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What Are MACRA and MIPS?

Updated Oct 23, 2023

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Max Freedman
Business Operations Insider and Senior Analyst at businessnewsdaily.com
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Think of the last time you had a calm day at your medical practice. If you can’t remember one, that might be because you’re operating on a traditional fee-for-service model requiring you to see as many patients as possible to turn a profit. Many doctors aren’t thrilled about this model, and neither are policymakers. That’s why the federal government enacted a law called MACRA in 2015, creating the MIPS program that shifts certain practitioners away from the fee-for-service model. Learn all about MACRA and MIPS below.

What is MACRA?

MACRA is an acronym for the Medicare Access and CHIP Reauthorization Act. (CHIP stands for the Children’s Health Insurance Program.) This federal statute went into effect in 2015 and changed how medical practices get reimbursed when they provide care to Medicare patients. It shifts Medicare providers from a traditional fee-for-service model to a potentially more progressive value-based healthcare approach.

According to the Centers for Medicare and Medicaid Services (CMS), MACRA rewards practitioners for the quality of care they provide, rather than the amount. This definition falls in line with widely accepted notions of value-based care.

Upon taking effect, MACRA replaced the Value-Based Modifier (VBM), Medicare Electronic Health Record (EHR) Incentive Program and Physician Quality Reporting System (PQRS). MACRA kept many key components of these programs and combined them into one: the Quality Payment Program (QPP). Within the QPP are two paths for practitioner reimbursement: Advanced Alternative Payment Models (APMs) and the Merit-based Incentive Payment System (MIPS). Your practice should become familiar with the latter.

Key TakeawayKey takeaway

MACRA is a federal law that introduced the MIPS model for practitioner reimbursement in 2015.

What is MIPS?

MIPS determines how much money Medicare pays your practice for its services. It gives your practice a composite performance score that affects how much Medicare pays you. Your score will range from zero to 100 and depends on four factors: quality, promoting interoperability, improvement activities and cost.

  1. Quality: The quality of care you provide is based on standards that CMS and professional medical groups have set. You choose the six quality metrics that best suit your practice, and CMS will only evaluate you based on those. In 2022, quality will comprise 30% of your MIPS score.
  2. Promoting interoperability (PI): This category encourages practices to use certified EMR software (see our AdvancedMD review for an example) to streamline the electronic exchange of health data and improve patient engagement. In 2022, your PI score makes up 25% of your total MIPS score.

  3. Improvement activities: Your improvement activities score reflects the efforts you take to strengthen your patient care processes. It also tracks how you improve patient engagement and access across all your care. As with the quality metric, you can choose the improvement metrics that make sense for your practice. In 2022, improvement activities will account for 15% of your score.
  4. Cost: As its name suggests, this final MIPS metric reflects the costs you incur to provide patient care. CMS uses the medical claims you send to Medicare to calculate this metric. Your cost score comprises 30% of your final score in 2022.

Note that all the above percentages can change if you file an exception application or participate in an APM instead of MIPS. They can also change if CMS gives you a special status. Additionally, if you don’t see enough patients to meet any of the cost metric’s qualifications, cost will not be a part of your MIPS score. CMS will distribute its 30% weight to other factors.

Key TakeawayKey takeaway

MIPS changes the amount that Medicare reimburses you based on your care’s quality and cost, as well as your practice’s interoperability and improvement measures.

What do MACRA and MIPS mean to providers? 

MACRA and MIPS affect the following practice and practitioner considerations.

  • Your payment amounts: If your MIPS score is above 75, you’ll receive reimbursements 27% greater than you’d otherwise receive. Conversely, MIPS scores lower than 75 lead to reimbursements 9% lower than you previously received. A MIPS score of exactly 75 leads to no changes in your reimbursement amount.
  • Your use of medical software: The PI portion of the MIPS score shows that the government is pushing medical practices to switch from paper records to digital ones using medical software. This transition is nearly complete across all providers, with CMS reporting that roughly 9 in 10 providers currently use an EMR system. The persistence of PI as a category suggests that now is the time to implement medical software that is interoperable with other systems if you haven’t already.
  • A shift in care models across the medical industry: Value-based care is a very different model from a fee-for-service model, and MACRA and MIPS could lead to the former gradually overshadowing the latter. This could mean that doctors who need to maximize their appointments to earn more revenue no longer face this burden. The end result could be an industry with fewer overly stressed doctors trying to do too much.

Who qualifies for MIPS?

In theory, all the above criteria mean that if you see Medicare patients, you qualify for MIPS. In reality, that’s not quite true. Some practices don’t qualify for MIPS. Below all are the qualification factors.

Certain types of clinicians 

CMS automatically qualifies the below types of practitioners for MIPS. If you fall outside these categories, you may not qualify for MIPS:

  • Physicians (including doctors of medicine, optometry, osteopathy, podiatry, and dental medicine and surgery)
  • Physician assistants
  • Osteopathic practitioners
  • Nurse practitioners
  • Clinical nurse specialists
  • Certified registered nurse anesthetists
  • Certified nurse-midwives
  • Registered dietitians or nutrition professionals
  • Qualified audiologists
  • Qualified speech-language pathologists
  • Clinical psychologists
  • Clinical social workers
  • Occupational therapists
  • Physical therapists
  • Chiropractors

Individual and group qualifications

If you’re an individual clinician, you qualify for MIPS if the following statements are true:

  • Your Medicare Part B claims identify you as one of the above types of practitioners.
  • You enrolled as a Medicare provider in 2021 or earlier.
  • You don’t participate in a qualifying APM.
  • You exceed the low-volume threshold (detailed below) as an individual.

The rules are mostly the same if you practice as part of a group. The only difference is that your group, not you alone, must exceed the low-volume threshold. This rule also applies to virtual practice groups. Additionally, if you or your group meets only one or two of the three low-volume criteria (detailed below), you can opt in to MIPS. Doing so wouldn’t be required in that case, but it could lead to higher reimbursements. 

Low-volume threshold

Your practice volume at the end of your MIPS determination period will also be a factor in whether or not you qualify. If you meet the following criteria, your practice exceeds the low-volume threshold and qualifies for MIPS:

  • You billed at least $90,000 for professional services covered under Medicare Part B. 
  • You had more than 200 encounters with Part B patients.
  • You provided Part B patients with at least 200 covered professional services.

Note that any individual practitioner who qualifies for MIPS must report data to CMS. Opt-in practitioners can choose whether or not to do so. Whether you’re reporting MIPS data because you’re required to or because you have chosen to, the potentially higher reimbursements could be worth your while.

Max Freedman
Business Operations Insider and Senior Analyst at businessnewsdaily.com
Max Freedman, has spent nearly a decade providing entrepreneurs and business operators with actionable advice they can use to launch and grow their businesses. Max has direct experience helping run a small business, performs hands-on reviews and has real-world experience with the categories he covers, such as accounting software and digital payroll solutions, as well as leading small business lenders and employee retirement providers. Max has written hundreds of articles for Business News Daily on a range of valuable topics, including small business funding, time and attendance, marketing and human resources.
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