American Association for Physician Leadership

Strategy and Innovation

Thriving Under Medicare’s Newest Pay-for-Performance Program: Making Sense of the Merit-Based Incentive Payment System and Alternative Payment Models: Part II

Rick Rutherford, CMPE

June 8, 2017


The final rules issued about the Merit-Based Incentive Payment System and Alternative Payment Models by CMS in November 2016 provided eligible clinicians a great deal of flexibility in their approach to compliance.

This article is the second of three parts.

This is the second installment in a series of three articles intended to guide medical practice managers through the maze of the innovative, complex regulations that will affect the amounts paid to healthcare providers by Medicare for at least the next three years (longer, unless modified by Congress). This series is designed to provide information to help practices optimize their payment potential from Medicare in 2019 based on their actions toward compliance for some portion of 2017 and to prepare to expand these behaviors as required in future years. This installment aims to help clinicians and managers make wise selections about their levels of participation in the new Medicare quality payment program for 2017.

This year is designated by the CMS as the transition year as the old quality programs (i.e., Physician Quality Reporting System [PQRS], Meaningful Use, and the Value-Based Modifier) are phased out in favor of participation in the Merit-Based Incentive Payment System (MIPS) or the Advanced Alternative Payment Models (APMs), which will determine the provider’s Medicare Part B payment rate for calendar year 2019. Medicare Advantage payment rates are negotiated separately between providers and insurance companies and are not directly affected by the new quality payment program.

The program is flexible to allow providers to expand their participation activities in subsequent years in hopes of improving future payments.

Each year of the new quality payment program, the MIPS performance components (described below) will be assessed and will determine the Part B payment rate for each provider two years following the assessment year. The program is flexible to allow providers to expand their participation activities in subsequent years in hopes of improving future payments. In this transition year, the choices made by each eligible clinician could result in payment variations ranging from a 4% cut (–4%) in payments for 2019 up to a payment increase of 4% (+4%) plus bonus increases (to be determined) for those who demonstrate superior levels of performance compared to all participants. The program is designed to allow providers to maintain their current Medicare Part B payment rates with a modest amount of reporting while allowing those who have been doing robust reporting in the legacy programs to reap the benefits of payment raises for continuing on that pathway in future years. It all depends on which choices are made among the various measures included in four different performance categories.

In or Out

The first decision for healthcare providers depends on whether or not they are covered under the new program. Eligible clinicians are defined for 2017 as physicians, physician assistants, nurse practitioners, clinical nurse specialists, or certified registered nurse anesthetists. Among those clinicians, individuals who bill Medicare Part B for fewer than 101 beneficiaries per year with total submitted charges below $30,001 are excluded from the reporting requirements and, therefore, exempt from negative future payment adjustments. This exclusion is referred to as the low-volume threshold exclusion.(1) In addition, eligible clinicians who are newly enrolled in Medicare Part B during the performance period year are excluded. These excluded individuals are not barred from reporting under the program if their group elects to do so, but they will not be subject to negative payment adjustments.

Eligible clinicians who can absorb a 4% reduction in their 2019 Medicare Part B payments or who determine that the costs to initiate this new quality reporting program will be greater than the penalty may choose not to report and accept the penalty. This is a year-by-year decision, so a course correction in future years is possible.

Alternative Payment Model or Merit-Based Incentive Payment System?

Eligible clinicians who participate in one of the following APMs are eligible to participate in the new program under the APM reporting requirements:

  • Comprehensive ESRD Care Model (Large Dialysis Organization [LDO] arrangement);

  • Comprehensive ESRD Care Model (non-LDO arrangement);

  • Comprehensive Primary Care Plus (CPC+);

  • Medicare Shared Savings Program Accountable Care Organization (ACO)—Track 2;

  • Medicare Shared Savings Program ACO—Track 3;

  • Next Generation ACO Model; or

  • Oncology Care Model (two-sided risk arrangement).

Medicare estimates that somewhere between 70,000 and 120,000 eligible clinicians are currently involved in these Advanced APMs for 2017. The rest are expected to participate in the MIPS program.

Group or Individual Reporting for the Merit-Based Incentive Payment System

MIPS clinicians may elect to report their performance as individuals or as a member of a group. Under the MIPS regulations, a group is defined as two or more MIPS-eligible clinicians possessing National Provider Identifier numbers filing claims under a single Tax Identification Number. Within the CMS final rule, there is clarification that an eligible clinician who does not exceed the low-volume threshold is swept into the reporting requirements if he or she is part of a group that does exceed the threshold and elects to do group reporting under MIPS. Groups do not have to undertake any special registration “to have their performance assessed as a group except for groups submitting data on performance measures via participation in the CMS Web Interface or groups electing to report the [Consumer Assessment of Healthcare Providers and Systems] CAHPS for MIPS survey.”(1)

The decision on reporting as a group or as individual clinicians should include considerations such as the full- or part-time status of individuals, individual opportunities for exclusion, significant disparities in ability to report on sufficient quality measures (which could drag down a small group), or disadvantages in the four performance categories (e.g., cost differentials in multispecialty practices).

Selection of Performance Period Duration

For performance assessment year 2017, eligible clinicians and groups have the flexibility of choosing a shorter duration for performance reporting than the full calendar year. CMS introduced this option for the 2017 transition year as an addition to the Quality Payment Program final rule in November 2016 and as a way to attract new clinicians who had not begun quality reporting in prior years. CMS explained that this flexibility “will focus the program in its initial years on encouraging participation and educating clinicians, all with the primary goal of placing the patient at the center of the healthcare system.”(2) With certain exceptions determined by the reporting selection or the choice of measures reported (explained later in this article), the minimum duration of measurement and reporting to qualify as a successful participant in 2017 is 90 continuous days.

To expand upon this reporting flexibility further, CMS stated, “Additionally, for further flexibility and ease of reporting, this 90-day period can differ across performance categories. For example, a MIPS eligible clinician may utilize a 90-day period that spans from June 1, 2017 – August 30, 2017 for the improvement activities performance category and could use a different 90-day period for the quality performance category, such as August 15, 2017 – November 13, 2017.”(3) Eligible clinicians and groups may elect to measure and report on periods of time longer than 90 days in 2017 if they choose. This might be helpful if they choose quality measures or advancing care information measures that have been in place under the prior PQRS and Meaningful Use programs because they would not have to disrupt the current data gathering process. Beginning with the 2018 performance period, current rules require all reporting entities to assess and report for the entire calendar year. It is possible that CMS could change this requirement in future rule-making.

Selection of Performance Reporting Mechanisms

Eligible clinicians and groups may choose to report the data they collect under MIPS in any one of five data submission methods. The options for data submission are determined by the reporting entity (individual or group) and by three of the performance categories (quality, advancing care information, or clinical improvement activities). The data submission options for 2017 for individual eligible clinicians can be found in Table 1; those for groups are found in Table 2.

Only groups are permitted to report using the CMS Web Interface reporting mechanism. If a group decides to use this new CMS Web Interface option, the group must register no later than June 30, 2017. Although many industry experts are assuming that the registration process will go through the same CMS GPRO Web Interface registration page used for PQRS, no specific details on registration for MIPS have been published. Those interested in this option should keep checking the CMS website ( ). Because the CMS Web Interface option uses patient attribution and sampling methods based on a 12-month performance period, groups electing to report via the interface must report on data for the entire calendar year.

Choosing an Array of Performance Measures

The selection of performance measures is the key decision to be made by eligible clinicians, because it directly affects the performance score that determines the Medicare payment rate in 2019. Making choices among the measures in each category requires some strategic thinking due to the weighting of categories toward the final performance score. In addition, some thought must be devoted to the cost of compiling and reporting information for more measures in order to avoid diminishing returns. Eligible clinicians or groups must decide what payment level they intend to achieve two years hence and select an array of measures that will earn enough points to affect the Medicare payment rate appropriately. As explained in the CMS rule, the opportunities range from 0 points up to 100 points. The breakdown is shown in Table 3.

Three of the four MIPS performance categories have catalogs of measures from which an eligible clinician or group may select those that provide the most favorable opportunity for them to earn a high performance score. As was true for the prior PQRS system, it is expected that as time passes and clinicians become more experienced in selecting and reporting on MIPS performance measures, the scores to achieve higher reimbursements will increase annually. There is strategic wisdom in establishing some stretch goals for performance reporting in this initial year to provide for learning by trial and error. On the other hand, participants who wish to do as little as possible to avoid a Medicare payment cut for 2019 have a special option for 2017 only. They may satisfactorily report one quality measure, one improvement activity (discussed later), or the required measures in the advancing care information performance category (discussed later) and receive the 3-point minimum for a neutral payment change score.

Quality Measures

Under MIPS, there are 271 approved quality measures. The potential score for each measure is determined by several key factors. The measures are divided into Class 1 and Class 2 measures. Class 1 measures are those “submitted or calculated that met the following criteria:

  • The measure has a benchmark;

  • Has at least 20 cases; and

  • Meets the data completeness standard (generally 50%.)”(4)

Class 2 measures fail to meet one or more of the three criteria above. Potential performance scores are higher for Class 1 measures.

MIPS participants may choose to report on a preapproved list of specialty measures or may choose in a la carte fashion from among all measures. Otherwise, six quality performance measures are required, although some of the specialty measure sets contain fewer than six (e.g., electrophysiology cardiac specialist, which requires only three measures). One of the quality measures reported must be an outcomes measure. If an outcomes measure is not available, then another high-priority measure must be chosen. A useful selection tool is available at that allows each participant to filter the list of quality measures and build a customized list of choices from which to obtain more detailed specifications. The specifications are important particularly for individuals or groups who choose to report via registries or electronic health records (EHRs), because those reporting options require reporting on 50% of all patients, not just Medicare patients, who fit the denominator for the time period. Some of the measure specifications exclude patients younger than a certain age, which makes reporting less onerous than it might seem at first glance (e.g., screening for future fall risk—65 or older). Keep in mind that some registries design their reporting software with less flexible measure sets for clients to select.

Clinical Improvement Activities

MIPS participants must attest via the CMS website that they have carried out four improvement activities focused on care coordination, beneficiary engagement, or patient safety. Small groups (fewer than 15 eligible clinicians) and those in rural or health shortage areas need only report two activities. There are 92 approved improvement activities, which can be found at . According to the final rule, these improvement activities “could have started prior to the performance period and are continuing or be adopted in the performance period as long as an activity is being performed for at least 90 days during the performance period.”(5)

Many of the clinical improvement activities are less specific in how the participant carries them out. For example, a practice that regularly conducts and reviews a self-designed patient satisfaction survey could attest to meeting activity designated as “IA_BE_13 Regularly assess the patient experience of care through surveys, advisory councils and/or other mechanisms.”(6)

Advancing Care Information

Participants may choose from two measure sets for credit in the advancing care information performance category. The selection by each participant of the appropriate measure set is determined by the level of certification for the electronic health records technology (CEHRT) used during the performance measurement period. One set of measures is designed for CEHRT certified to some extent to the 2015 edition. Another is designed for CEHRT that may only be certified to the 2014 edition. The level of certification will be determined by submitting the CEHRT number with the attestations. For future reporting years, unless rules changes are implemented, MIPS-eligible clinicians will get credit only for 2015 edition certified systems. The advancing care information category is intended to replace the prior Medicare EHR Incentive Program, often referred to as Meaningful Use. Supporting that intent, the MIPS final rule explains that credit is given to “a MIPS eligible clinician who possesses CEHRT, uses the functionality of CEHRT, and reports on applicable objectives and measures specified for the advancing care information performance category for a performance period in the form and manner specified by CMS.”(7)

Each advancing care information measure set includes five required measures and several optional measures that assist participants in earning higher points in this category. MIPS-eligible clinicians or groups may “submit data for the advancing care information performance category through multiple submission methods, which includes, for example, via attestation, qualified registries, QCDRs [Qualified Clinical Data Registries], EHRs and CMS Web Interface.”(8)

The final installment of this series will feature discussions of various MIPS reporting strategies that should contribute to success by individuals or groups of clinicians and show some reporting and scoring scenarios.


  1. Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models. Final rule with comment period. Fed Regist. 2016:81:77008-77831.

  2. Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models. Final rule with comment period. Fed Regist. 2016:81:77011.

  3. Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models. Final rule with comment period. Fed Regist. 2016:81:77085.

  4. Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models. Final rule with comment period. Fed Regist. 2016:81:77289.

  5. Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models. Final rule with comment period. Fed Regist. 2016:81:77186.

  6. Quality Payment Program: Improvement Activities. . Accessed February 6, 2017.

  7. Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models. Final rule with comment period. Fed Regist. 2016:81:77213.

  8. Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models. Final rule with comment period. Fed Regist. 2016:81:77214.

Rick Rutherford, CMPE

Consultant/Speaker, 300 Widgeon Drive, Hampstead, NC 28443; phone: 443-812-1414; e-mail:

Interested in sharing leadership insights? Contribute

This article is available to Subscribers of JMPM.

Log in to view.

For over 45 years.

The American Association for Physician Leadership has helped physicians develop their leadership skills through education, career development, thought leadership and community building.

The American Association for Physician Leadership (AAPL) changed its name from the American College of Physician Executives (ACPE) in 2014. We may have changed our name, but we are the same organization that has been serving physician leaders since 1975.


Mail Processing Address
PO Box 96503 I BMB 97493
Washington, DC 20090-6503

Payment Remittance Address
PO Box 745725
Atlanta, GA 30374-5725
(800) 562-8088
(813) 287-8993 Fax



AAPL providers leadership development programs designed to retain valuable team members and improve patient outcomes.

American Association for Physician Leadership®

formerly known as the American College of Physician Executives (ACPE)