The Medicare Access and CHIP Reauthorization Act (MACRA) was passed on April 16, 2015. This legislation was landmark because it repealed the Sustainable Growth Rate (SGR). This legislation also created two new payment systems for Medicare Providers. These two programs are known collectively as the Quality Payment Programs (QPP). MACRA was passed with overwhelming from both sides of the aisle, in an effort to control unsustainable Medicare spending growth.

Pay for Quality

MACRA Payment models

Nearly 18% of the United States’ GDP is spent on health care. With baby boomers enrolling in Medicare at the rate of 10,000 per day, Medicare spending is on track to increase 50%.  Congress is desperate to reduce massive future budget deficits and to avoid major tax increases.

Health care suffers from an archaic payment model – the Medicare rules. Clinicians, for the most part, can only receive payments for in-person services provided to the patient. Unlike a lawyer or consultant who can utilize the telephone as an efficient way to handle problem solving with a client, and bill for this time, the health care provider is generally limited in billing for consultations that take place face-to-face (although this is changing with telemedicine). This payment model has discouraged caregivers from providing innovative, important and cost-effective services (such as phone consultations, care coordination and case-management) to their patients.

MACRA introduced two Quality Payment Programs to address the risings costs. These programs emphasize paying for quality over paying for volume. The two programs are: Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (Advanced APM). The proposed rules defining these programs were released at the end of April. These two programs emphasize this shift in fee for quality from fee for service.

MACRA repealed SGR and offered some minor reimbursement improvement in the form of 0.5% annual increases through 2019.  Beginning 2019, only practices who are judged to be offering high quality / low cost health care to their patients will receive increases — potentially significant incentives. Practices participating in advanced APMs can receive bonus payments of up to 5% of their Medicare billing.  High quality / low cost practices participating in MIPS will avoid up to a 9% penalty and can receive rewards of up to a 37% increase in Medicare billing.

To learn more about these Quality Payment Programs, check out our next post, Paying for Quality at a New Level.

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