases rather than lump sum bonuses. Budget neutrality means that low performers cannot bonus even if they are improving. Assuming utilization stays constant, the MIPS effectively transfers payments from low performers to high performers.
MACRA Advanced Alternative Payment Model (APM) Participation Incentive
Clinicians are exempt from the MIPS if they are in an advanced APM, in which case they receive a lump sum bonus equal to 5% of their Part B revenue annually from 2019-2014, followed by favorable rates thereafter. Generally, an APM qualifies as advanced if it involves risk for spending in excess of a financial benchmark (downside risk), as in tracks 2 and 3 of the Medicare Shared Savings Program (MSSP). Because the most popular MSSP track (track 1) imposes no downside risk on ACOs in the first six years of participation, the vast majority of clinicians serving fee-for-service Medicare beneficiaries are exposed to the MIPS. Performance of track 1 MSSP ACOs in the MIPS is based on the 33 ACO program quality measures rather than 6 provider-selected measures.	The 5% bonus may be insufficient to induce ACOs in track 1 of the MSSP to enter an advanced APM because many ACOs are likely to perform well in the MIPS and any difference in bonuses may be insufficient to mitigate the risk of losses from assuming downside risk. The MIPS offers a new alternative that may be quite attractive to many ACOs or prospective ACOs—an opportunity for some to achieve equal or greater bonuses at a lower cost by reporting on far fewer measures and having control over measure selection. For ACOs taking downside risk (advanced APMs), the 5% bonus weakens incentives for ACOs to lower Part B spending because it grows with greater Part B fee-for-service revenue.