Medicare Access and CHIP Reauthorization Act of 2015: What You Need to Know

On April 16, 2015, President Barack Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), legislation which permanently repeals the Sustainable Growth Rate (SGR), establishes 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 (CHIP).

MACRA’s passage into law is a culmination of over two years of close collaboration with members of Congress on both sides of the aisle and a broad array of stakeholders, including the ACC. The law touches upon many areas across the health care spectrum.

As with any law, the language of MACRA is drafted with a high degree of flexibility to allow medical specialty organizations such as the ACC to work closely with the Department of Health and Human Services (HHS) through the regulatory process to establish how the law will function. The passage of the law represents only the first step in a long process, albeit an important one. Stay tuned to the ACC Advocate and for more detailed information as the process unfolds.

MACRA Timeline:

Beginning July 1, 2015, clinicians will begin receiving a 0.5 percent payment increase to Medicare payments.  This payment increase will continue annually until Dec. 31, 2018.  Starting in 2019, clinicians will choose from one of two pathways: the Merit-based Incentive Payment System (MIPS) or Alternative Payment Models (APMs). 

July 1, 2015                         Annual 0.5 percent payment increase begins

Dec. 31, 2018                      Annual 0.5 percent payment increase ends

Jan. 1, 2019                         Start of MIPS and incentives for participating in APMs

What MACRA Does:

  • Repeals the SGR formula used for determining Medicare payments to clinicians.  The SGR henceforth does not exist.
  • Establishes a period of positive payment increases by providing an annual 0.5 percent payment increases for clinicians beginning July 1, 2015, and ending Dec. 31, 2018, to support a predictable transition from fee-for-service to quality-based payment.
  • Promotes the transition to quality-based payment by implementing two payment pathways for clinicians beginning in 2019: the new MIPS or an APM.
  • Support participation in APMs by providing annual payment increases of 0.75 percent to those participating in a qualifying APM in 2026 and beyond, and 0.25 annual payment increases to all other clinicians.

Merit-based Incentive Payment System

Those eligible professionals (physicians, physician assistants, nurse practitioners, and clinical nurse specialists) who elect to participate in MIPS will receive annual payment increases or decreases based on their performance. MACRA streamlines the three existing quality reporting programs into one system. Instead of having three reporting systems with three separate reporting deadlines, there will be one system. Under MACRA, these three quality reporting programs no longer exist: the Physician Quality Reporting System (PQRS), Meaningful Use (MU), and the Value-Based Payment Modifier (VM). The total amount of penalties under MACRA is less than the combined total amount of penalties of the previous disjointed reporting programs.

Under MACRA, each clinician will receive a composite score (of 0-100) based primarily on four categories. 

  • Clinical quality
  • Meaningful use
  • Resource use
  • Clinical practice improvement

The four categories will utilize quality measures already in place under the existing Medicare quality reporting programs. The clinical quality category will use measures currently reported under PQRS, the MU category will use measures currently used under the Electronic Health Record (EHR) Incentive program, and the resource use category will utilize measures currently used under the VM. Additional measures will be defined and further developed through the rulemaking process in close partnership with medical specialty societies, such as the College. 

The clinical practice improvement category will recognize clinicians for activities that contribute to advancing patient care, safety and care coordination. Activities include participation in an alternative payment model such as the patient centered medical home, participation in a qualified clinical data registry, and the utilization of telehealth services. HHS will identify the activities that clinicians may choose to participate in to fulfill this portion of the composite score. For example, Maintenance of Certification has been discussed as a potential activity that would be available to clinicians as an option, but not as a requirement, for meeting this category.

Performance will be assessed against benchmark composites issued to clinicians at the beginning of a performance year based on the prior year’s performance. Clinicians with the highest MIPS composite score could earn additional “exceptional performance” payments. Those clinicians receiving a scoring below the threshold will receive a reduced payment. 

The maximum negative payment adjustment will start at 4 percent in 2019, gradually increasing to 9 percent in 2022 and beyond. Any penalties will be assessed on a graduated basis so that those closer to the benchmark receive a smaller penalty, while those further from the benchmark may be subject to the maximum adjustment. The maximum negative adjustments under MIPS are lower than the maximum negative adjustments allowed under the three current reporting programs (PQRS, MU, VM) combined. The payment adjustments under these individual programs will sunset at the end of 2018 and will not overlap with the MIPS adjustments.

Maximum bonus adjustments will begin at 4 percent in 2019, gradually increasing to 9 percent in 2022 and beyond. However, the possible percentage bonus may be increased by up to three times to incentivize growth in the number of high performers.

Under MIPS, there could be a scenario where all eligible professionals meet or exceed the benchmark composite. In this case, the Centers for Medicare and Medicaid Services (CMS) will proportionally distribute bonus funds so that larger bonuses go to the highest performers, while those closer to the benchmark receive a smaller bonus. To address this, $500 million annually from 2019 to 2024 is allocated toward awarding bonus payments for the highest performers. Additional opportunities for bonus payments are also available to those who demonstrate improvement from one year to another.

Alternative Payment Models

MACRA incentivizes participation in Medicare and private payer APMs. Clinical professionals who opt to participate in an APM and receive at least 25 percent of their Medicare revenue through an APM beginning in 2018 will receive a 5 percent payment bonus. In order to continue incentivizing movement toward APMs, the threshold for receiving the 5 percent APM bonus will increase to 50 percent of Medicare revenue, or combined Medicare and all-payer revenue received through an APM in year 2021. The threshold will continue to increase over time, reflecting the commitments made by CMS and private payers to move toward value-based payment models.

The patient centered medical home has been identified as one APM. Other models that incorporate quality measurement, the use of certified EHRs, and the assumption of substantial financial risk will be considered for the MACRA incentive. A Technical Advisory Committee will be created to review and develop APMs based on criteria developed through an open comment process.

MACRA recognizes that the administrative and financial responsibilities of participating in an APM have been a barrier to small practices. To address this issue, $20 million annually has been allocated to assist practices of 15 or fewer eligible professionals, and practices serving rural and underserved areas participating in an APM or clinical quality improvement activities under MIPS.

Other provisions

Among the other provisions included in MACRA are:

  • Reauthorization of funding for CHIP for two years through FY 2017.
  • Delays enforcement of the “two-midnight” rule until Oct. 1, 2015.  Until then, contractors may only review claims to probe and educate, and claims submitted before Oct. 1, 2015, will not be subject to post-payment reviews by Recovery Audit Contractors.  The “two-midnight” rule required patients spend at least two nights in the hospital to be considered inpatient for reimbursement purposes.
  • Prohibition of implementation of 2015 Medicare Physician Fee Schedule provisions requiring the transition of all 10-day and 90-day global surgical packages to 0-day global periods.
  • Expansion of the use of Medicare data for transparency and quality improvement by removing barriers and allowing for Medicare data to be provided to qualified clinical data registries to facilitate quality improvement.
  • Requirements that the HHS Secretary draft a plan for development of quality measures to assess professionals, including non-patient-facing professionals.
  • Declaration of a national objective to achieve widespread exchange of health information through interoperable certified EHR technology nationwide by Dec. 31, 2018.
  • Provision that will protect clinicians by preventing quality program standards and measures (such as PQRS/MIPS) from being used as a standard or duty of care in medical liability cases.

For additional questions, please contact

Keywords: Advisory Committees, Centers for Medicare and Medicaid Services, U.S., Certification, Electronic Health Records, Fee Schedules, Fee-for-Service Plans, Inpatients, Insurance, Health, Liability, Legal, Meaningful Use, Medicaid, Nurse Clinicians, Nurse Practitioners, Patient Care, Patient-Centered Care, Physician Assistants, Quality Improvement, Registries, Telemedicine, United States

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