A Brief Explanation of MACRA

Posted September 12, 2017
By Julia Zehel

Earlier this year, the first measures included in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) took effect, primarily the start of the first Merit-based Incentive Payment System (MIPS) Scoring Period. In the coming years, MACRA will be gradually implemented, and by 2019, the full effects of the bill will be realized.

Bu what does this mean, and what effects will we see? Despite the huge impact of this piece of legislation, few people are aware of the specific changes it introduces. This article is meant to provide a brief explanation of this bill.

Simply put, MACRA restructures the payment system for doctors treating patients covered by Medicare. It accomplishes this by introducing the Quality Payment Program (QPP), which does the following: repeals the Single Growth Rate (SGR), updates the Medicare Physician Fee Schedule (PFS), and creates two new tracks for compensation. The purpose of QPP is to completely change the payment structure for Medicare patients, transitioning away from the fee-for-service models that were previously utilized and towards a system that emphasizes quality of outcome.

The first track is called the Merit-based Incentive Payment System (MIPS). Utilizing four categories, the scoring for MIPS physicians is relatively simple. The categories are: Quality, Improvement Activities, Cost, and Advancing Care Information (ACI). The purpose of MIPS is to assign each participating physician or clinician a score, viewable by the public. In addition to that, this score is compared to the scores of other care providers around the country. Depending on where they fall relative to the national average, it impacts the compensation they receive for treating patients on Medicare. In other words, receiving a high score nets you a bonus, while a low score results in a loss in monetary compensation. These bonuses/penalties will first take effect in 2019 when, depending on score, can have a maximum effect of +/- 4%. This will be based off of the care provider’s performance score for the previous calendar year. For example, a high-scoring physician in 2018 will receive this bonus in 2019. Moving forward, the variance in compensation between high-scoring and low-scoring providers will increase to a maximum of +/- 9% in 2022.

The second track is called Alternative Payment Models (APMs), which has two possible options. To qualify for either sub-track, the care provider must reach a specific threshold of Medicare patients and maintain more-than-a-nominal financial risk in their operations. While this may be risky, there are a number of incentives to take this first sub-track, most notably a boost in any participant’s MIPS Score. The second sub-track, called an Advanced APM, has more stringent requirements, including mandated use of Certified Electronic Health Record Technology (CEHRT). The benefits, however, are scaled up—not only are participants in Advanced APMs (called Qualified Participants, or QPs), exempt from MIPS Scores, but they also receive an annual lump sum payment of 5% of their revenue from Medicare.

Because of these stricter, new requirements to be part of the Advanced APM Track, only a small percentage of physicians will participate. According to early estimates, only 10% of care providers will be eligible to become a QP.

While the QPP only affects physicians’ income from Medicare, it will still have a major impact on treatment strategies. According to the Centers for Medicare and Medicaid Services, in 2015, Medicare spending comprised 20% of the National Health Expenditure. In the same year, according to the Kaiser Family Foundation, 17% of the US population was covered by Medicare, a percentage that equals roughly 55 million US Citizens. All together in 2015, the US Government spent $646 billion on this program. The sheer scope of Medicare gives this incentive program power over all practicing care providers.

In summary, the primary impact of MACRA is the introduction of the QPP, which shattered the paradigm that dictated the treatment and care of Medicare patients. These newly introduced bonuses and penalties will hopefully herald  a positive change in not only Medicare, but healthcare overall in America.