MACRA was signed into law in 2015 and replaces the prior Medicare reimbursement methodology. Prior to MACRA, Medicare reimbursement for physicians was based on the Sustainable Growth Rate (SGR) formula. The SGR formula was largely fee focused; when physician spending grew less rapidly than the GDP physicians received payment bonuses (and vice versa – reimbursement amounts decreased if spending rates outpaced GDP). The SGR was meant to curb healthcare costs for the Medicare population, but because medical spending is across a large physician population providers can lack a sense of personal responsibility to reduce healthcare costs. The SGR was not successful in reducing physician spend and so the door for new Medicare reimbursement models was opened.
MACRA created MIPS (Merit-based Incentive Program). MIPS is a combination of other metrics which measure a physician’s effectiveness. These other metrics are the “Physician Quality Reporting System (PQRS)”, the “Value-based Payment Modifier (VBM)”, and the “Medicare Electronic Health Record (EHR) incentive program”. These other metrics measure a physician’s performance in quality of care, effective use of resources, clinical practice improvement activities, and meaningful use of electronic health records. Physicians who perform poorly when being measured on these metrics will see their payment rates decrease – while those who perform well in these measures will be reimbursed at a higher rate than their peers. MIPS-based payments will begin in 2019, but performance measurement will begin in 2017.
Some organizations will be given the option to opt out of MIPS, and instead participate in Alternative Payment Models (APMs). APM organizations will be eligible for reimbursement bonuses starting in 2019. Practices that choose to participate in the APM will be taking on greater financial risk than those who participate in MIPS. These organizations will have quality measures in place that will be similar to MIPS, and must use certified Electronic Health Record (EHR) technology. Of the many provider-payment models that qualify for an APM, one is an Accountable Care Organization (ACO).
MACRA also extends the Children’s Health Insurance Program (CHIP). CHIP provides matching funds to states for health insurance that is given to families with children. The program was designed to provide health insurance for children in families that make slightly too much money to qualify for Medicaid. Like Medicaid, CHIP is designed in partnership with the federal and state government. State governments have freedom in how they implement CHIP in their jurisdictions; for example, some expand their Medicaid program while others design CHIP as a separate program within their state.