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Thursday, September 1, 2016

Medicare Access and CHIP Reauthorization Act of 2015: The Future of Medicare Reimbursement - An Introduction

On April 16, 2015, President Obama signed the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) into law.  This law will radically alter the manner in which physicians will be compensated for providing treatment and services to Medicare patients.  The good news is that the statute repealed the heavily criticized Sustainable Growth Rate (“SGR”) formula for payment for physician services.  SGR would have drastically reduced payments to physicians under the Medicare program.  However, it replaced this scheme with the “Quality Payment Program,” which has two different “paths” for physician compensation under Medicare: the Merit-Based Incentive Payment System (“MIPS”) and the Alternative Payment Models (“APM”).  The program is said to be designed to “reward[] health care providers for giving better care rather than more care.”  Only time will tell if it achieves this goal.  While the AMA has opined MACRA will have the effect of “stabilizing” Medicare reimbursement to practitioners and will be a huge improvement over SGR, it appears this “stability” will favor large practices at the expense of solo practitioners and small groups.


The implementation of this statutory scheme is still somewhat fluid.  On May 9, 2016, the Centers for Medicare and Medicaid Services (“CMS”) published proposed implementing regulations in the Federal Register.  These proposed regulations, which total some 962 pages, may be viewed at  Final regulations are expected to be promulgated in November, 2016.  Although the program was originally scheduled to go into effect in 2019, the first “performance period” was to begin on January 1, 2017.  However, on July 13, 2016, Andy Slavitt, the Acting Administrator of the CMS, testified before the Senate Finance Committee that implementation may have to be delayed, due to fears of an adverse impact upon small and rural practices.   Whatever the result of the November, 2016 Presidential election, there will be a new administration in place in January, 2017, and the application of the final regulations which are ultimately enacted will depend upon the attitude of this new administration.


This is the first in a series of articles setting forth what practicing physicians need to know about MACRA and its impact on Medicare reimbursement.  Some of the details could change in the future, of course, but based upon the statute as enacted, and CMS’ proposed regulations as published on May 9, 2016, physicians participating in Medicare will fall under either MIPS or APM.  CMS estimates that 761,342 clinicians will be eligible for MIPS, while some 30,658 – 90,000 of those clinicians could be exempt from MIPS and receive a bonus for participating in an advanced APM.


In brief, MIPS provides a performance score based upon four factors: 1) 50% of the score is based upon “Quality” (replacing the Physician Quality Reporting System and Value-based Payment Modifier); 2) 25% on “Advancing Care Information” (replacing EHR Meaningful Use); 3) 15% on “Clinical Practice Improvement;” and 4) 10% on “Resource Utilization.”  The percentages for Advancing Care Information and Clinical Practice Improvement are to stay the same for 2019, 2020 and 2021, while Quality goes down to 45% in 2020 and 30% in 2021, while Resource Utilization goes to 15% and 30%, respectively, for those years.  Based upon a composite performance score in each of these four categories, physicians will receive either a positive, or a negative, adjustment in compensation.  The program is intended to be “budget neutral,” so there will be equal numbers of negative and positive adjustments. Negative adjustments are capped at 4% in 2019, 5% in 2020, 7% in 2021 and 9% in 2022 and beyond, while positive adjustments must be paid out in an amount equal to the total negative payment adjustments among all providers.


Unfortunately, according to CMS’ own estimates, these negative adjustments are likely to disproportionately affect solo practitioners and those in smaller practices, with 86% of solo practices, 69.9% of practices of 2 – 9 eligible clinicians, 59.4% of practices of 10 – 24 clinicians, and 44.9% of practices of 25 – 99 clinicians likely to be penalized, with only 18.3% of practices of 100 or more eligible clinicians likely to be penalized in 2019.  In contrast, practitioners eligible to participate in an advanced APM will receive a 5% bonus in 2019.

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