On April 16, 2015, President Obama signed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) into law.

Under MACRA, the sustainable growth rate (SGR) physician payment methodology is replaced with 0.5% annual payment increases for doctors for the next five years, as Medicare transitions to a new physician payment system focused on quality, value, and accountability. MACRA also extended a number of programs and policies.

MACRA’s Physician Reimbursement Scheme

Under the new reimbursement scheme, Medicare doctor pay will rise by 0.5% each year between 2015 and 2019. Base payments will then be held steady from 2020 to 2025, but doctors will become eligible for additional payments under the Merit-based Incentive Payment System (MIPS). The bill directs the Secretary of Health and Human Services (HHS) to develop MIPS to reward physicians and certain other medical professionals based on a number of factors related to quality of care. These factors include implementation of care models that emphasize quality over volume and meaningful use of electronic health records. Under MIPS, doctors, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists will receive annual payment increases or decreases based on their performance.

Beginning in 2026, physicians will receive a 0.75% annual increase if they participate in an alternative payment model or a 0.25% annual increase if they do not. Alternative payment models are defined in the legislation to include certain Medicare shared savings programs and demonstration projects.  

Other Changes in MACRA

MACRA continued funding for or otherwise extended many programs and policies. These extensions included the following, which were extended for an additional two years: 

  • Children’s Health Insurance Program (CHIP)
  • Funding for community health centers
  • Ambulance add-on payments and home health rural add-on payments
  • Therapy cap exceptions process

In addition to the new Medicare physician reimbursement scheme and extensions, the legislation contains a collection of other measures, including:

  • Limiting base payment increases for post-acute providers, such as long-term care and inpatient rehabilitation hospitals, skilled nursing facilities, and home health and hospice organizations, to 1% in 2018.
  • Delaying by one year scheduled reductions in Medicaid “disproportionate share hospital” payments to hospitals that care for large numbers of people who are uninsured or covered by Medicaid. These reductions will occur between 2018 and 2025, instead of between 2017 and 2024.
  • Directing the Secretary of HHS to consider changes to longstanding restrictions on gainsharing. Gainsharing involves hospitals sharing savings with doctors who reduce the volume of services while preserving quality.
  • Relaxing or strengthening various aspects of anti-fraud oversight under Medicare, including reducing improper payments to Medicare contractors, improving fraud reporting, and modifying the Medicare durable medical equipment face-to-face encounter documentation requirement.
  • Allowing “qualified entities,” such as nonprofit research foundations, to have access to claims data from Medicare, Medicaid, and CHIP. These qualified entities can sell analyses of those data to doctors and hospitals, subject to certain restrictions.
  • Prohibiting the Secretary of HHS from implementing the final rule requiring the transition of all 10-day and 90-day global surgical packages to 0-day global periods.
  • Amending the Protecting Access to Medicare Act of 2014 to extend the moratorium on the two-midnight rule through September 2015. The two-midnight rule would generally deny coverage of hospital inpatient care expected to require less than a two-midnight stay.
  • Prohibiting supplemental Medigap plans that provide first-dollar, Part B deductible coverage for new Medicare beneficiaries, starting in 2020.
  • Requiring high-income seniors to pay higher premiums for doctor and outpatient care and prescription drug coverage. Starting in 2018, wealthier Medicare beneficiaries (individuals with incomes above $133,500, with higher thresholds for couples) will pay more for their Medicare coverage.