Medicare Access and CHIP Reauthorization Act

By Megan Stamm*

Overview

On October 14, 2016, the Center for Medicare and Medicaid Services released the final version of the Medicare Access and CHIP Reauthorization Act (MACRA).[1] The new version implemented changes that addressed issues physicians had concerning Medicare.[2] These regulations will encourage physicians to accept more patients using Medicare by issuing incentive plans.

MACRA replaced the sustainable growth rate formula, which was the method used to control spending by Medicare on physician spending.[3] There were many issues surrounding this formula. The primary issue concerned the fact that it forced physician offices to pay 20% more per year.[4] These pay cuts forced physician offices to not accept patients covered under Medicare because it became too expensive to treat people insured by Medicare. The physicians’ pay was cut because the sustainable growth rate formula promoted a fee-for-service system. A fee-for-service system forces physicians to bill services separately, e.g. office visits, tests, procedures.[5]  A fee-for-service system promotes quantity, not quality, by incentivizing physicians to issue more treatments because their pay was dependent on the quantity of care; the more services rendered, the more pay a physician received. The new MACRA system for payment will eliminate the fee-for-service system, which will hopefully promote a more efficient system.

Quality Payment Program

In lieu of the sustainable growth rate, MACRA imposed the Quality Payment Program.[6] The Quality Payment Program offers physicians a choice on which payment method they would like to follow.[7] The first method is called the Merit Based Incentive Payment System (MIPS). MIPS evaluates physicians on a pay-for-performance method.[8] A pay-for-performance method will compensate physicians for their quality of care by evaluating them in four categories

  1. Quality
  2. Cost
  3. Advancing Care Information
  4. Improvement Activities[9]

These four measures will determine a physician’s composite score and the composite score will determine payment adjustments.[10]

The second method of payment is called Advanced Alternative Payment Models (APMs).[11] APMs allow the physicians to take on more risk with their patients’ care.[12] Physicians take on more risk by reducing their rates, withholding payments, or paying the Center for Medicaid and Medicare Services when actual expenditures exceed expected expenditures.[13] As an incentive to opt for the APMs route, physicians will receive a lump sum of 5% of last year’s payments.[14] The automatic 5% bonus appeals to a lot of physicians because their payments are not solely computed based on the four categories evaluated in MIPS. If a physician feels the APM route is best for them, they must qualify for it by

  1. Use Certified EHR Technology
  2. Report quality measures comparable to measures under MIPS
  3. Bear financial risk[15]

New System’s Improvements

The Merit Based Incentive Payment System and the Advanced Alternative Payment Model replaced the Sustainable Growth Rate formula as a means to cut Medicare costs and encourage physicians to treat more Medicare patients.[16]  This is achieved by decreasing funding to supplemental Medicare plans, raising premiums for high-income seniors, and promoting quality over quantity.[17]

How MACRA Will Work

Supplemental Medicare plans involve private insurers helping cover the costs Medicare will not cover, such as copayments, deductibles, and coinsurance.[18] Unfortunately, these policies require Medicare to spend more money because patients will seek unnecessary procedures, which increases Medicare’s spending. By decreasing funding for supplemental Medicare plans, private funding will no longer be paid for by Medicare. Private companies will now have to cover what Medicare was previously covering.[19]

Raising premiums for high-income seniors will spread the cost of Medicare to those “who can afford it”.[20] Under the new regulations seniors who make between $107,000 a year and $133,500 a year will pay for 35% of their premiums.[21] Seniors between the range of $133,500 and $160,000 will pay 65% of their premiums.[22] Lastly, seniors who make more than $160,000 a year will pay for 80% of their premiums.[23] Whatever percentage seniors are not responsible for, the government covers.[24] By making seniors pay a bigger percentage of their premiums, the government will save $73 billion from not having to pay that portion.[25] The total cost of the new system will cost the government around $214 billion.[26]

Promoting quality over quantity will theoretically save Medicare money by treating patients more effectively, so these same patients do not have to continually receive care for the same issues. Essentially, the pay-for-performance method will save money because people will not be using their insurance as often because their ailments will be solved quicker.[27]

Why MACRA is Important

Before MACRA, many seniors were unable to find physicians willing to accept their insurance plans.[28] This prevented seniors from obtaining the medical attention they deserved because their options for physicians were limited. When they did find a physician willing to accept their insurance plans, those physicians were concerned with treating as many patients with as many visits as possible because the fee-for-service system paid physicians by patient visits. Now, seniors will have more options for medical treatment and those medical treatments will promote efficiency. The pay-for-performance model will compensate physicians for the quality of work, not for how many patients a doctor can see and how many times they see those same patients. MACRA will allow seniors to obtain better medical assistance, with fewer physician visits.


The views and opinions expressed in this blog are those of the authors only and do not reflect the official policy or position of the Michigan Journal of Environmental and Administrative Law or the University of Michigan.

*Megan Stamm is a Junior Editor on MJEAL. She can be reached at mestamm@umich.edu.

[1] The Medicare Access and CHIP Reauthorization Act of 2015, Ctr. For Medicare and Medicaid Serv., https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/MACRA-LAN-PPT.pdf.

[2] Quality Payment Program, Dep’t of Heath and Hum. Serv., https://qpp.cms.gov/learn/apms, (Last visited Jan. 8, 2016).

[3] Id.

[4] Id.

[5] James C. Robinson, Pay For Performance: From Quality To Value, Heath Aff. Blog, (May 29, 2008), http://healthaffairs.org/blog/2008/05/29/pay-for-performance-from-quality-to-value/.

[6] Id.

[7]What are Alterrnative Payment Programs, Dep’t of Heath and Hum. Serv., https://qpp.cms.gov/learn/apms, (Last visited Jan. 8, 2016).

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] Delivery System Reform, Medicare Payment Reform, Ctr. For Medicare and Medicaid Serv., https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/MACRA-MIPS-and-APMs.html, (Last visited Jan. 8, 2016).

[17] Understanding Medicare Payment Reform, Am. Med. Ass’n,  https://www.ama-assn.org/practice-management/understanding-medicare-payment-reform-macra. (Last visited Jan. 8, 2016).

[18] What’s Medicare Supplemental Insurance Dep’t of Heath and Hum. Serv., https://www.medicare.gov/supplement-other-insurance/medigap/whats-medigap.html, (Last visited Jan. 8, 2016).

[19] Id.

[20] Id.

[21] Id.

[22] Id.

[23] Id.

[24] Id.

[25] Id.

[26] Understanding Medicare Payment Reform, Am. Med. Ass’n,  https://www.ama-assn.org/practice-management/understanding-medicare-payment-reform-macra., (Last visited Jan. 8, 2016).

[27] Delivery System Reform, Medicare Payment Reform, Ctr. For Medicare and Medicaid Serv., https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/MACRA-MIPS-and-APMs.html, (Last visited Jan. 8, 2016).

[28] Id.

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