In 1997 congress passed the Balanced Budget Act (BBA), to replace the Medicare Volume Performance Standard (MVPS), in an attempt to rein in the growth in physician expenditure and healthcare costs. The BBA was designed to ensure that the annual increase in expense per Medicare beneficiary did not exceed the growth in Gross Domestic Product (GDP), and tied physician reimbursement to GDP.

Each year the Center for Medicare and Medicaid Services (CMS) would send a report to the Medicare Payment Advisory Commission, and include a conversion factor to either increase or decrease payments made by Medicare based on changes in Medicare spending. Unfortunately, most of the potential adjustments were downward, forcing Congress to suspend or adjust the Sustainable Growth Rate (SGR) formula (“doc fix”).

CMS Goals 

In January of 2015, Sylvia Burwell, Secretary of Health and Human Services, stated that the goal of CMS was to have 85% of all Medicare fee-for-service payments tied to quality or value by 2016, and 90% by 2018. Even more striking was the goal to have 30% of all Medicare payments tied through either quality or value through an alternative payment model by 2016, and 50% of those payments by the end of 2018.

MACRA and the “New” Quality Payment System Options (MIPS vs. APMs)

The deficiencies with the BBA eventually led to the passage of the Medicare Access and CHIP Reauthorization Act (MACRA)1 of 2015, which President Obama signed into law on April 16, 2015 and went into effect in July of 2015.

Physicians and other Eligible Providers (PAs, APNs, CRNAs, etc.) will now be paid through systems set up via MACRA. Payments will go through the Quality Payment Program, which will have two pathways for participation: the Merit-based Incentive Payment System (MIPS)2 or the Advanced Payment Model (APM).


About 4% of all physicians are initially expected to participate in the APM, which will provide a 5% bonus for participation for the first 6 years of the program. However, it also places some of those payments within a risk model.


MIPS applies to all Eligible Providers except for those new to Medicare, have less than or equal to $30,000 in Medicare charges, and less than or equal to 100 Medicare patients.

Beginning in 2019, 4% of an Eligible Professional’s revenue generated through Medicare fee-for-service payments will be distributed under MIPS, which will grow to 9% by 2022. Under the previous PQRS programs, physicians in small practices were liable to penalties as much as 6% or bonuses of up to 2%; practices with 8 or more physicians were subject to maximum penalties of 8% and a bonus of 4%.3

Payment Adjustment Under MACRA



MACRA includes a 0.5% upward adjustment to the Medicare conversion factor for the first 5 years of the program, followed by no upward adjustment for the subsequent five years. After the initial 10 years, eligible providers will receive either a 0.25% increase under the MIPS program or a 0.75% increase under the APM model.

To be eligible for the APM model, providers must be part of a current APM that measures up to an “advanced threshold”. These advanced thresholds include the Medicare Shared Savings Program (MSSP) ACOs, Tracks 2 and 3; Medicare Next Generation ACOs; Comprehensive Primary Care Plus (CPC+) Model; Oncology Care Model (two-sided risk); and Comprehensive End-Stage Renal Disease Care Model. Absent from the proposed APM rules include Track 1 MSSP ACOs (due to the fact there is no downside risk in payment) and other bundled payment models. There will also be incentives under the new Quality Payment Program, with rewards and penalties ranging from 4% to 9% of Medicare reimbursement.

Overall the program is budget neutral (“Hunger Games” strategy), however, the program does provide for an additional $500 million in funding that can be awarded for those exceeding targets within the first five years. The bonuses would be awarded on a sliding scale with a maximum 10% additional amount above the base MIPS bonus. Bonuses within the APM model are not required to be budget neutral.

Composite Performance Score (CPS) in MIPs

Under MACRA, the current Value-based Modifier programs of quality and cost will all be combined (Physician Quality Reporting System (PQRS) and Meaningful Use). In its place, there will now be four components: quality, cost/resource use, clinical practice improvement activities (CPIA), and meaningful use of certified HER.

Eligible Providers will be scored, and those scores will be weighted and combined into a composite score. The weight of each of the four components will shift over time, with the initial benchmark of quality at 60%, cost/resource use at 0%, CPIA at 15%, and advancing care information at 25%.

Most anesthesiologists are exempt under the current standard of Meaningful Use and may continue to be exempt under the new Advancing Care Information program as a “non-patient facing” specialty, as long as the anesthesia provider reported 25 or fewer codes during the given reporting year. Under Clinical Practice Improvement Activities, Eligible Providers must report on three high-weighted activities or six medium-weighted activities (out of a total of 90 listed activities).



 Quality Under MACRA4 

Under the new quality program, Eligible Providers only need to report on six measures in lieu of the previous 9 measures under PQRS, as long as they include an outcome measure and a cross-cutting measure, under the final rule released on October 14, 2016, clinicians only have to report on 50% of Medicare patients, which is a change from the originally proposed requirement of reporting on 80% of Medicare patients, or 90% of all patients if reporting through a Qualified Clinical Data Registry (QCDR).

CMS will continue to emphasize non-process measures in the areas of patient outcomes, patient experience, patient satisfaction, and patient perception of coordination of care by multiple eligible professionals (EPs). CMS also will emphasize measures that follow the patient across the continuum of care including patient-reported outcome measures (such as functional status), and measures of accountability among multiple levels of care.

Quality Measures for Anesthesiologists:

CMS has proposed an Anesthesiology Specialty-Specific Measure Set for eligible anesthesiologists.

  • MIPS #44: CABG: Preoperative Beta-Blocker in Patients with Isolated CABG Surgery
  • MIPS #76: Prevention of CVC-Related Bloodstream Infections*
  • MIPS #404 Anesthesiology Smoking Abstinence*
  • MIPS #424: Perioperative Temperature Management*
  • MIPS #426: Post-Anesthetic Transfer of Care Measure: Procedure Room to PACU*
  • MIPS #427” Post-Anesthetic Transfer of Care Measure: Procedure Room to ICU*
  • MIPS #430: Prevention of PONV-Combination Therapy*

            * Indicates a proposed “high priority measure”

Different Options for Inclusion in MACRA in 2017

On September 8, after many professional organizations raised concerns with the relative short timeline for implementation of quality reporting measures, the Acting Administrator at CMS, Andy Slavitt, published a blog5 outlining different options that eligible clinicians might follow for inclusion in MACRA in 2017. Initially, the proposal was to allow up to four options to avoid negative payment adjustments under MACRA in 2019. The new plan allows eligible providers to “pick the pace” of participation for the first performance period that begins January 1, 2017.

  • Option #1: As long as eligible providers submit some data to the Quality Payment Program, the negative payment adjustment will be avoided.
  • Option #2: Allows the eligible provider to submit date to the Quality Payment Program for a reduced number of days. In practicality this means that one’s first performance period could begin after January 1, 2017. The EP could qualify for a small positive payment adjustment
  • Option #3: Eligible Providers may opt to submit Quality Payment Program information for a full calendar year beginning on January 1, 2017. The Eligible Providers then could qualify for a modest positive payment adjustment
  • Option #4: Instead of reporting quality data and other information, MACRA allows the EP to participate in the Quality Payment Program by joining an Advanced Alternative Payment Model (APM), such as Medicare Shared Savings Track 2 or 3 in 2017. The EP could then qualify for a 5 percent payment incentive in 2019.


MACRA will fundamentally change how physicians are judged on quality, cost, and practice improvement projects. Both CMS and the American Society of Anesthesiologists have excellent resources for understanding the nuances of this new program.