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MACRA is Reshaping the Way Healthcare Providers are Reimbursed by Medicare. Are You Prepared?

The Medicare Access and CHIP Reauthorization Act of 2015, or MACRA, has been a buzzword in healthcare since inception. Key stakeholders have been struggling to comprehend the law and how exactly it affects them. The drive to understand the ins-and-outs of MACRA is led by the desire to successfully navigate a new landscape designed on value and efficiency.

In a nutshell, MACRA is continuing the healthcare industry’s shift from volume to value.

That means physicians have more financial incentive to improve outcomes and control costs rather than simply submitting as many claims for reimbursement as possible.

This change increases the importance of pharmaceutical and medical device companies developing engagement strategies with providers based on value and cost.


There are two categories of physicians impacted by MACRA:

MACRA created the Quality Payment Program to replace the Sustainable Growth Rate and is made up of two silos—the Merit-based Incentive Payment System (MIPS) and advanced Alternative Payment Model track (APMs). Non-exempt providers who aren’t in Advanced APMS must participate in MIPS, with Medicare Part B reimbursement tied to performance. MIPS also combines and streamlines the Physician Quality Reporting System (PQRS), Value-based Payment Modifier (VBM), and the Medicare and Medicaid Electronic Health Record incentive program, more commonly referred to as Meaningful Use.

The second track—Advanced APMS—is for providers who are participating in an approved value-based care program, such as Next Generation Model ACOs, Medicare Track 2 or 3 Shared Savings programs, or Comprehensive Primary Care Plus participants.  These programs are acceptable since providers take on “more than nominal” financial risk. The incentive for this track is reporting physicians receive a 5% bonus payment regardless of outcomes.

Advanced APMs are required to:

  • Base payments on quality measures
  • Make providers take on financial risk for the cost of care
  • Mandate the use of certified electronic health record technology

Medicare Advantage plans can qualify as Advanced APMs if they meet this criteria. Other examples of APMs include certain Medicare ACO and bundled payment programs.


What has changed so far?

The law has already affected the healthcare landscape and should continue to do so in the future, with the most obvious effect being the change in physician reimbursement. As MIPS progresses, so do the potential financial ramifications. Reimbursement penalties or bonuses increase every year, with up to a 9% payment adjustment in the year 2022. This is huge for organizations as the swing can change whole financial outlooks.

MACRA is also expected to help fuel market consolidation at the local level, forming larger systems with more clout in negotiations. In addition, the law will create a greater reliance on technology to handle care, leading to more e-prescribing which facilitates prescription use and the ability to track prescription trends. Look out for computer decision support systems to gain popularity, allowing standardization of care, including drug use.

As the demand for technology increases so will investment in the sector, which could disrupt the normal budgets of health systems. Their reaction most likely will be to trim the fat in other areas, with drug costs coming under more scrutiny.

Finally, value-based care usually results in a shift from brand drugs to generics and cheaper alternatives as health systems and providers see margins slip due to changes in reimbursement structure.


What does the future hold?

As for the future, MACRA is an open comment law, meaning CMS can alter it based on suggestions or if they feel a need to change direction. In 2017, CMS reduced requirements so providers were less likely to be penalized, while allowing more lead time to adjust to the program. 2018 was more of the same with CMS easing regulations, so if trends continue, one might expect similar cutbacks in future years. Despite the continual lowering of regulatory hurdles, there has been fierce opposition to the program, most notably from The Medicare Payment Advisory Commission (MedPac), which has called for the dissolvement of the program, pitching an alternate program instead. Even with the blowback, stakeholders should expect the government to push a volume to value agenda, tying reimbursement to outcomes in an attempt to lower rising healthcare costs.