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Answering Common Questions about the Medicare Access and CHIP Reauthorization Act

February 24, 2016
On April 16th, 2015, President Obama signed the Medicare Access and CHIP Reauthorization Act into law. This legislation will create significant changes within the Medicare and CHIP programs. Wonk Tank has answered some common questions about the law here.

What is MACRA?

Estimated Federal Fiscal Year Costs or Savings under H.R. 2<br/> Source: Obamacarefacts.comEstimated Federal Fiscal Year Costs or Savings under H.R. 2
Source: Obamacarefacts.com

The Medicare Access and CHIP Reauthorization Act, or MACRA, is a law (formerly HR 2) that passed the House and Senate with a bipartisan majority, and was signed by the President in April, 2015.[1], [2] It has several provisions, including one to reauthorize the Children’s Health Insurance Program (a program offering health coverage to kids whose families are low-income but do not qualify for Medicaid). CHIP will now continue to exist through 2017,[3] after which the exchanges are intended to absorb the program’s beneficiaries and provide affordable, comprehensive coverage to current CHIP kids.

Other provisions affect Medicare’s payment of physicians. One will repeal the Sustainable Growth Formula (SGR) which was intended initially to be a way of controlling physician cost growth and cutting physician fees when costs grew too high, but has never been effectively utilized.[4] MACRA then schedules 0.5 percentage increases in physician payments per year until 2019, after which physicians are enrolled in an alternative payment model of some kind. If physicians choose to continue receiving FFS payments after 2019, their payments will remain flat at the level established for 2019 payments. [5]

SGR Repealed<br/>Source: CBS News

How will this affect Medicare?

MACRA essentially provides a way for Medicare to finally move away from the system of fee-for-service payment that had been used for decades, which incentivized doctors to provide volume (e.g. lots of tests, prescriptions, and procedures) while not necessarily ensuring quality care. This legislation strongly encourages doctors to enter payment models that measure their care based on quality, and forces them to adopt risk based upon their level of spending.  As a result, beneficiaries may see a decrease in the number of referrals and tests that their doctors offer, and an increase in services that offer quality such as longer office visits, more availability, and more effective follow-up care. MACRA will also be the first time that some of these alternative payment models are rolled out nationwide, which will serve as a test of whether or not they will really be able to control costs and affect practice habits.

What is an alternate payment model?

Medicare providers have historically been paid based upon a fee-for-service model, meaning that a doctor would be paid for each individual procedure, office visit, or other service that he provides. This offers doctors an incentive to see more patients and order more tests than may otherwise be recommended or used. Alternate Payment Models (APMs) are models of payment that reimburse doctors based upon quality care or other metrics. MACRA’s definition of an APM is a model of payment that was expanded based upon the innovative models created by the Center for Medicare and Medicaid Innovation (e.g. the Comprehensive Primary Care initiative), a demonstration program, or an Accountable Care Organization (ACO). These programs measure quality, use EHR technology, bear financial risk or use a medical home model, and have an increasing percentage of payments linked to value. [6]

Examples of these programs are the Comprehensive Primary Care initiative, and the Merit-Based Incentive Payment System (MIPS). The Comprehensive Primary Care initiative is a program through which primary care practices receive population-based care management fees, and have opportunities to share risk. These practices are expected to provide high levels of coordinated care and risk-stratified care for patients. MIPS combines together several programs–the EHR meaningful use system, the Physician Quality Reporting System, and the Value Based Payment Modifier program. Through MIPS, physicians will be assigned a score on a 100 point scale relating to aspects of their practice such as quality, resource use, practice improvements, and EHR use. Their Medicare payments will then be adjusted based on these scores. [7]

How does this affect Medicaid and CHIP?

Medicaid will go mostly unaffected by MACRA. However, CHIP is extended until 2017, which will allow researchers and the Department of Health and Human Services more time to assess whether or not CHIP kids can be reasonably absorbed into the exchanges.[8] Currently, it is unclear whether these exchanges could provide kids with the quality of care they would receive in a state CHIP program at a price that’s affordable for their families.

How will this affect me, if I have private insurance?

This legislation will not affect you much if you have private insurance, at least initially. Due to realigned Medicare incentives, you may notice some slight practice differences for your doctor, especially if you receive care from a primary care doctor and not a pediatrician (who wouldn’t see any Medicare patients, and so would not be affected by the law). However, private plans often follow the government’s lead when innovation is introduced. As a result it is possible that if the alternate payment models used in MACRA work to control costs, they will be adopted by private insurers.

Does MACRA do anything else?

MACRA includes other miscellaneous provisions. One provides $100 million in technical support to small practices. Another provision helps to offer additional funding to community health centers, teaching health centers, and the national health service corps, which were given funding under the ACA which was set to expire in 2015. [9]


  [1] “New Legislation to Transform Medicare Physician Payment”, American Academy of Family Physicians, February 22, 2016, http://www.aafp.org/practice-management/payment/medicare-payment.html.


  [2] Patrick Conway, Tim Gronniger, Hoangmai Pham, et al, “MACRA: New Opportunities For Medicare Providers Through Innovative Payment Systems (Updated)”, Health Affairs Blog, February 22, 2016, http://healthaffairs.org/blog/2015/09/28/macra-new-opportunities-for-medicare-providers-through-innovative-payment-systems-3/.


  [3] “Medicare Access and CHIP Reauthorization Act (MACRA)”, California Academy of Family Physicians, February 22, 2016, http://www.familydocs.org/payment-reform/macra.


  [4] “Medicare Physician Payment Reform: Understanding how MACRA will impact physicians”, American Medical Association, February 22, 2016, http://www.ama-assn.org/ama/pub/advocacy/topics/medicare-physician-payment-reform.page.


  [5] “Frequently Asked Questions: Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)”, American Academy of Family Physicians, February 22, 2016, http://www.aafp.org/practice-management/payment/medicare-payment/faq.html.


  [6] “Frequently Asked Questions: Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)”, American Academy of Family Physicians, February 22, 2016, http://www.aafp.org/practice-management/payment/medicare-payment/faq.html.


  [7] “Frequently Asked Questions: Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)”, American Academy of Family Physicians, February 22, 2016, http://www.aafp.org/practice-management/payment/medicare-payment/faq.html.


  [8] “Medicare Access and CHIP Reauthorization Act (MACRA)”, California Academy of Family Physicians, February 22, 2016, http://www.familydocs.org/payment-reform/macra.


  [9] “Medicare Access and CHIP Reauthorization Act (MACRA)”, California Academy of Family Physicians, February 22, 2016, http://www.familydocs.org/payment-reform/macra.
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