medicare billing

MACRA and How it impacts the future of medicare reimbursement

When the Medicare Access and CHIP Reauthorization Act (MACRA) was passed in 2015, it was one of the rare occasions of bipartisan agreement on the topic of healthcare reform. Both sides saw the benefits in moving to a model of value-based care but there was not a clear understanding of how this would be implemented. CMS has recently announced its plan for action.


Before MACRA went into effect physicians were paid based on the Sustainable Growth Rate (SGR), which was part of a larger effort to reduce federal spending. physician billingThis formula gave targets for spending. In the beginning, many physicians actually saw pay increases but as the budget adjusted, many saw reimbursement rates reduced by almost five percent in one year. In order to avoid the backlash of the impacted clinicians, Congress opted to roll over scheduled cuts year after year which only forced the needed adjustment to be larger as time wore on. This is what ultimately lead to the passage of MACRA.

option one: Merit-based incentive payment system (MIPS)

To replace the old system, MACRA has established two overarching payment incentive plans that a provider can participate in, the first of which is Merit-based Incentive Payment System (MIPS). This program builds on the existing programs that have already been in place (Physician Quality Reporting System, Value-based Payment Modifier, and the Medicare Electronic Health Record incentive program) and allows flexibility for clinicians to choose the measures and activities that relate to the type of care they provide. In return, reimbursement will be based on success in four distinct performance categories:

  1. Quality – Clinicians have the ability to select six quality and safety measures that are most aligned with their practice and medical specialty.
  2. Advancing Usage of EHR Technology – This eliminates the requirement of all-or-nothing EHR implementation and allows a choice in measures that display how that particular practice is utilizing technology in their day to day. It is important to note that there is an emphasis on information exchange across the healthcare system.
  3. Clinical Practice Improvement – Clinicians can select from more than 90 options of clinical practice improvement activities that match their specific practice goals. These can include items like patient engagement, coordination of care, or patient safety
  4. Cost – This category would review Medicare submitted claims and a score would be applied based on specific measures across different specialties

The highlight of the MIPs program is the amount of flexibility offered to physicians in how they are rated under the program. In addition, previously reporting requirements for programs were extremely cumbersome. This model will streamline reporting and eliminate the duplicative requests for information. The downside is that providers will still have a hard time improving their performance in real time because reporting will still be annual. Most providers would prefer that reporting be closer to when care was actually provided. Armed with this information, they would be able to make adjustments and ultimately improve their performance incrementally.

This will be a multi-year implementation plan. In the beginning, physicians will receive a fee increase of 0.5 percent between 2016 and 2019. In 2017, Medicare will begin to measure performance for the MIPs program, and payments based on those measures will being in 2019. Under this system, payments will not increase (based on exceptional performance) or drop (based on penalties) by more than 4% until 2022 when this figure will rise to 9%.

Option two: alternative payment model

The second payment incentive plan is the Alternative Payment Model. In this model, clinicians have the opportunity to have a much higher reimbursement rate. To be eligible, an APM must use quality measures in line with MIPS and will need to be an approved patient-centered medical home. In addition, the providers would have to share in loses by having a portion of the expected costs be at total potential risk. Finally, at least 25 percent of their revenue for their Medicare population would need to come from pre-designated APMs by 2019 and this would increase to 75 percent by 2023. Most likely, there will be limited involvement in the beginning and this number will grow as clinicians have the ability to participate in more advanced APMs.

The highlight of the Alternative Payment Model is that it also builds on the Affordable Care Act which provided higher rewards for those that attempted to take steps in total care transformation by focusing on participation in Accountable Care Organizations. In addition, clinicians would be exempt from the reporting requirements that MIPS calls for as well as qualifying for larger financial bonuses for participating in highly coordinated, quality care. The down side is that that it does require that the provider accept both the risk and the reward. In addition, most will not qualify for this model because they will not have sufficient participation at the highest level.

This model will also call for a multi-year implementation plan. In the beginning, it will award a five percent bonus through 2024 for having the appropriate thresholds of Medicare revenue coming from APMs. In addition, the base physician rate will also be increased by 0.5 percent faster than those that participate in the MIPS program for the first four years and from 2026 onward. This is all being provided as a reward for the risk that the provider is taking in their APM contracts.

Initial Reactions

Overall, the healthcare community appears to be on board as well as law makers across both major parties. The support being offered today is most likely due to the commitment of CMS and other groups to have a vision of Medicare payment reform that also drives high quality patient care.

Dr. Patrick Conway, the CMS chief medical officer has explained his position as the following, “We are working with the medical community to advance our collective vision for Medicare payment reform. By proposing a flexible, rather than a one-size-fits-all program, we are attempting to reflect how doctors and other clinicians deliver care and give them the opportunity to participate in a way that is best for them, their practice, and their patients. Reducing burden and improving how we measure performance supports clinicians in doing what they do best – caring for their patients.”

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