MACRA, the Medicare Access and CHIP Reauthorization Act, is a 2015 federal law that fundamentally changed how Medicare pays doctors and other clinicians. It replaced an older, widely criticized payment formula called the Sustainable Growth Rate (SGR) with a new system that ties a portion of a clinician’s Medicare reimbursement to how well they perform on quality and cost measures. If you work in healthcare or receive Medicare, MACRA shapes the financial incentives behind clinical care.
Why MACRA Was Created
Before MACRA, Medicare physician payments were governed by the SGR formula, which Congress originally designed to control spending growth. In practice, the SGR repeatedly called for steep pay cuts that Congress overrode with temporary fixes nearly every year, creating uncertainty for clinicians and doing nothing to reward better care. MACRA eliminated the SGR entirely, replacing it with several years of modest, predictable payment updates followed by a system where future pay depends on performance.
The Two Tracks of the Quality Payment Program
MACRA created the Quality Payment Program (QPP), which gives clinicians two paths for Medicare reimbursement: the Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (Advanced APMs). Nearly all Medicare clinicians fall into one of these tracks.
MIPS is the default path. It consolidated three older reporting programs into a single system that scores clinicians across four performance categories: Quality, Cost, Promoting Interoperability (essentially electronic health record use, weighted at 25% of the total score), and Improvement Activities. Your combined score across these categories determines whether your future Medicare payments go up, go down, or stay neutral.
Advanced APMs are the other option. These are payment arrangements where clinicians take on some financial risk in exchange for potential rewards. Examples include certain accountable care organizations and bundled payment programs. An Advanced APM must require the use of certified electronic health records, tie payment to quality performance, and involve genuine financial risk. Clinicians who meet specific thresholds for the share of their patients or payments flowing through an Advanced APM can earn Qualifying APM Participant (QP) status, which comes with meaningful perks: exemption from MIPS reporting, no MIPS payment adjustments, and a higher annual payment conversion factor of 0.75% compared to 0.25% for non-QPs.
How MIPS Scoring Works
Each year, clinicians participating in MIPS are scored on a 0 to 100 point scale based on their performance across the four categories. That score directly determines a payment adjustment applied to Medicare reimbursements two years later. For example, performance during the 2025 calendar year feeds into payment adjustments that take effect on January 1, 2028.
The performance threshold, the score you need to avoid a penalty, is set at 75 points through 2028. Score below that, and your Medicare payments are reduced on a sliding scale, with the maximum negative adjustment reaching 9%. Score between 0 and 18.75 points, and you face the full 9% cut. Score above 75, and you receive a positive adjustment, though the exact size of that bonus depends on how everyone else performs. MIPS is budget-neutral by law, meaning total penalties must roughly equal total bonuses, so positive adjustments are scaled up or down each year based on the distribution of scores.
The submission window for reporting performance data typically opens in early January and closes at the end of March the following year. For the 2025 performance period, submissions are due by March 31, 2027.
Who Has to Participate
MACRA applies to a broad range of clinician types who bill Medicare. The list includes physicians (MDs, DOs, dentists, podiatrists, and optometrists), physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, physical therapists, occupational therapists, clinical psychologists, speech-language pathologists, audiologists, registered dietitians, clinical social workers, and certified nurse midwives. Chiropractors and osteopathic practitioners are also included.
If your specialty code on Medicare claims matches one of these clinician types, you’re generally subject to MIPS unless you qualify as a QP through an Advanced APM or meet certain low-volume exclusion criteria.
Partial QP Status
Not everyone in an Advanced APM fully qualifies for QP status. Clinicians who participate but fall short of the payment or patient count thresholds can achieve Partial QP status. This gives you a choice: you can opt out of MIPS entirely (receiving no adjustment, positive or negative) or you can voluntarily report to MIPS and receive whatever payment adjustment your score earns. If you choose to report, you must meet all standard MIPS requirements through one of the available reporting pathways.
How MACRA Affects Patient Care
MACRA’s design is built on the idea that tying money to quality measures will improve clinical outcomes. The measures themselves cover things like whether patients with high blood pressure achieve control, whether heart failure patients are readmitted to the hospital, and in some cases, mortality rates. Evidence from cardiology practices suggests this approach can work: after implementing quality improvement programs tied to these measures, adherence improved in five out of seven tracked quality metrics within 24 months. In one case, the use of a guideline-recommended heart device improved by 27% over two years after a quality program was introduced.
There are legitimate concerns, though. When clinicians are judged on outcomes, there’s a risk of avoiding the sickest or most complex patients to keep scores high, particularly when results are publicly reported. Patients with multiple chronic conditions, fewer resources, or lower health literacy could theoretically be turned away by clinicians worried about their performance numbers. Risk adjustment methods exist to account for patient complexity, but they don’t fully eliminate this incentive.
The Payment Update Structure
Beyond performance-based adjustments, MACRA also set the baseline trajectory for Medicare physician payment rates. The law provided several years of small, predictable annual increases after repealing the SGR, followed by a period with no automatic updates. Starting with recent performance years, the annual update is built into the conversion factor: 0.75% for QPs in Advanced APMs and 0.25% for everyone else. These are modest numbers, and many physician groups have argued they don’t keep pace with inflation or rising practice costs, but they replaced the annual chaos of the SGR era with something clinicians could at least plan around.