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Understanding MACRA: A Simple Guide to Complex Health Insurance Changes

Congress and President Obama signed the Medicare Access and CHIP Reauthorization Act (MACRA) into law on April 6, 2015, a bipartisan effort with sweeping repercussions on how Medicare calculates physician fee schedules. This updated reimbursement system, also known as the Quality Payment Program (QPP), now pays medical providers based on the quality and effectiveness of their care.

By rewarding and penalizing medical professionals based on their performance – not the sheer number of procedures and services they perform – lawmakers intended MACRA to reduce the overall cost of healthcare and significantly improve patient outcomes. While successful in many ways, MACRA has also triggered newer complications, sparking frequent legislative revisions and contentious debates.

Understanding the Legislative Background of MACRA

Medicare paid $138 billion to participating physicians nationwide in 2014, accounting for 22% of its total annual spending and nearly tripling costs since 2000. To counter these expenses, the federal government enacted MACRA, repealing the long-standing Sustainable Growth Rate (SGR) system and replacing it with newer models designed to satisfy patient and physician advocacy groups alike.

Physician reimbursement under Medicare has always been contentious. After the program’s creation in 1965, physician interest groups successfully lobbied for “customary fees” typically provided by private insurers over fixed government Medicare stipends. However, this codified language resulted in widespread fraud and excessive billing, spurring repeated attempts at restructuring Medicare payment protocols over the years.

Following sustained backlash over the SGR, Congress passed MACRA through an overwhelmingly bi-partisan effort in 2015. This ever-evolving measure rewards physicians for the strength and outcomes of their individual services, disincentivizing a prevailing “quantity over quality” mindset in many healthcare environments.

MACRA and Health Insurance Coverage 

The federal government implemented MACRA to transform Medicare’s fee-for-service practices into adjustable payments based on the following:

  • Performance metrics
  • Patient experiences
  • Patient outcomes

While MACRA allows physicians to choose between two payment systems, each heavily incentivizes healthcare facilities to improve and expand electronic health records (EHRs) management.

EHRs have always allowed for quick updates to medical charts, transference of digital prescriptions to pharmacies, and remote access to patient data. However, many older EHR systems imposed limited flexibility on the exchange and interpretation of data from outside sources. Much of the language in MACRA promotes the evolution of EHRs and the development of effective health IT policies, all while stressing a primary focus on patient outcomes.

How MACRA Impacts Insurance and Healthcare 

Under MACRA, the Centers for Medicare and Medicaid Services (CMS) pays medical professionals based on the quality and effectiveness of their services. This new Quality Payment Program (QPP) has implemented the following changes:

  • Repealed the SGR system contested by most doctors
  • Changed the way Medicare rewards physicians for “value over volume”
  • Allows clinicians to choose between Merit-Based Incentive Payments Systems (MIPS) or alternative payment models (APMs)

Since establishing the framework in 2016, the CMS has continuously expanded and tightened MACRA regulations. These ever-shifting protocols have increased the overall reported quality of care, reduced cost-sharing for some covered services, and expanded patient access by encouraging more physicians to participate in Medicare.

Comparing Health Insurance Models Pre- and Post-MACRA 

Congress wrote the SGR system into the Balanced Budget Act of 1997 to counter spending growth driven by long-standing fee-for-service Medicare payment models. Under the SGR, physicians whose spending exceeded annual limits would trigger automatic reimbursement penalties. 

However, almost all parties involved – patient advocacy groups, doctors, the CMS, and Congress – eventually grew frustrated with the SGR and advocated for its repeal.

In response to this backlash, MACRA included a two-part QPP system:

Merit-Based Incentive Payment System (MIPS)
Advanced Alternative Payment Model (APM)
Almost all Medicare fee-for-service providers
Clinicians willing to bear a higher financial risk (with higher reward potential) and use certified EHR technology
Incentives and Penalties
Higher or lower payments based on a composite performance score measuring:

– Quality
– Cost
– Use of approved EHR
– Clinical practice improvement activities

Exceptional cases receive up to 10% payment bonuses
– 5% annual lump sum bonus
– Shared savings and losses
– Quality measures comparable to MIPS
– Exempt from MIPS

Considering the stringent eligibility requirements of APMs, over 90% of Medicare clinicians participate in MIPS. While these post-MACRA protocols have yielded positive results, they tend to disadvantage smaller facilities with fewer Medicare patients, whose medical outcomes have less of a combined effect on provider bonuses.

How to Navigate Health Insurance Post-MACRA 

MACRA primarily decides how Medicare-participating clinicians get paid. However, it also added an additional income bracket for Medicare Part B and Part D, raising premiums for some beneficiaries. 

Furthermore, it eliminated post-2020 enrollment in Medigap Plan C and Plan F, the only two supplementary programs with coverage for Part B deductibles and excess charges. 

Whether enrolling in Medicare for the first time or switching to a more favorable policy, consider the following:

  • Consider Medicare Advantage. Compare various Medicare Advantage Plans against the uniform costs and coverages offered by Original Medicare.
  • Factor in Medigap access. Considering restricted Medigap access, some beneficiaries might find the best value-to-cost protections in a Medicare Advantage Plan with built-in prescription drug coverage and other bonus benefits.
  • Review the costs. With the change in Part B and Part D premiums, you should shop around to ensure you’re getting the best bang for your buck. 

All in All 

Since Medicare’s inception in 1965, physicians, politicians, and patient advocacy groups have struggled to agree upon the program’s payment protocols and bylaws. Following several contested revisions of Medicare’s original fee-for-service system, Congress and President Obama signed MACRA into law in 2015. MACRA disincentivized a “quantity over quality” healthcare attitude and rewarded doctors for providing quality care with positive outcomes.

While MACRA has yielded many positive results, it has triggered Medicare premium increases for some people in higher income brackets and limited access to specific Medigap plans. If you have questions or concerns about how these measures affect your policy, call 1-800-MEDICARE to discuss your options with a licensed professional.

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