MACRA 101
Condensed Guide
Why do I need to know about MACRA?
Medicare is undertaking a significant update to how it pays for physician services. As is typically the case with Medicare, privately managed Medicare will likely follow suit. It is important to understand the details around the MACRA as it will impact many of our health plan clients.
What is the MACRA?
On April 14, 2015, a bipartisan majority in Congress passed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The MACRA will make comprehensive changes to how Medicare pays for physician services. In particular, the MACRA brings about three major changes:
- Stops the use of the Sustainable Growth Rate (SGR) – a formula for determining Medicare payments for health care providers.
- Creates a new framework for rewarding health care providers for giving better care not more just more care.
- Combines existing quality reporting programs into one new system.
How did the MACRA come to be?
1997:
The Balanced Budget Act of 1997 enacted the Medicare SGR. The SGR was put into place to control spending on Medicaid and Medicare reimbursements and to keep growth in spending below the GDP growth rate; however, the unsustainability of the SGR was quickly realized since Medicare spending per beneficiary increased faster than GDP.
1998-2014:
Each year as physician payments were set to decrease to account for a relatively slower GDP growth, congress would make a “doc fix” to lessen the effect of the SGR. Rather than addressing the SGR, Congress passed 17 doc fixes between 2003 and 2014 to address the fear that too large of a cut in physician payments may cause doctors to stop providing Medicare services.
2015:
A bipartisan majority in Congress passed the MACRA. The MACRA contained:
- Updates to the Physician Fee Schedule (PFS).
- A new Merit-Based Incentive Payment System (MIPS).
- A new Technical Advisory Committee for assessing Physician Focused Payment Model (PFPM) proposals.
- Incentive payments for participation in Alternative Payment Models (APMs).
What is the implementation timeline?
- July 2015 through December 2015: Medicare physician payments increase by 0.5%.
- 2016 through 2019: Medicare physician payments increase by 0.5% each year.
- January 2019: Based on eligibility, physicians enter either the APM track or the MIPS track.
- 2020 through 2025: Medicare physician fee-for-service payments remain at 2019 levels with no updates.
How will the MACRA payment reforms work?
The MACRA replaces the SGR with annual 0.5% payment increases for each of the next five years, and gives providers two payment track options after that:
- Merit-Based Incentive Payment System (MIPS)
- Alternative Payment Models (APMs)
MIPS:
What is the MIPS track?
The MIPS combines three existing quality initiatives—Meaningful Use (MU), the Physician Quality Reporting System (PQRS), and the Value-Based Payment Modifier (VBPM)—into a single program. Under the MIPS, CMS will calculate a cumulative assessment score for physicians to determine reimbursement increases or decreases. The score will be based on four categories:
- Quality
- Resource use
- Meaningful use of certified electronic health records (EHR) technology
- Clinical practice improvement activities
How will the MACRA MIPS impact the payment methodology?
The MIPS does not come into effect until 2019. Until 2019, the maximum reimbursement reduction (a.k.a. penalty) will grow to 8%; however, in 2019 the maximum reimbursement reduction eases to 4%. As providers ease into the new system, the maximum reimbursement reduction will grow again – to 9% by 2022. Additionally, each year DHHS will set a performance threshold, which is based on the average of the MIPS scores from the prior year. Those falling below the threshold will receive penalties and those above will receive rewards.
APMs
What is the APM track?
The MACRA also creates payment incentives for physicians to receive a “significant share” of their revenue through APMs. Providers participating in APMs can opt out of MIPS. Examples of APMs include ACOs, PCMHs, and bundled payments.
How will the MACRA APMs impact the payment methodology?
From 2019 to 2024, providers qualifying as APM participants will receive a 5% lump sum incentive payment for that year. Starting in 2026, participating providers will receive 0.75% fee schedule update while other providers will receive a 0.25% update
How are care episode groups relevant to the MACRA?
The MACRA requires CMS to establish “care episode groups” and “patient condition groups.” The creation of these groups is intended to help CMS measure resource use more effectively. These groups will also play a part in determining payments to providers (under the MACRA, care episode groups will account for at least 50% of expenditures under Medicare Parts A and B).
Care Episode Groups: CMS must consider a patient’s clinical problems at time of a service during an episode of care (e.g., clinical condition or diagnosis), whether hospitalization occurs, and principal services furnished.
Patient Condition Groups: CMS must consider the patient’s clinical history at the time of a medical visit, current health status, and recent significant history.
Timeline
Adapted from American Academy of Family Physicians.
What's next for the MACRA?
Looking ahead:
CMS has already taken steps to transition to MIPS even though the program will not begin until 2019. CMS plans to outline the initial MIPS policies in the 2017 Medicare physician fee schedule (due around June 30, 2016). There will also likely be substantial provider outreach and trainings to ease the transition.
How does this impact payers/health plans? Is it likely that this moves from a Medicare-focused matter to Medicaid/Commercial?
The MACRA will quicken the adoption of value-based systems. Even though the MACRA is for Medicare physician payments, it is likely that the effects will impact Medicaid as well. The Department of Health and Human Services is working with private payers and Medicaid programs to move to APMs and value-based payment.
