MACRA: From SGR to the Quality Payment Program

MACRA, the Medicare Access and CHIP Reauthorization Act of 2015, is the federal law that changed how Medicare pays clinicians. Signed on April 16, 2015, MACRA permanently repealed the Sustainable Growth Rate (SGR) formula. In its place, MACRA created the Quality Payment Program (QPP). 

The QPP pays clinicians for value over volume through two tracks. Those tracks are the Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs), which adjust Medicare Part B payments.

What is MACRA?

MACRA is the Medicare Access and CHIP Reauthorization Act of 2015, a bipartisan federal law (H.R. 2) that reformed Medicare physician payment. President Barack Obama signed MACRA into law on April 16, 2015. The bill drew rare bipartisan support across both chambers of Congress.

The U.S. House passed MACRA on March 26, 2015, by a vote of 392 to 37. The U.S. Senate passed MACRA on April 14, 2015, by a vote of 92 to 8. In total, 484 members voted in favor. In one law, MACRA repealed the SGR formula, created the Quality Payment Program, and consolidated three legacy Medicare programs. Those actions set up the SGR question that follows.

What Does MACRA Stand For?

MACRA stands for the Medicare Access and CHIP Reauthorization Act of 2015. The name reflects two jobs the law carried out. MACRA reformed Medicare physician payment. MACRA also reauthorized the Children’s Health Insurance Program (CHIP) for two years. The same law required the removal of Social Security Numbers from all Medicare cards by April 2019.

Did MACRA Replace PQRS, The Value Modifier, And Meaningful Use?

Yes. MACRA consolidated three legacy Medicare programs into the single Merit-based Incentive Payment System (MIPS). Those programs were the Physician Quality Reporting System (PQRS), the Value-Based Payment Modifier (VM), and the Medicare EHR Incentive Program (Meaningful Use). The three former programs ended. Their requirements were folded into the MIPS performance categories.

How Does MACRA Fit Into The Quality Payment Program?

MACRA is the law that created the Quality Payment Program (QPP). The QPP is how MACRA is carried out each year. MACRA is the statute. The Quality Payment Program is the program that MACRA authorized. The two terms are not interchangeable.

The QPP runs through two tracks. The first track is the Merit-based Incentive Payment System (MIPS). The second track is Advanced Alternative Payment Models (APMs). Each performance year, CMS updates measures, thresholds, and reporting rules within the structure MACRA set. The law stays fixed. The program adapts through annual rulemaking. For the full breakdown across both tracks, start with the Quality Payment Program overview.

What Replaced The Sustainable Growth Rate (SGR)?

MACRA replaced the Sustainable Growth Rate (SGR) formula with the Quality Payment Program. The SGR was a Medicare cost-control formula, and the Balanced Budget Act of 1997 introduced the SGR. The formula tied annual physician payment updates to growth in the national economy. When health spending outpaced economic growth, the SGR called for payment cuts.

Those cuts grew larger each year. Congress overrode them almost every year through temporary patches known as the doc fix. By 2015, the SGR called for a 21.2 percent payment cut. That scheduled cut forced Congress to act. MACRA permanently repealed the SGR and replaced fee-for-service volume incentives with the value-based Quality Payment Program.

Why Did Congress Repeal The SGR Formula?

Congress repealed the SGR because the formula produced steep, unrealistic payment cuts. Lawmakers overrode those cuts almost every year. The Balanced Budget Act of 1997 created the SGR to hold Medicare spending within economic growth. In practice, medical costs rose faster than the economy. 

Each year, the formula demanded a larger cut. Congress refused to let those cuts take effect. Instead, Congress passed temporary doc fix patches roughly 17 times. The patches solved nothing long-term. By 2015, the SGR called for a 21.2 percent cut. A cut that size threatened Medicare patients’ access to care. Permanent repeal became the only durable answer, and MACRA delivered it.

Did Macra Permanently End The SGR “Doc Fix”?

Yes. MACRA permanently repealed the SGR formula. That repeal ended the cycle of short-term doc fix patches Congress had passed for years. In place of the formula, MACRA set defined fee-schedule updates. MACRA also tied future payments to performance through the Quality Payment Program.

How Did MACRA Change Medicare Physician Payment?

MACRA changed Medicare physician payment from rewarding volume to rewarding value. Before MACRA, Medicare paid clinicians mainly for the quantity of services delivered. More services meant more payment. That fee-for-service design rewarded volume over outcomes. MACRA broke that link.

MACRA ties Medicare Part B payment to quality and cost performance. Clinicians earn adjustments based on how they perform, not only on how much they bill. MACRA delivers this shift through the two tracks of the Quality Payment Program. Those tracks are the Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs). The next question defines both tracks at a concept level.

What Are The Two QPP Tracks MACRA Created?

The Quality Payment Program has two tracks. MACRA created both.

• MIPS (Merit-based Incentive Payment System): MIPS adjusts Medicare Part B payments up or down based on a clinician’s performance score. Most eligible clinicians report through MIPS.
• Advanced APMs (Advanced Alternative Payment Models): Advanced APMs are risk-bearing payment models. Qualifying participants are exempt from MIPS. Qualifying participants also earned a separate APM incentive payment.

Both tracks operate inside MACRA’s structure. The mechanics of scoring and qualification sit within the Quality Payment Program, not within the statute itself.

When did the Quality Payment Program Start?

The Quality Payment Program began its first performance year on January 1, 2017. That start came about 20 months after MACRA was signed. The timeline below tracks MACRA from enactment to its first payment adjustments.

Date	Milestone	What Happened
April 16, 2015	MACRA Enactment	MACRA signed into law; SGR repealed; QPP authorized
October 14, 2016	QPP Final Rule	CMS issued the rule implementing the QPP for 2017
January 1, 2017	First Performance Year	Clinicians first measured under MIPS or an Advanced APM
2019	First MIPS Payment Adjustments	2017 performance produced the first payment adjustments

Each milestone below marks one step from statute to active payment program.

MACRA Enactment (April 16, 2015)

MACRA was signed into law on April 16, 2015. The law repealed the SGR and authorized the Quality Payment Program.

QPP Final Rule (October 14, 2016)

On October 14, 2016, CMS issued the final rule implementing MACRA’s Quality Payment Program. The rule set the terms for the 2017 performance year.

First Performance Year (January 1, 2017)

The first QPP performance year opened on January 1, 2017. That year, clinicians were first measured under MIPS or an Advanced APM.

First MIPS Payment Adjustments (2019)

The 2017 performance year produced the first MIPS payment adjustments in 2019. This gap established MACRA’s two-year lag between performance and payment.

How Does MACRA Update Medicare Payment Rates From 2026 Onward?

MACRA set Medicare physician fee-schedule updates in three phases. MACRA also created a permanent split between APM and non-APM clinicians starting in 2026. The schedule below shows the statutory update MACRA assigned to each period.

Period	Statutory Update	Applies To
2015–2019	0.5% annually	All physicians
2020–2025	0.0% freeze	All physicians
2026 onward	0.75% (QP) / 0.25% (non-QP)	Split by APM participation
2019–2024	5% APM incentive payment	Qualifying APM participants

These figures are the permanent updates written into MACRA. For CY2026, the actual conversion-factor increase runs higher because Congress added a temporary 2.5 percent update through separate legislation.

0.5% Update Period (2015–2019)

From 2015 through 2019, MACRA set annual fee-schedule updates at 0.5 percent.

0.0% Update Freeze (2020–2025)

From 2020 through 2025, MACRA froze the conversion-factor update at 0.0 percent. The freeze helped fund the transition to value-based payment.

Dual Update Paths (2026 Onward: 0.75% QP / 0.25% Non-QP)

Beginning in 2026, MACRA sets two update paths. Qualifying APM Participants (QPs) receive a 0.75 percent annual update. All other clinicians receive 0.25 percent. The gap is a permanent incentive to join Advanced APMs.

How Does MACRA Connect To Value-Based Care?

MACRA is the legislative foundation of Medicare’s move to value-based care. Value-based care pays clinicians for patient outcomes, not for the number of services billed. Traditional fee-for-service did the opposite. MACRA turned that principle into federal payment policy.

The Quality Payment Program is the mechanism MACRA uses to reward value. Under the QPP, both MIPS and Advanced APMs measure quality and cost. Payment follows performance. For the full path from MIPS reporting to Advanced APM participation, see the guide on value-based care.

Is MACRA the Same as MIPS?

No. MACRA is the federal law. MIPS is one of two payment tracks that the law created. MACRA, the Medicare Access and CHIP Reauthorization Act of 2015, authorized the Quality Payment Program. 

The Quality Payment Program runs through MIPS and Advanced APMs. Saying MACRA when you mean MIPS confuses the statute with one program inside it. MACRA is the cause. MIPS is one effect. The distinction matters for compliance because MACRA obligations are met through a specific QPP track, not through the statute directly.

How Does Macralytics Help Practices Meet MACRA And QPP Requirements?

Macralytics helps U.S. practices meet their MACRA obligations under the Quality Payment Program. The support follows four plain steps:

1. Confirm QPP eligibility and the correct track (MIPS or APM).
2. Select the reporting method and the measures that fit the practice.
3. Submit performance data and monitor the resulting score.
4. Protect against a Medicare Part B penalty of up to 9 percent and pursue positive adjustments.

Practices that want hands-on support can work with the Macralytics team for QPP consulting.