The Medicare Access and CHIP Reauthorization Act of 2015, or MACRA, is impacting Medicare beneficiaries, doctors, and hospitals. Although MACRA has several components, the most important is its establishment of new ways to pay physicians who work with Medicare beneficiaries. Now is the time to inform your clients on what MACRA is and the changes they can expect as a result.
What Is MACRA?
On April 16, 2015, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) was signed into law, replacing the Sustainable Growth Rate (SGR) formula for healthcare provider reimbursement. Created to control Medicare costs, SGR and its fee-for-service payments caused Medicare costs and spending to outpace GDP growth. If MACRA had not passed, Medicare providers would have been hit with a 21.2 percent decrease to reimbursements by the end of March 2015.
Problems Before MACRA
The Sustainable Growth Rate (SGR), established in 1997 to control Medicare costs, implemented fee-for-service (FFS) payments, allowing hospitals to unbundle clinical services and have patients pay for treatments independently. As a result, the system tended to prioritize the volume of services provided at the expense of the quality of care. Physicians’ pay became dependent on the quantity of care, and clinical centers across the nation were incentivizing doctors to perform more and more treatments per patient.
Coordinated care suffered as individual clinics were rewarded for performing multiple treatments, and the most at-risk patients were not receiving appropriate attention from their doctors, resulting in higher healthcare costs and potentially preventable emergency room visits. The hope had been that SGR and FFS payments would prevent Medicare spending and costs from exceeding that of the national GDP growth. Unfortunately, healthcare spending did outpace GDP growth. Between 2003 and 2014, Congress passed temporary Medicare “doc fixes” to prevent these types of reimbursement cuts.
What MACRA Means for Hospitals and Physicians
In an effort to create a more permanent solution to “doc fixes,” MACRA was implemented in April 2015, repealing the Sustainable Growth Rate (SGR) and introducing the Quality Payment Program (QPP), rewarding Medicare providers for value over volume. QPP requires most Medicare clinicians to choose one of two major value-based tracks for earning payments, which include:
- merit-based incentive payment system (MIPS)
- advanced alternative payment models (Advanced APMs)
With MIPS, healthcare providers are annually rated on clinical quality, information technology use, clinical practice improvement, and resource use. Advanced APMs allow physicians to opt out of MIPS as long as a large enough percentage of their revenue comes from qualifying advanced APMs. Through advanced APMs, practices earn more by taking on additional risk patients such as those with end-stage renal disease (ESRD) or cancer. Advanced APMs are less likely, so most practices will be part of the MIPS program. Starting in 2019, either APMs or MIPS can provide physicians with up to a 5 percent incentive payment depending on their ratings and score, according to CMS.
What Does MACRA Mean for Medicare Beneficiaries and Hospital Stays?
Medicare patients must have an inpatient stay in a short-term acute care hospital for at least three days, not counting the day of discharge, for Medicare to pay for a subsequent stay in a skilled nursing facility (SNF). But, problematically, acute care hospitals are increasingly holding patients under outpatient observation status, rather than admitting them as inpatients.
Outpatients can still stay in hospital beds for multiple days and nights, receiving medical and nursing care, diagnostic tests, treatments, medications, and food — care identical to that of inpatients. Yet, being under an observation status is a hospital billing classification that can cause Medicare beneficiaries to pay for the cost of their hospital stay, hospital medications, and SNF charges. A doctor must order an inpatient designation before the hospital will admit them as such. For this reason, it is crucial for patients and family members to ask their status each day they are at a hospital.
How MACRA Impacts Observation Status for Medicare Patients
To correct this problem, a notice regarding observation status was implemented under the Medicare Outpatient Observation Notice (MOON) program in August 2016 and took effect in March 2017. Thanks to the MOON, today when Medicare beneficiaries are overnight in the hospital on an outpatient basis, the hospital is required to give them written notification that they are in observation within 36 hours of beginning services. An additional oral explanation of the MOON must be provided, and a signature must be obtained from the individual or a person acting on such individual’s behalf, to acknowledge receipt, according to CMS. Although this measure is beneficial for improving patient-provider communication, MOON does come with a few stipulations.
- Not all outpatients will receive notice of their non-inpatient status.
- Only patients who are classified as receiving observation services for at least 24 hours will receive MOON.
- Patients receiving MOON lose their appeal rights, meaning they cannot contest their status or ask Medicare to consider them as inpatient.
Other Things You Should Know About MACRA
- Starting in 2020, new Medicare beneficiaries will no longer be offered $0 deductible Medigap plans.
- Through December 31, 2019, anyone who’s on Original Medicare — either A, B, or both — will be able to purchase Plans F, C, or high-deductible F as long as they pass medical underwriting.
- Beginning January 1, 2020, anyone new to Medicare cannot purchase Plans F, C, or high-deductible F.
- Starting January 1, 2020, IRMAA-eligible beneficiaries will pay more for Medicare Part B and Part D premiums.
Sources: https://ablehealth.com/macra/ | https://www.practicefusion.com/quality-payment-program/ | https://hbr.org/2013/10/doubts-about-pay-for-performance-in-health-care | https://www.npr.org/templates/story/story.php?storyId=111492444 | https://www.medicareresources.org/faqs/what-is-the-medicare-doc-fix-legislation/ | https://qpp.cms.gov/