MACRA (Medicare Access and CHIP Reauthorization Act)
Federal legislation signed in 2015 that repealed the sustainable growth rate (SGR) formula for Medicare physician payment and replaced it with the Quality Payment Program (QPP). MACRA created two paths for Medicare physician payment: the Merit-based Incentive Payment System (MIPS) for most eligible clinicians, and the Advanced Alternative Payment Model (APM) track for clinicians participating in qualifying risk-based arrangements. MACRA set the framework for transitioning Medicare from volume-based to value-based physician payment.
Why this matters for your clinic
MACRA ended an era of annual congressional patches to the SGR formula and put physician payment on a structured path toward value-based measurement. The practical effect for most clinic owners is that Medicare payment is no longer simply a conversion factor times RVUs. It now includes performance adjustments based on quality, cost, and interoperability metrics reported annually under MIPS.
MACRA also created financial incentives for participating in Advanced APMs. Clinicians who receive a sufficient percentage of their Medicare payments through qualifying APMs are exempt from MIPS. The original 5% APM incentive expired after PY 2022. Congress extended at 3.5% for PY 2023, 1.88% for PY 2024, and 3.5% for PY 2025 (paid in 2027). For CY 2026 onward, Qualifying APM Participants receive the higher Medicare conversion factor (+0.75%) instead of a lump-sum bonus. This pathway is relevant for clinic owners considering joining an ACO or entering capitation arrangements.
Understanding MACRA at a high level helps clinic owners understand why their Medicare payment rate is not simply a fixed number per CPT code. The framework it created is the regulatory context for MIPS adjustments, APM participation decisions, and the long-term direction of federal healthcare payment policy.
What good looks like
CMS publishes the full MACRA QPP framework, including performance thresholds, payment adjustment schedules, and APM qualification criteria annually through the Physician Fee Schedule rulemaking process. The official QPP portal at qpp.cms.gov is the authoritative reference for current MIPS and APM participation data.
Example
Prior to MACRA, the Medicare conversion factor was adjusted each year through a formula (SGR) that routinely produced cuts Congress had to block annually with so-called 'doc fixes.' MACRA replaced that with a predictable annual update schedule tied to performance. A clinic that was receiving no performance adjustment on $600,000 in annual Medicare revenue now receives either a positive or negative MIPS adjustment of up to 9% on that revenue, depending on their score. The stakes: a 9% negative adjustment equals $54,000 per year in reduced Medicare revenue.
From Sorso
MACRA is background context that most clinic owners do not need to study in detail, but every owner with meaningful Medicare volume needs to understand that their Medicare reimbursement has a performance-adjustment component built in, and that MIPS scores are the operational mechanism that drives it.
Founder of Sorso. 19 years in corporate finance. Managed a $450M loan portfolio before building a fractional CFO firm exclusively for healthcare clinics.
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