New bonuses and penalties will be paid or imposed depending on how well doctors do on certain measures.

Federal health officials on Friday finalized a new rule for how Medicare pays U.S. doctors, part of a broader push by the White House to overhaul federal health spending.

The Centers for Medicare and Medicaid Services released the highly anticipated rule, which introduces new bonuses and penalties tied to performance for 712,000 doctors and other clinicians starting in 2019.

The new bonuses and penalties would be paid or imposed depending on how well doctors do on measures of quality, electronic health records and managing costs. Doctors can also enter Medicare contracts that include quality and cost-control incentives and earn bonuses.

An early draft of the rule sparked an outcry from physician groups that feared doctors in small medical practices would suffer under the new formula. CMS officials have sought to allay those concerns by making it easy to avoid penalties in the first year, giving doctors more time to prepare, and with other changes they said would make it easier for doctors to participate.

Doctors must begin reporting data on performance next year, but under a recently announced change, doctors can avoid penalties as long as they report some quality data.

“We know that small practices can provide the same high quality care as larger ones,” said Dr. Patrick Conway, CMS’s acting principal deputy administrator and chief medical officer, as officials announced the final rule. The “vast majority” of small physician groups can succeed, he said.

Physicians groups had mixed reactions to the new rule. The American Medical Association praised the CMS for its flexibility in a statement and said the association was reviewing the rule’s details.

The Medical Group Management Association said in a statement that changes would lessen the burden on doctors’ time and finances, but the rules grow less flexible over time and doctors must wait too long between reporting performance and receiving bonuses or penalties. “The sheer magnitude of a 2,400-page regulation and its impact on physician practices can’t be ignored,” the MGMA said.

The new incentives are among several initiatives introduced under the Affordable Care Act and other recent laws that seek to increase the level of Medicare spending tied to measures of quality or cost. Medicare historically has paid doctors for the amount of tests, visits and procedures they perform, which has been criticized as an incentive to provide unnecessary medical care.

The White House last year pledged to shift half of Medicare’s budget outside of managed care into contracts with the new incentives by 2018. In March, the administration announced 30% of spending was under contracts with such incentives.

Kristie Canegallo, White House deputy chief of staff for implementation, said such changes to Medicare payment under the Affordable Care Act have been “largely unchallenged” despite debate over other aspects of the law.

The new rule stems from the 2015 Medicare Access and CHIP Reauthorization Act, which Congress passed in an attempt to end more than a decade of wrangling over how Medicare pays doctors. Previously, Medicare paid doctors under a formula tied to economic growth, which threatened doctors with annual pay cuts that Congress repeatedly averted.

Anne Phelps, U.S. health-care regulatory leader for consultant Deloitte, said the new rule would be as significant for clinicians as the Affordable Care Act is to insurers as it pushes doctors into a new model for payment. “It’s a disruptive law,” she said.

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