How MACRA Affects Medicare?

macra cms reform

On April 16th, President Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA CMS reform). This historic Medicare Reform has several very important effects on Medicare.

The legislation permanently repeals the Sustainable Growth Rate (SGR), creates a framework for rewarding clinicians for value over volume, streamlines quality reporting programs into one system, and reauthorizes two years of funding for the Children’s Health Insurance Program.

The $141 billion bill for the plan has many concerned, but over the long term, it will cost no more than current law. The Centers for Medicare and Medicaid Services (CMS) state that current law spending on Medicare Part B (doctor visits) will be the same meaning that doctors will not see a windfall.

MACRA CMS reform also affects Medicare Part A (hospital visits) with the present value of future Part A benefits declining by $387 billion, or just under 2%, and Part D (prescriptions) but the exact savings await the next actuaries reports.

Some specifics of the plan include:

  • Reforms the Medicare physician payment system by providing a 0.5% annual increase for Medicare providers for the next four years;
  • Transitions to an incentive-based payment system in 2019 with potential for increased payment rates for providers participating in alternative payment models based on patient outcomes;
  • Requires Electronic Health Records (EHRs) to be interoperable by 2018 and prohibits providers from deliberately blocking information sharing with other EHR vendor products;
  • Extends funding for the Children’s Health Insurance Program (CHIP) and Community Health Centers for an additional two years, and
  • Extends for six months a moratorium on enforcement of the “two-midnight” rule for short inpatient hospital stays.

Many positives surround this plan. CMS states that MACRA will repeal and replace the SGR cuts at no long-term cost to taxpayers, while providing hundreds of billions of dollars in reduced unfunded liabilities and debt from Medicare. All without tax increases. The guaranteed payment increase over the next four years will introduce mid-term stability and predictability for Medicare providers before they are transitioned to a new value-based system. And without the CHIP Program two year extension, approximately two million children would have lost access to healthcare, and more than eight million children could have lost access to specialty care.