MACRA Repeals SGR & Replaces MU Stage 3 for Provider Payments

This October, the Department of Health and Human Services (DHHS) released the final Medicare Quality Payment Program (QPP) rule, which is a part of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). MACRA repealed the sustainable growth rate (SGR) formula that was used to determine Medicare reimbursements for physicians, and replaced it the QPP framework, changing the way physicians are paid.

QPP Is a Push Toward Interoperability

Among other government regulations, the Medicare QPP is a driving force for interoperability and a bigger push away from fee-for-service (FFS) to value-based payment models. The QPP defines how providers will be reimbursed for quality and gives providers two options: the Merit-based Incentive Payment System (MIPS) or the Advanced Alternative Payment Models (APMs). As only those who are already well into value-based reimbursements will qualify for APMS, the majority will fall under MIPS.

Intended to be implemented in stages, MACRA’s QPP is the next step in the transition to value-based payment models. It will consolidate Meaningful Use (MU), the Physician Quality Reporting System (PQRS), and the Value-based Payment Modifier into MIPS (see figure below). Those who qualify may choose to participate in Advanced APMs. Hospitals and other healthcare organizations (HCOs) have a vested interest in helping their providers succeed under MACRA, whether through MIPS or an advanced APM. 


The QPP default path is MIPS. Beginning January 2017, providers who bill more than $30,000 a year to Medicare or treat a minimum of 100 Medicare patients will be subject to MIPS payment guidelines. Initially, there is a phase-in for the categories of costs and resources; however, once MIPS is in full swing, providers will be evaluated on four categories:
1) Quality (replaces PQRS)
2) Advancing Care Information (ACI) (replaces EHR Incentive Program or MU)
3) Cost (replaces Value Modifier (WM) Program)
4) Clinical improvement activities (new category)1

Different than Stage 3 of MU, MIPS requires reporting on five measures related to interoperability. Medicare payment adjustments for providers range from +/-4% starting in 2019, to +/-9% in 2022, going forward.2 


Eligible Advanced APMs will involve downside risk, quality measurements, and health information technology (HIT) requirements. Advanced APMs are meant for providers who are participating in specific value-based care models (for 2017: the Comprehensive ESRD Care Model, Comprehensive Primary Care Plus Model, Medicare Shared Savings Program Tracks 2 and 3, and the Next Generation ACO Model).
HCOs eligible to participate in Advanced APMs can receive a 5% incentive payment. To be eligible, providers must receive 25% of their Medicare-covered services through Advanced APMs or see 20% of their Medicare patients through an Advanced APM in 2017. MACRA’s QPP intends to incentivize interoperability and reduce the administrative burden on physicians so they can focus on care improvement and the adoption of value-based care. 

Pathologists are MIPS-eligible Clinicians

The final rule also addresses non-patient-facing physicians, such as pathologists. The definition of non-patient-facing is a physician or group that bills 25 or less patient-facing encounters per year.3 Non-patient-facing MIPS-eligible clinicians will have adjusted measures to meet; however, pathologists are still required to participate in MIPS. They will not be penalized as long as at least one quality measure is reported for 2017. Those reporting six measures and participating in a clinical practice improvement activity will be eligible for up to a 4% bonus in 2019.2 

ONC 2015 Edition Certification

With MU currently in transition, and the advent of the MACRA rule, providers will now contend with the ACI criteria in place of MU. However, whether you are a hospital and fall under MU or a provider under MACRA, beginning in 2018, you must be utilizing software certified to standards specified in the ONC 2015 edition. In 2017, you may use software certified to the 2014 edition, the 2015 edition, or a combination of both.
Orchard Software will begin the certification process for Orchard Harvest LIS v10 and v11 in January 2017 and expects to be certified well in advance of the 2018 requirement. We also plan to begin the certification process for Orchard Sequoia beginning in late summer/early fall of 2017.
1. (2015, October 14). HHS finalizes streamlined Medicare payment system that rewards clinicians for quality patient care. Retrieved from

2. Klipp, J. [Ed.] (2016, November). Pathologists have options for avoiding penalties under MACRA. Laboratory Economics, 11(2), 1, 5-6.

3. (2016, May 18). MACRA NPRM fact sheet: MIPS quality performance category for non-patient facing eligible clinicians [PDF document]. Retrieved from

Orchard’s Commitment

Orchard is committed to keeping you informed and being a trusted resource that you can turn to for industry-related education. As always, we welcome your feedback. Follow us on Twitter at @orchardsoftware, and feel free to respond to this post by emailing us at news@orchardsoft.

Kim Futrell, BS, MT(ASCP)
Products Marketing Manager
Orchard Software Corporation