The Jan. 1 launch of Medicare’s new clinician payment system under the MACRA law — the Quality Payment Program — promises to tie a greater percentage of payment to performance, and to accelerate health care’s shift to new value-based payment models. But many small rural hospitals have more immediate concerns.

“It’s been a struggle to know how this is going to affect us and determine how we move forward,” says Rebekah Mussman, president and CEO of the Crete (Neb.) Area Medical Center, a critical access hospital.

The Quality Payment Program — established by the Medicare Access and CHIP Reauthorization Act of 2015, the final rule of which was released by the Centers for Medicare & Medicaid Services in October — has two tracks. But most eligible clinicians at small rural facilities will be in the Merit-based Incentive Payment System, a pay-for-performance program. The other track offered by Medicare is limited to a handful of Advanced Alternative Payment Models.

Framing the Issue

  • The Centers for Medicare & Medicaid Services has rolled out a new Medicare physician payment system that will affect payment starting in 2019, with data reporting beginning in 2017.
  • Many small rural providers, including Rural Health Clinics, Federally Qualified Health Centers and clinicians with low volumes of Medicare patients, are exempt from the QPP in 2017.
  • Most clinicians at small rural facilities who are not exempt from the Medicare Access and CHIP Reauthorization Act of 2015 will fall under the Merit-based Incentive Payment System in 2017, but can choose how much data to report to avoid penalties and potentially earn a bonus.

To prepare for MIPS, health care experts and leaders recommend starting with these five steps:

1. Determine which clinicians are in and out

A sizable percentage of small rural providers have been given a reprieve in 2017 from MIPS, which focuses on Medicare Part B. Exempt providers include Rural Health Clinics, Federally Qualified Health Centers and clinicians with low Medicare volumes. Specifically, clinicians who see fewer than 100 Medicare patients, or who bill less than $30,000 worth of Medicare services, will be exempt from MIPS participation in 2017.

The MIPS may apply to critical access hospitals, but only if they are participating in an arrangement the CMS calls Method II billing, in which the CAH bills for both facility and professional services. For the MIPS to apply to the CAH, clinicians must have reassigned their billing rights to the hospital, says Akin Demehin, the American Hospital Association’s director of policy. “If they have not reassigned their billing rights, the critical access hospital is not subject to MIPS.”

Hospital leaders, however, need to double-check their assumptions about which clinicians are in or out of MIPS, says Lynn Barr, CEO of Caravan Health, based in Beaverton, Ore. For instance, hospital-employed specialists, including emergency department physicians and surgeons, are not exempt. “In the past, [the Physician Quality Reporting System] only affected ambulatory physicians. It’s natural to think employed specialists are automatically exempt, but they’re not unless they are excluded because of low volumes or other reasons,” Barr says.

In addition, the inclusion of nonphysician providers — physician assistants, nurse practitioners, clinical nurse specialists and certified registered nurse anesthetists — may significantly affect rural providers. “They tend to employ a lot of nonphysician providers because of physician access issues in rural areas, says the AHA’s Priya Bathija, senior associate director of policy.

2. Identify who has to report what

In 2017, eligible clinicians will be assessed in three MIPS categories: quality, improvement activities and advancing health information. Clinicians will be assessed on cost measures starting in 2018. CMS has also loosened reporting requirements for certain providers. For instance, rural providers can report two rather than four improvement activities.

3. Avoid transition-year complacency

CMS is allowing providers to choose how much data they report in 2017. While providers will receive a 4 percent penalty in 2019 if they don’t submit any data, they can avoid this penalty by reporting a minimum amount (for example, one quality measure). While small rural hospitals may welcome this respite, they need to be careful not to procrastinate and fail to get ready for 2018, when providers might have to submit a year’s worth of data or risk a 5 percent penalty in 2020.

“There’s danger in knowing you've got this low bar to achieve for Year 1 to avoid downside risk,” says Steve Smith, a managing consultant for accounting and advisory firm BKD LLP. “Organizations need to make sure that doesn't lead to a lack of preparation for future performance periods.”

4. Determine the cost of participation

Small rural hospitals should consider the costs and benefits associated with seeking MIPS bonuses, which will be at 4 percent or lower in 2017. “Organizations have to look at the exact dollar figure that's on the line and weigh that against the costs to implement necessary processes and systems,” Smith says. “The cost could be more than the upside dollars organizations may potentially achieve.”

For example, a CAH with $40,000 in Part B billing under MIPS might have to spend $50,000 on information technology and data analytics to have the potential to earn a 4 percent bonus in 2017.

5. Engage clinicians

Only one of the 14 clinicians employed by the Crete Area Medical Center will be MIPS-eligible in 2017, according to Mussman’s estimate. But she is encouraging all of the hospital's clinicians to prepare for a value-oriented future as well as the potential expansion of MIPS. “We’re approaching this like it doesn’t matter who falls in or out of MIPS right now. We can either keep our heads in the sand, or we can get ahead of the curve,” Mussman says.

In discussing MIPS with clinicians, Mussman has been stressing the program’s public reporting aspect. “MACRA is putting physicians and other clinicians on a scoring scale, and that score will essentially follow them the rest of their career because it will be tied to their [National Provider Identification]. That score very well may affect how they negotiate employment contracts and insurance compensation moving forward,” Mussman says.

Rural Providers Turn to Population Health for Quality Payment Program Success

“Don’t get hung up on the payment model,” advises Lynn Barr, chief transformation officer of the National Rural Accountable Care Consortium, when asked what leaders of small rural health care organizations should keep in mind about Medicare’s new Quality Payment Program.

The program is part of the Medicare Access and CHIP Reauthorization Act of 2015 and was finalized in October. In addition to tying clinician payment to performance, QPP encourages participation in alternative payment models, including accountable care organizations and bundled payment.

“It’s not about the payment model. It’s about implementing population health,” says Barr, who is also CEO of Caravan Health, a service organization that helped the consortium prepare 159 rural health systems to join forces as 23 ACOs in the Medicare Shared Savings Program, Track 1. “The various payment models are being tested and are still changing. But population health is here to stay.”

The experience of rural ACOs suggests that putting in place basic population health approaches, such as assigning care coordinators to high-risk patients, leads to big improvements in a rapid fashion:

  • One of its first rural National Rural MSSP ACOs improved its overall quality score from 68.9 percent in Year 1 to 96.8 percent in Year 2.
  • In 2015, ACO inpatient spending within the consortium decreased by 3 percent, according to a Caravan survey of its members.

Rebekah Mussman, president and CEO of the Crete (Neb.) Area Medical Center, hopes the critical access hospital's experience with the patient-centered medical home model will help it do well under MIPS. The hospital's two Rural Health Clinics were certified as PCMHs several years ago, preparing it for MIPS-style care.

“MIPS lines up pretty nicely with the foundational elements of a patient-centered medical home, including care coordination, ensuring patient access and population management,” Mussman says. “I think we are a step ahead because our physicians and providers believe in that philosophy.”

Mussman also hopes that MIPS will provide an “extra push” that her organization needs to become a high performer compared with national benchmarks. “We are focusing on disease management and our patient registry to ensure none of our chronically ill patients are falling through the cracks,” she said.

MaineGeneral Health’s physician-hospital organization, Kennebec Region Health Alliance, has already added five small rural private practices to its MSSP Track 1 ACO.

Barbara Crowley, M.D., chief transformation officer at MaineGeneral in Augusta, expects that eventually all of the PHO’s private practices will join.

“As a network, we’re going to report quality metrics for MSSP, so every practice participating with us in MSSP gets credit,” she says. “Now, the other reality is that our MIPS performance will depend on how we do as a network. To be successful, we have to keep patients in-network through improved access and referrals. For example, our orthopedists are working on a program where their physician assistants see and screen patients that same day.”

Rural Hospital Pursues Advanced Value-based Payment Path

A rural Oregon hospital, Sky Lakes Medical Center, is jumping into the Centers for Medicare & Medicaid Services’ Advanced Alternative Payment Models, which are the elite track of Medicare’s new clinician payment system, the Quality Payment Program. Providers in Advanced APMs must be capable of managing sizable financial risk in exchange for 5 percent incentive payments.

As David and Goliath stories go, this one involves not just one giant but two. The 176-bed Sky Lakes, hospital in Klamath Falls will be participating in two Advanced APMs in 2017:

  • The Medicare Shared Savings Program, Track 3: Under this Medicare accountable care organization program, providers assume upside and downside risk. While they share in any Medicare savings, they are also responsible for covering a significant portion of any Medicare spending that exceeds the target.
  • Comprehensive Primary Care Plus: This primary care medical home model has two tracks: Track 1 is for beginner to intermediate medical homes with certified electronic health record technology and basic population health functions. Track 2 is for advanced medical homes with certified EHR technology and broader population health experience. Under Track 2, fee-for-service payments are replaced with a hybrid payment. A percentage of the payment is a fixed fee that can be applied to nonoffice-based evaluation and treatment; the rest is standard fee for service.

CMS estimates that only 70,000 to 120,000 clinicians will take part in the Advanced APMs in 2017. The number of small rural providers currently capable of meeting performance demands under these models will likely be small, American Hospital Association policy directors say.

Sky Lakes President and CEO Paul Stewart says he recognizes the challenges inherent in Advanced APMs, but he says his hospital is philosophically committed to this approach. “We believe the current system of paying for volume is not sustainable, nor does it reward the right behaviors. We agree we need to take proactive steps to transform the system to focus more on value,” he says.

A history of population health management

Sky Lakes has been building toward value-based population health for decades, caring for Medicaid patients under fully capitated arrangements, deploying an electronic health record, and actively investing in community wellness initiatives to prevent and manage disease.

One Sky Lakes clinic, Cascades East Family Medicine, has been a certified patient-centered medical home for several years and is now set to enter Track 2 of CPC Plus. Sky Lakes is using what it’s learned at Cascades East throughout its other clinics, many of which will be in CPC Plus Track 1.

Providing needed support staff to these small clinics will be key, says Grant Niskanen, M.D., Sky Lakes’ vice president of medical affairs. “Some of our very sick patients live in very rural areas of a few hundred people. It’s mostly ranches out there,” he says. “We are using social workers and case managers to coordinate whatever services are available for those people. It’s hard for one physician with maybe one nurse to do all that. But with a team approach, we have been able to do well by these patients.”

A partnership turned ACO

Although independent, Sky Lakes formed a collaborative with six other Oregon hospitals and health systems: an academic medical center, two large tertiary facilities, and three other small rural hospitals. Named Propel Health, the partnership enables the six organizations to remain independent while supporting one another, particularly in information technology and data analytics efforts.

The partnership also led to the formation of a joint ACO, the Oregon ACO, which is entering MSSP Track 3 in January.

With the ink barely dry on the agreement letters with CMS to participate in CPC Plus and MSSP, Stewart and Niskanen are still weighing what needs to be done to succeed under two Advanced APMs. One of their first tasks will be to determine any synchronicities between the two programs, such as shared performance metrics. “We’re still sorting through how the CPC Plus program interfaces with the MSSP program,” Stewart says.


Here are some of the basics on MACRA and its Quality Payment Program for physicians and other selected providers. For more, see the December issue of H&HN at

  • MACRA (Medicare Access & CHIP Reauthorization Act): The 2015 federal law that repealed the sustainable growth rate formula and set the stage for the Quality Payment Program.
  • Quality Payment Program: The new Medicare physician payment program that encompasses the MIPS and Advanced APM tracks.
  • MIPS: The QPP track that the majority of clinicians will be in, at least initially. MIPS is a pay-for-performance system. Clinicians receive annual bonuses or penalties beginning at 4 percent in 2019, the first payment year, based on their performance.
  • Alternative Payment Model: A payment approach that provides additional incentives to clinicians to provide high-quality and cost-efficient care for a care episode, a patient population or a specific clinical condition.
  • Advanced Alternative Payment Model: One of the two tracks in the QPP, it is intended for clinicians at the forefront of vpopulation health management. Advanced APMs bear more financial risk for losses. In 2017, only a small number of Medicare demonstration models are included in the advanced APM category, including Tracks 2 and 3 of the Medicare Shared Savings Program, the Next-Generation ACO Model and Comprehensive Primary Care Plus. CMS is pushing for more involvement in 2018.
  • Advancing Care Information: This is one of the Merit-based Incentive Payment System performance categories. It replaces the Medicare EHR Incentive Program for clinicians, also known as meaningful use.

MACRA Resources

The American Hospital Association's MACRA Resource Page

This page offers a number of resources, including the latest information and updates about MACRA.

Quality Payment Program

CMS aims to provide easy-to-understand information on how to comply with QPP, along with lists of the specific metrics and improvement activities that can be reported. You’ll also find the QPP final rule, an executive summary of the rule, and links to CMS webinars.

American Medical Association

Physicians will find a tool to help them evaluate how QPP will impact their practices, and more.

American Medical Group Association

More educational resources and assessment tools can be found on this site.

Executive Corner: Will MIPS Add to the Metric Reporting Overload?

The implementation of the Merit-based Incentive Payment System comes at a time when clinicians and hospitals alike are concerned about rapid growth in the number of quality-measure-reporting and pay-for-performance requirements. “They’re annoyed with the amount of measurement that is going on for them,” says Barbara Crowley, M.D., chief transformation officer of MaineGeneral Health in Augusta.

Medicare quality measurement programs for hospitals will include approximately 90 measures in 2019. The MIPS includes a list of nearly 300 measures from which clinicians can select for reporting. And Medicare is not alone in asking for quality data. The Oregon Association of Hospitals and Health Systems found that Oregon hospitals were tracking more than 400 different metrics for various payers and other initiatives. “For rural hospitals, the resources required to keep up with all this monitoring and reporting [are] very difficult to bear,” says Paul Stewart, president and CEO of Sky Lakes Medical Center in Klamath Falls, Ore.

While more work needs to be done, various national and state efforts are making headway in reducing metric burden. For instance, the Centers for Medicare & Medicaid Services incorporated specialty measure sets into MIPS quality reporting (available at “For example, there is a cardiology specialty measure set that falls in line with the way that cardiologists already practice,” says Steve Smith, managing consultant at BKD LLP. “This will actually make it a little bit easier for a provider to do this kind of reporting, because it's probably something they're already doing.”

While Crowley commends CMS for working to simplify reporting under MIPS, she believes hospitals and networks need to help clinicians “get through the morass” of the Quality Payment Program. “Our role is to support them to be as successful as they can be,” Crowley says.