Bonuses and Penalties

Understanding new CMS rules could lead to a reimbursement bonus—but misunderstanding them may lead to reimbursement reductions.

By Dixon Davis, MBA

The Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 established new ways to pay physicians who provide medical services to Medicare beneficiaries. The good news is that the law included the repeal of the flawed sustainable growth rate (SGR) methodology physicians had struggled with for nearly 2 decades. The tough news is that, on the heels of other challenges in health care reimbursement, physicians face a new pay-for-performance methodology focused on quality, value, and accountability. Physicians must learn the ins and outs of this new set of expectations and prepare themselves to cater to these new metrics as they kick in this year. Those whose performance scores are higher than the norm will receive higher reimbursement, while those with poor scores will receive reduced reimbursement.


MACRA payments will be applied via one of two formulas: advanced alternative payment models (advanced APMs) or the Merit-based Incentive Payment System (MIPS). It is anticipated that the vast majority of ophthalmologists will be paid through the MIPS avenue because of the steep requirements for participating in a qualifying APM.

Out With the Old, In With the New

MACRA changed a lot for retina doctors, including nomenclature. Some programs are sticking around but will be part of larger metrics. Use this chart to keep it all straight.

Increased or decreased reimbursement will be accomplished via incentive bonuses and penalties applied to then-current Medicare rates. The first adjustments will be applied to Medicare payments made in 2019; however, they will be based on measures submitted in 2017. Therefore, it is important that all providers become aware of this change and prepare to submit the required data soon. Adjustments in percentages applicable for years 2019 to 2022 can be seen in the figure below. These adjustments describe the range that is possible, but it is important to realize that all payment adjustments are budget-neutral, meaning that retina specialists are now playing a zero-sum game.

The total pool of funds paid out by Medicare will not change. What will change is how the funds are allocated to providers. If few providers are penalized, then there will be little money to pay in bonuses, and vice versa.

There is, however, one exception to the zero-sum game: The Centers for Medicare and Medicaid Services (CMS) has been appropriated an additional $500 million per year to be paid to providers who demonstrate exceptional performance; physicians who fall into this category may receive additional bonus money. Overall, this is a fairly small amount and will likely not greatly affect providers’ bottom lines—that is, unless there are relatively few providers who score highly.

Don't Take a Chance

Because CMS is adjusting the way retina doctors are reimbursed, some might fear that their future payments will be subject to chance. Not so. Abide by the rules and you might just earn a bonus— otherwise, you could lose a portion of your reimbursement. Read more at


A MIPS composite performance score will be calculated based on four categories of performance: quality measures (which will include elements of the physician quality reporting system [PQRS]), advancing care information (ACI), clinical practice improvement activities (CPI), and resource use.

MIPS scores will not be concocted from concepts with which no one is familiar (see the sidebar Out With the Old, In With the New on this article’s opening page). In fact, the quality measures category will incorporate portions of the PQRS, the Medicare electronic health record (EHR) incentive program (also known as meaningful use) will be part of the ACI category, and the value-based payment modifier will now be part of the resource use category.

In 2019, quality measures will make up a majority of MIPS scoring, as indicated on this pie chart:

Weighting for quality measures and ACI will comprise 85% of the composite score for 2017 reporting; evaluation of resource use is not planned to be part of the 2019 MIPS scoring formula. Practices that have already been reporting PQRS and meaningful use statistics will likely submit successful reports in 2017. In addition, CMS has created options for 2017 reporting that make it easy to avoid a penalty.


CMS and many associations are providing excellent information and resources to educate physicians and practice managers to help practices submit reports successfully. The CMS website is free, but association membership is required for some of these resources:


It is essential for each practice to identify someone who will champion efforts to earn high MIPS scores. Although this will not likely require full-time attention for many small to mid-sized practices, it will require dedication to ensure proper reporting. Once an effective leader is identified in an office, practices leaders need to determine the following:

  • What measures will the practice report on for quality measures, ACI, and CPI?
  • Which measures must the practice become more familiar with, and what plans can be set in place to further understand those measures?
  • How will each measure be tracked and reported? Note: Most of this can be done electronically, but manual reporting can be done. For those who have been submitting for PQRS and meaningful use, much of this work is already under way.
  • How will this data be submitted? There are a variety of options, including the IRIS registry, EHR vendors, and online submission.
  • Is the practice using EHR? If not, it is wise to start doing so. Without one, there is a high likelihood of receiving future negative adjustments to Medicare payments.

The first (and, for some, most difficult) step is finding the best staff member to take charge of submitting data. After that is accomplished, there should be little reason to panic for this year’s submission, to avoid a penalty in 2019. Use 2017 as a year to get a good handle on the program. We recommend that practices submit the full measure requirements for 2017 if possible, and make it a priority to be prepared to submit the full measures in 2018, when submission requirements will not be so lenient and competition for bonus and penalty dollars will increase.

Dixon Davis, MBA
• senior consultant, BSM Consulting, Salt Lake City


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About New Retina MD

New Retina MD delivers cutting-edge content to retina specialists in their first 15 years of practice. Each issue provides fresh insight from younger physicians plus established mentors on clinical and nonclinical issues affecting ophthalmologists in the earlier stages of their careers. NRMD features surgical pearls, clinical research endeavors, practice management, medical reimbursement and policy, continuing educational requirements, financial planning, innovations, and more.