Physicians spent years trying to get Congress to repeal the Sustainable Growth Rate (SGR) formula, which made adjustments to physician reimbursement based on shifts in Gross Domestic Product – and, over time, resulted in massive payment cuts to doctors. After a lot of patching and ho-humming about the situation, Congress finally repealed the SGR formula with a new law called the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015.
What Does This Mean for CMS (Centers for Medicare & Medicaid Services)?
Aside from repealing the SGR formula, MACRA perpetuated CMS’s shift from fee-for-service to paying for quality. A 2015 statement by Sylvia M. Burwell, secretary of Health and Human Services, offers more insight into this transition:
“Our goal is to have 85% of all Medicare fee-for-service payments tied to quality or value by 2016, and 90% by 2018. Perhaps even more important, our target is to have 30% of Medicare payments tied to quality or value through alternative payment models by the end of 2016, and 50% of payments by the end of 2018.”
The passage of MACRA will speed up the transition from fee-for-service to paying for quality, as well as dramatically changing the whole American health care system – but we are only now beginning to understand its full effect. Although the law (all 100 pages of it) was just passed on April 16, 2015, and the additional 900 pages of proposed regulations were released on April 27, 2016, the final ruling was Oct. 14, 2016. The reporting period is supposed to begin on January 1, 2017. That doesn’t leave much time for medical professionals to become familiar with this new law!
How MACRA Relates to the Quality Payment Program
The “Quality Payment Program” is the framework MACRA uses to pay clinicians based on the quality of their care. There are two paths providers can choose in order to participate: the Merit-Based Incentive Payment System (MIPS) or Alternative Payment Models (APMs).
Most anesthesia providers will not be a candidate for APMs, which means the great majority will take the MIPS option.
MACRA’s Financial Effect
For the first five years, MACRA will include an upward adjustment to the Medicare conversion factor of 0.5%. For the next five years after that, the conversion factor will be flat. Things change again starting in year 11, when providers will receive either a 0.25% increase (MIPS) or a 0.75% increase (APMs), depending on which path they choose.
Providers will be rewarded or penalized based on the quality of their care. For those who choose the MIPS path, penalties begin at -4% of Medicare reimbursement and go all the way up to –9%. Incentives, too, range from 4-9%. So the end result is that the penalties pay for the rewards, and the program must remain budget-neutral (as with the value-based modifier). But there is also an additional $500 million, exempt from the budget-neutrality rule, that may be used to reward extraordinary performance within MACRA’s first five years.
For those physicians who can participate in APMs, there is a 5% annual incentive on the table – but an APMs participant must also assume financial risk, which means losses are a possibility.
More Information about MACRA to Come
Because of the considerable scope of MACRA, this is the first in a planned series of articles about the new law and its ramifications. Check back for more in the future, especially when it comes to MIPS.