How to Create a Person-Centric Healthcare Payment Model

June 29, 2016

Person Centric

As CMS gears up to reach its goal of 50% value-based payments by 2018, it’s clear we need a new type of pay-for-performance reimbursement. What kind of model does MACRA propose?

The goal is straightforward: to move from fee-for-service reimbursement that encourages more care, to value-based reimbursement that rewards quality, effective, and resource-sensitive care. But thus far, the journey has been labor-intensive while generating inconsistent results.

MACRA (Medicare Access and CHIP Reauthorization Act of 2015) is a welcome relief from Meaningful Use and the Sustainable Growth Rate physician payment formula. The law’s goal is to significantly change the way Medicare pays clinicians and accelerate the transition to meaningful value-based reimbursement. It proposes a new, flexible, value-based payment framework customized to individual providers and patient populations.

After some initial physician fee schedule updates, MACRA pursues this goal through two programs, the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APMs). They replace the current confusing jumble of CMS payment adjustments.


Beginning in 2019, MIPS will mean individualized payment adjustments (positive, negative, or neutral) based on four factors:

  1. Quality (50% -> 30% of score over 4 years): Prioritizes personalized, outcomes-based care
  2. Resource Use (10 -> 30% of score over 4 years): Considers unnecessary care that wastes limited resources and exposes patients to needless risks
  3. Clinical Practice Improvement Activities (15% of score): Includes improving care access, managing populations, coordinating care, and engaging patients
  4. Efforts to Advance Care Information (25% of score): Measures effective use of electronic health records to benefit patient care. Weighting for this component may decrease as electronic health record adoption increases over time.

Initially the program will apply to physicians, physician assistants, and advanced practice nurses (PDF). The composite score generated from the four measured areas is designed to assess both achievement and improvement. Payment adjustments will range from +/-4% in 2019, moving to +/-9% in 2022.


Also beginning in 2019, APMs are for professionals more advanced in value-based care who participate in a CMS Innovation model, a Medicare ACO model, or a CMS demonstration program. Initially, eligible professionals must receive 25% of their Medicare Part B payments through an APM. Participating clinicians can receive a 5% incentive payment for six years.


CMS is very specific in its goals (PDF). It wants to create a sustainable payment system incorporating health information that is open, flexible, and person-centric. That means several key changes:

  • Providers: Allow professionals to choose their six evaluation measures, customizing and consolidating quality measurement (from a current nine prescribed measures)
  • Care Continuum: Emphasize care continuity, outcomes, and differences between primary and specialty care goals. Follow chronically ill patients throughout the care continuum.
  • Patients: Specifically incorporate measures that are meaningful to patients and their families, including patient-reported outcomes. Incorporate patient preferences and shared decision-making.
  • Population Health: Produce results that can be stratified across patient age, gender, race, and other significant demographic variables. Automatically calculate population health measures.

Why does MACRA represent the next generation of value-based reimbursement? It financially incentivizes care that is customized, safe, and coordinated. These goals align with what healthcare professionals aspire to provide for their patients. It also simultaneously focuses on patient-reported outcomes while prioritizing affordability and overall population health.

In short, MACRA is a flexible approach that emphasizes a combination of personalized quality and care efficiency. It is a sustainable, person-centric healthcare payment model.

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