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Overview and Description

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) went into effect on April 16, 2015, and took effect in January 2017, in order to provide a new means of reimbursing physicians who demonstrate a quality over quantity approach to their clinical practice. Prior to MACRA, payment increases for Medicare services were set by the Sustainable Growth Rate (SGR) law. This capped spending increases according to the growth in the Medicare population, and a modest allowance for inflation. However, as clinicians increased their utilization of services, the reimbursement for each unit of service had to be adjusted downward to hold costs constant. In practice, the SGR would have resulted in large decreases in the Physician Fee Schedule, which was not sustainable. As a result, MACRA was designed to replace a fee-for-service system with a pay-for-performance system that would incentivize physicians to provide high value patientcare.1 The Quality Payment Program (QPP) was created under MACRA, with the following objectives

  • To improve beneficiary population health.
  • To improve the care received by Medicare beneficiaries.
  • To lower costs to the Medicare program through improvement of care and health.
  • To advance the use of healthcare information between allied providers and patients.
  • To educate, engage and empower patients as members of their care team.
  • To maximize QPP participation with a flexible and transparent design, and easy to use program tools.
  • To maximize QPP participation through education, outreach and support tailored to the needs of practices, especially those that are small, rural and in underserved areas.
  • To expand Alternative Payment Model participation.
  • To provide accurate, timely, and actionable performance data to clinicians, patients and other stakeholders.
  • To continuously improve QPP, based on participant feedback and collaboration.2

Within the QPP, there are 2 tracks available from which clinicians choose to participate, based upon practice size, specialty, location, or patient population

  • Merit Based Incentive Payment System (MIPS) or
  • Advanced Alternative Payment Models (Advanced APMs)

Under the MIPS program, CMS combines four performance categories to provide a performance score. The performance in these domains is compared against a group’s scores from previous years as well as against scores of their national peers. These comparisons ultimately result in an upward or downward adjustment annually in Medicare reimbursements for participating providers. The four reportable categories include

  • Quality: This category replaced the Physician Quality Reporting System (PQRS). Quality is based on performance measures created by CMS, as well as medical professional and stakeholder groups. Quality makes up the largest of the proportion of the performance score.
  • Promoting Interoperability (PI): This category replaced the Medicare Electronic Health Record (EHR) Incentive Program (commonly known as “Meaningful Use” and has been renamed from the Advancing Care Information performance category. This category focuses on patient engagement and the electronic exchange of health information using certified electronic health record technology (CEHRT). Interoperability is achieved by proactively sharing information with patients or other clinicians, including test results, visit summaries, and therapeutic plans.
  • Improvement Activities: This new category includes an inventory of activities that assess how care processes are improved, patient engagement is enhanced, access to care is increased. Activities appropriate to a practice, such as enhancing care coordination, patient and clinician shared decision-making, and expansion of practice access, may be chosen.
  • Cost: This category replaces value-based modifiers (VBM). CMS calculates the cost of a provider’s care based upon Medicare claims and uses cost measures to gauge the total cost of care during a given year.3

Under the quality category, providers may report on CMS-approved performance measures, or may report under a qualified clinical data registry (QCDR). A QCDR may be developed by a specialty society, regional health collaborative, large health system, or software vendor working in collaboration with one of these medical entities. QCDR submission differs from qualified registry submission in that QCDRs can submit non-MIPS measures, called QCDR measures, and also submit data for the Promoting Interoperability and Improvement Activities. QCDR measures must be submitted to CMS for approval. QCDRs may submit measures for CMS approval that are

  • Not contained in the annual list of Quality Payment Program (QPP) measures.
  • Have substantive differences in the population covered by an existing QPP measure.
  • Have a different manner of submission of an existing QPP measure.
  • Developed by the QCDR, specialty societies, or regional quality collaboratives.
  • A National Quality Forum (NQF)-endorsed measure that is not part of MIPS.

QCDRs also are permitted to customize the Clinician and Group Consumer Assessment of Healthcare Providers and Systems (CAHPS) and may include non-Medicare beneficiaries. No more than 30 approved or provisionally approved QCDR measures for a clinician may be submitted. QCDRs must submit data through a secure submission method.

Under the Advanced APM program, providers are exempt from participating in MIPS if they meet the following criteria

  • Requires participants to use certified technology.
  • Provides payment for based on quality measures comparable to those used in the MIPS quality performance category.
  • Either: (1) is a Medical Home Model expanded under CMS Innovation Center authority OR (2) requires participants to bear a significant financial risk.4

Examples of advanced alternative payment models that include outpatient services are as follows

  • Bundled Payments for Care Improvement (BPCI): This initiative is comprised of 4 broadly defined models of care, which link payments for multiple services beneficiaries receive during an episode of care.
  • Medicare Accountable Care Organization (ACO) Track 1+: This time-limited shared savings program encourages groups of doctors, hospitals, and other health care providers to come together as an ACO to provide coordinated, high-quality care to Medicare patients. Track 1+ Model ACOs assume limited downside risk.
  • Medicare Shared Savings Program (Track 2, Track 3, Level E of the BASIC track, the ENHANCED track): This model also encourages groups of doctors, hospitals, and other health care providers to come together as an ACO to provide coordinated, high-quality care to their Medicare patients. However, providers may share in savings or repay Medicare losses depending on performance. These ACOs take on the greatest amount of risk but may share in the greatest portion of savings if successful.
  • Next Generation ACO: Building upon experience from the Pioneer ACO Model and the Shared Savings Program, this model sets predictable financial targets, enables providers and beneficiaries greater opportunities to coordinate care, and aims to attain the highest quality standards of care.

From 2019 to 2024, physicians who participate in an alternative payment model receive bonus payments of 5% of the Medicare-covered professional services annually. Participating groups are generally required by the alternative payment models to bear the financial risk.

Physicians who do not participate in an alternative payment model must participate in the MIPS, unless they are exempt from the program.

This recent trend towards high-value care has made significant impacts specific to the field of physiatry and how we provide quality care for our patients. The Inpatient Rehabilitation Facility Quality Reporting Program (IRF QRP) is a program developed by the Centers for Medicare and Medicaid Services (CMS) to improve the quality of care provided by inpatient rehabilitation facilities (IRFs) in the United States.5 The program requires IRFs to report data on certain quality metrics that are designed to assess various aspects of the care provided to patients. The IRF QRP applies to all IRFs that are paid under the Medicare Part A program and have at least 20 patient stays per year.

Inpatient Rehab Facilities (IRFs) report on a variety of quality metrics. These metrics can be classified into two subtypes: process measures and outcome measures. Outcome measures, designed to assess effectiveness of care, include examples such as: rates of infections (MRSA, Catheter-associated urinary tract infections or CAUTIs), in-hospital falls, pressure injuries, as well as length of stay and improvement in functional scores upon discharge. Process measures, evaluating procedures that IRFs use to deliver care, include examples such as: the percentage of patients who receive a functional assessment within three days of admission, the percentage of patients who receive a discharge plan within two days of admission, and the percentage of patients who receive a vaccination for influenza.

The data reported by IRFs through the IRF QRP is publicly reported on the CMS Care Compare website (https://www.medicare.gov/care-compare/?providerType=InpatientRehabilitation), allowing patients and families to compare different IRFs using these metrics compared to national mean scores. This information can be used to help patients make informed decisions about where to receive care, and can also be used by IRFs to identify areas for improvement in their own care delivery processes. IRFs may use a variety of different internal and shared software platforms to collect and compare their quality metrics and submit their data sets to CMS. A commonly used platform is E-Rehab-Data, offered to inpatient rehabilitation providers by the American Medical Rehabilitation Providers Association (AMRPA).

Although these metrics provide goals for providers to improve the quality of the care, many have argued that certain quality metrics may not serve as appropriate benchmarks for high quality care in these rehabilitation settings.6 For example, neurogenic bladder is a frequent complication of injury to the brain or spinal cord, a condition commonly treated in IRFs. Management of this condition often requires bladder training over the course of a rehab stay, including intermittent catheterization, void trials, and indwelling catheter placement. Neuro-rehabilitation patients have high incidences of UTIs while undergoing this bladder management regimen. Incentivizing the removal of these catheters too soon to avoid higher rates of CAUTIs could potentially harm these at-risk patients, leading to harmful conditions such as renal failure and autonomic dysreflexia.

As of April 2023, CMS has proposed several notable updates to Medicare payment policies and rates under the Inpatient Rehabilitation Facility (IRF), Prospective Payment System (PPS) and the IRF Quality Reporting Program.7 For example, IRFs that fail to report data on the required quality measures may face a reduction in their Medicare payments (more specifically, a 2.0 percentage point reduction in their Annual Increase Factor). Overall, CMS estimates that IRF payments for FY 2024 would increase by 3.7 percent (or $335 million) relative to payments in FY 2023, based on a variety of changes to the IRF PPS. In addition, providers now need to start collecting the IRF-Patient Assessment Instrument (PAI) assessment on all patients receiving care in an IRF, regardless of payer. Overall reporting requirements may also expand beyond just Medicare patients, and IRFs may be required to report quality metrics for all of their patients regardless of insurance type.

Function and Functional Health

The American Academy of Physical Medicine and Rehabilitation states that while physiatrists “evaluate and treat injuries, illnesses, and disability, and are experts in designing comprehensive, patient-centered treatment plans…, [they] utilize cutting‐edge as well as time‐tested treatments to maximize function and quality of life.” But just what is the definition of function? While the Merriam-Webster dictionary defines function as “the normal and specific contribution of a bodily part to the economy of a living organism,” function is more than the contribution of even all bodily parts. The World Health Organization developed the International Classification of Functioning, Disability and Health (ICF),8 which conceptualizes a person’s level of functioning as a “dynamic interaction between their health conditions, environmental factors, and personal factors.” Functioning and disability may be described on a continuum that includes body structures and functions, impairments, activities/activity limitations, and participation/participation restrictions. Environmental factors may range from physical (e.g., climate, terrain or building design) to social (e.g., attitudes, institutions, and laws). Personal factors may include race, gender, age, educational level, coping styles, etc., which independent of the health condition but still may influence how a person functions.

Thus, it is not surprising that physical medicine and rehabilitation focuses on functional health, or the ability to perform all of one’s activities of daily living.9 However, while the goal of improving the ability to perform daily functional tasks enjoyably and effectively may appear merely as an idea to strengthen the ability to use muscles, many factors go into performing a task well, with minimal pain (if any at all), and with enjoyment. To accomplish this successfully, two main factors, in addition to medical, must be considered

  • Physical Ability: including strength, conditioning, coordination, tone and spasticity, proprioception, and balance.
  • Psychological Status/Mood: affected by sleep, environmental factors, support, pain, motivation, and energy.

In terms of collecting data for performance measures, the former is easier to develop objective measures, while the latter will rely more on subjective self-reporting.10 In any case, the physiatrist can play a unique role in a patient’s care, with meaningful patient outcomes in medical, social, emotional, and vocational arenas. For instance, the physiatrist can recommend different exercise programs or prescriptions, and consultations to physical therapy, occupational therapy, speech-language pathology, neuropsychology, or prosthetics-orthotics. They can provide spasticity management when conservative pharmacological methods fail. They can provide education on sleep hygiene and medical sleep aids. They can prescribe appropriate pharmacological and non-pharmacological interventions for pain management. Mostly, they can coordinate complex interdisciplinary care and motivate patients and their support systems. The key to success in navigating pay-for-performance is utilizing the scales already developed for the multitude of conditions physiatrists treat throughout the course of treatment in order to demonstrate efficacy and tangible improvement in whatever is being measured.

Outcome Measures

The World Health Organization defines a health outcome as “a change in the health status of an individual, group or population which is attributable to a planned intervention or series of interventions, regardless of whether such an intervention was intended to change health status.”11 On a different level, The International Consortium for Health Outcomes Measurement (ICHOM) defines health outcomes as “the results that matter most to patients” rather than those that matter most to physicians and healthcare organizations.12 In either case, to measure health outcomes, one must utilize outcome measures, simply defined as “tools used to assess a patient’s current status.

Choosing appropriate measures to monitor a condition is essential to validating outcomes. Measures should be valid and reliable. Measures should not place onerous burdens on providers and patients to collect. Mostly, measures should provide meaningful data to the outcome.

Outcome measures also should have key characteristics.12 Providers and patients should see value in collecting the data and be willing to commit the time to participate in its collection. Measures potentially can serve dual roles, such as in decreasing complications, improving patient satisfaction, and lowering cost of care. Measures should attempt to prevent unintended consequences, such as decreasing length of stay while attempting to decrease hospital readmissions. Overall, outcomes measures should be treated like a laboratory experiment so that interventions can be tested appropriate for efficacy while trying to minimize the impact of external and confounding variables that may place into question or invalidate results.

Of the CMS listed quality measures for outpatient care, Functional Outcome Assessment (CMIT ID: 641) is the most unique to physiatry.13 It calls for “documentation of a current functional outcome assessment using a standardized functional outcome assessment tool on the date of the encounter AND documentation of a care plan based on identified functional outcome deficiencies on the date of the identified deficiencies.” In explaining its rationale, the authors state that “utilization of the appropriate outcomes assessment, questionnaires, and tools enhances clinical practice by (1) identifying and quantifying body function and structure limitations, (2) formulating evaluation, diagnosis, and prognosis, (3) forming the plan of care, (4) assisting in evaluating the patient progress towards the goals and validating the benefits of treatment, (5) improving communication between client, clinician, and third party payer, (6) assisting to improve the documentation of care provided.” Because it does not delineate specific measures, it has the potential for application to many types of patients that physiatrists treat.

In practice, there are hundreds of widely accepted and used outcome measures. Therefore, it is important that physiatrists develop a toolbox of standardized outcomes that can be used to improve patient care and be accurate measurements of outcome in order to provide appropriate reimbursements. For example, primary functional outcomes for rehabilitation have been well-established, including the Short Physical Performance Battery (SPPB),14 The 4-meter Habitual Gait Speed (HGS) (derived from the subcomponent of SPPB),15 and 6-Minute walk test (6MWT).16 The SPPB is a reliable and valid measure of lower-extremity performance and predictive of adverse outcomes. The 6MWT is a widely used and reliable measure of mobility in patients, including those with multiple comorbidities. The HGS is predictive of disability and mortality among older adults.

An example of a program using these outcome measures to test the effectiveness of their treatment strategies is the Live Long Walk Strong program designed to prevent mobility decline and its consequences through an innovative care model emphasizing rehabilitative care.17 This program centers in concept around the ICF with a full assessment corresponding to each domain of the ICF. Not only were the outcome measures predictive of important factors, such as mobility, mortality, functionality, but also the treatment plan to achieve meaningful clinical improvements was easily facilitated in the outpatient setting.

  • Physiatry risk stratification based on SPPB (which takes a total of 10 minutes to administer) and referrals to specific therapists and/or orthotists
  • Medical management of musculoskeletal concerns
  • Screening for cognitive impairment with the Mini-Cog
  • Motivating patients for engagement in the program and addressing any concerns that the patients or families may have with the overall program of care.

Assessments within the ICF domains (and some sub-categories) included Comorbidities, Polypharmacy, Depression, Activity, Body Functions and Structure, Participation, Personal Factors, and Environmental factors Appropriate and specific treatment plans were implemented for each domain.

These studies are important as they demonstrate realistic, reliable, and meaningful change that reflect improved patient function and quality of life. These outcome measures can be applied to the pay-for-performance system, with the potential of increased payment/reimbursement for physiatrists as patients demonstrate improvement from baseline scores through interdisciplinary treatment and pharmacological intervention.


  1. Sura A, Shah NR. Pay-for-Performance Initiatives: Modest Benefits for Improving Healthcare Quality. Am Health Drug Benefits 2010; 3(2): 135–142.
  2. Quality Payment Program. US Department of Health and Human Services. Centers for Medicare and Medicaid Services (CMS). Quality Payment Program. https://qpp.cms.gov/about/qpp-overview. Accessed, April 28, 2020.
  3. MIPS Overview. MIPS Overview. US Department of Health and Human Services. Centers for Medicare and Medicaid Services (CMS). Quality Payment Program. https://qpp.cms.gov/mips/overview. Accessed, April 28, 2020.
  4. Advanced Alternative Payment Models (APM). Department of Health and Human Services. Centers for Medicare and Medicaid Services (CMS). Quality Payment Program. https://qpp.cms.gov/apms/advanced-apms?py=2020. Accessed April 28, 2020.
  5. Inpatient Rehabilitation Facility (IRF) Quality Reporting Program (QRP). Centers for Medicare & Medicaid Services. https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/irf-quality-reporting. Accessed April 19, 2023.
  6. Davis, M. When Quality Measures Put Patients with Spinal Cord Injury at Risk. TIRR Memorial Hermann Journal (Online). Spring 2016 Edition.  https://memorialhermann.org/services/specialties/tirr/healthcare-professionals/journal/2016/spring-2016/quality-measures-put-sci-patients-at-risk. Accessed April 19, 2023.
  7. Fiscal Year 2024 Inpatient Rehabilitation Facility Prospective Payment System Proposed Rule (CMS-1781-P). CMS Newsroom. Centers for Medicare & Medicaid Services. https://www.cms.gov/newsroom/fact-sheets/fiscal-year-2024-inpatient-rehabilitation-facility-prospective-payment-system-proposed-rule-cms-1781. Accessed April 19, 2023.
  8. World Health Organization. International Classification of Functioning, Disability and Health (ICF). https://www.who.int/classifications/icf/en/. Accessed April 28, 2020.
  9. Functional Health & Disability: Definition & Major Issues. Psychology 108: Psychology of Adulthood and Aging / Psychology Courses. Chapter 3/Lesson 9. Study.com. https://study.com/academy/lesson/functional-health-disability-definition-major-issues.html. Accessed April 28, 2020.
  10. Dayton MR, Judd DL, Hogan CA, Stevens-Lapsley JE. Performance-Based Versus Self-Reported Outcomes Using the Hip Disability and Osteoarthritis Outcome Score After Total Hip Arthroplasty. Am J Phys Med Rehabil 2016; 95(2): 132-138.
  11. World Health Organization. Health Promotion Glossary. https://www.who.int/healthpromotion/HPG/en/. Accessed April 28, 2020.
  12. Ferguson J. The Who, What, and How of Health Outcome Measures. HealthCatalyst. https://www.healthcatalyst.com/the-who-what-and-how-of-health-outcome-measures. Accessed April 28, 2020.
  13. Functional Outcome Assessment. Centers for Medicare & Medicaid Services. Measures Inventory Tool. https://cmit.cms.gov/CMIT_public/ViewMeasure?MeasureId=641. Accessed April 28, 2020.
  14. Short Physical Performance Battery. Shirley Ryan AbilityLab Rehabilitation Measures Database. https://www.sralab.org/rehabilitation-measures/short-physical-perfromance-battery. Accessed April 28, 2020.
  15. Bohannon RW, Wang YC. Four-Meter Gait Speed: Normative Values and Reliability Determined for Adults Participating in the NIH Toolbox Study. Arch Phys Med Rehabil 2019; 100(3): 509-513.
  16. Six Minute Walk Test. Shirley Ryan AbilityLab Rehabilitation Measures Database. https://www.sralab.org/rehabilitation-measures/6-minute-walk-test. Accessed April 28, 2020.
  17. Brown LG, Ni M, Schmidt CT, Bean JF. Evaluation of an Outpatient Rehabilitative Program to Address Mobility Limitations Among Older Adults. Am J Phys Med Rehabil 2017; 96(8): 600-606.

Original Version of the Topic

Carl V. Granger, MD, Lynne M. Adamczyk, RN, BSN, MBA. Achieving Pay-for-Performance in Outpatient Practice through Measurement of Functional Health Outcomes.  9/11/2015.

Previous Revision(s) of the Topic

Richard D Zorowitz, MD, Kevin J Cipriano, MD, Robert J Maldonado, MD. Quality Payment Program. 7/31/2020

Author Disclosures

Jaspal Singh, MD
Nothing to Disclose

Jack Haberl, MD, MBA
Nothing to Disclose

Zach Danssaert, DO
Nothing to Disclose