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Medicare Access and CHIP Reauthorization Act
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The Medicare Access and CHIP Reauthorization Act (MACRA) is a piece of federal legislation that was signed into law in 2015. The law repealed a formula Medicare used to determine its reimbursement rates for providers, the Sustainable Growth Rate (SGR) formula. It also significantly altered how Medicare reimburses physicians by consolidating several payment programs into a two-track system. The bill passed the U.S. House of Representatives 392-7 and the U.S. Senate 92-8. It was signed into law by President Barack Obama on April 16, 2015.[1]
Major provisions
Reimbursement rates
The primary function of the Medicare Access and CHIP Reauthorization Act (MACRA) was to repeal the Sustainable Growth Rate (SGR) formula, which previously determined the rates at which Medicare reimbursed physicians. The SGR formula linked rate changes to the nation's gross domestic product, making the rates unpredictable for physicians from year to year. Under MACRA, physician reimbursement rates were intended to be more predictable. Rates were set to increase by 0.5 percent annually through 2019 and then freeze from 2020 to 2025. In 2026 reimbursement rates will begin to increase annually again; the percentage at which they increase will vary depending on the reimbursement program a physician joins, but will be less than 1 percent.[2]
Two-track payment system
The Medicare Access and CHIP Reauthorization Act (MACRA) not only changed the rates at which Medicare reimburses physicians, but also significantly altered how it does so. Previously, Medicare had several various programs through which it reimbursed physicians, each with its own methods and incentives intended to encourage physicians to raise the quality of care they deliver at a lower cost (known as pay-for-performance):[2]
- Physician Quality Reporting System
- Electronic Health Records Incentive Program
- Value-Based Payment Modifier
Starting in 2019, these programs will be consolidated and Medicare will begin using a two-track reimbursement system consisting of the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APMs). Physicians can choose to join either track. When base reimbursement rates begin increasing again in 2026, they will increase at a rate of 0.25 percent under MIPS and 0.75 percent under APMs, in order to encourage physicians to join track two.[2]
Track one
Under the Merit-Based Incentive Payment System (MIPS), physicians will be paid a base rate that can be adjusted up or down according to a composite score they receive from the Centers for Medicare and Medicaid Services. The score will be based on physicians' performance in four categories:[2]
- Clinical quality. This category will include quality metrics from the Physician Quality Reporting System, as well as likely some new measures.
- Resource utilization. This category essentially evaluates the costs of healthcare delivery. It will be similar to the Value-Based Payment Modifier and will be designed to incentivize efficiency.
- Meaningful use. This category will include most of the requirements of the Electronic Health Records Incentive Program. Providers who use an electronic records system to report their performance in the four MIPS categories to CMS will be automatically be counted as having met the meaningful use component.
- Clinical practice improvement. This category will contain new measures focused more on the patient experience, such as expanded access to services and care coordination. MACRA requires the measures to be set by CMS in conjunction with industry professionals and to be attainable by practices of all sizes and in all types of geographic areas.
The percentage of the final score that each category is worth may vary from year to year. In a proposed final rule for MACRA released by CMS on April 27, 2016, the agency proposed the first year of scores to be based 50 percent on clinical quality, 10 percent on resource utilization, 25 percent on meaningful use, and 15 percent on clinical practice improvement activities.[3]
Scores will range from 0 to 100 and will determine reimbursement levels based on a set threshold and a sliding scale. Providers whose scores meet the threshold will receive the regular base reimbursement. Those coming in with a score above the threshold will receive a bonus. Providers that earn scores below the threshold will have a percentage of their reimbursement docked. This percentage will increase incrementally during the first four years of the program: 4 percent in 2019, 5 percent in 2020, 7 percent in 2021, and 9 percent in 2022 and each year thereafter.[2]
Track two
Track two of the new payment system consists of Alternative Payment Models (APMs). Under this track, providers agree to be reimbursed through any of various payment models such as accountable care organizations and patient-centered medical homes. The models must all adhere to the same criteria established by the Centers for Medicare and Medicaid Services (CMS), and providers can propose new models to CMS.[2]
These models typically place greater financial risk on providers for the stated purpose of increasing the quality of care while lowering costs. Providers who enroll in track two must also serve a certain percentage of their patients through the alternative payment model; this percentage will increase over time. To encourage more providers to join an alternative payment model, bonuses available under track two are five percent greater than under track one between 2019 and 2024.[2]
A proposed final rule for MACRA released by CMS on April 27, 2016, described three potential requirements for APMs:
- Use of a certified electronic health records system
- Payment linked to quality measures
- Significant risk of losses placed on providers
If approved, the proposed rule would also allow CMS to withhold or reduce payments to APMs that incur greater costs than expected.[3]
Background
The primary function of the Medicare Access and CHIP Reauthorization Act (MACRA) was to repeal the Medicare Sustainable Growth Rate (SGR) formula. The SGR formula was Medicare's method of paying physicians while attempting to control the agency's healthcare spending. It did so by linking physician reimbursement to annual growth in the nation's gross domestic product (GDP). In a given year, if Medicare's spending on physician services grew at a lower rate than GDP growth, the agency would increase its payments to physicians the following year. If spending on physician services grew at a higher rate than GDP, payments to physicians would be cut.[2][4]
The SGR formula went into effect in 1997, and between that year and 2001, physician payments grew steadily as GDP grew. In 2002 the economy turned and the SGR formula adjusted physician reimbursement rates accordingly with a cut of 4.8 percent in payments. This alarmed physicians as well as Congress, and the legislative body passed a law for 2003 to prevent the formula from generating further cuts. This law was referred to as the "doc fix," and Congress passed one each subsequent year as Medicare's expenditures continued to rise faster than GDP.[4]
In 2006 Congress amended the doc fix to freeze Medicare payments as is, but the legislation also allowed the cuts recommended by the SGR formula to compound each year and go into effect when the patch expired. For example:[5]
| “ | In 2008, the law required that Medicare reduce payment rates by the 5.3 percent and also by the 5.0 percent reduction that was ignored in 2007, totaling to a 10.1 percent pay cut.[6] | ” |
| —Conor Ryan, American Action Forum[5] | ||
By 2015 the cuts calculated by the SGR formula had accumulated to 21 percent. To avoid these cuts and the continued cycle of "doc fix" legislation, Congress passed the Medicare Access and CHIP Reauthorization Act, also called a "permanent doc fix," as opposed to the previous temporary measures. The bill passed the U.S. House of Representatives 392-7 and the U.S. Senate 92-8. President Barack Obama signed the legislation into law on April 16, 2015.[4][1]
Recent news
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See also
External links
- Centers for Medicare and Medicaid Services
- Healthcare Financial Management Association, "Paving the Way for Medicare Reform"
- Health Affairs Blog, "Breaking Down The MACRA Proposed Rule"
Footnotes
- ↑ 1.0 1.1 Congress.gov, "H.R.2 - Medicare Access and CHIP Reauthorization Act of 2015," accessed May 6, 2016
- ↑ 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 Healthcare Financial Management Association, "Paving the Way for Medicare Reform," January 1, 2016
- ↑ 3.0 3.1 Health Affairs Blog, "Breaking Down The MACRA Proposed Rule," April 29, 2016
- ↑ 4.0 4.1 4.2 Health Affairs Blog, "May The Era Of Medicare’s Doc Fix (1997-2015) Rest In Peace. Now What?" April 14, 2015
- ↑ 5.0 5.1 American Action Forum, "Explaining the Medicare Sustainable Growth Rate," March 26, 2015
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
