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Understanding MACRA and the New Rules of Medicare Physician Compensation - Part I

Big changes are underway regarding Medicare physician compensation: Passed a few years ago by Congress and signed into law by President Obama, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) has already begun its years-long process of implementation. It’s time to get acquainted with MACRA and what it means for you and your profession.

Comprising a complex, far-reaching group of regulations, MACRA is set to have a wide impact on Medicare physician compensation, establishing “new ways to pay physicians for caring for Medicare beneficiaries,” reports the Network for Regional Healthcare Improvement (NRHI).

At its most fundamental level, MACRA eliminates the annual “Doc Fix,” also known as the Sustainable Growth Rate (SGR) provisions. Originally designed to “significantly cut physicians salaries,” as Jason Shafrin writes at Healthcare Economist. Knowing that these SGR provisions were inherently a bad idea — and a potential disaster to the healthcare industry — Congress reversed them every December for almost 20 years in an effort to keep budgets in line but also to avoid committing a permanent rate.

The new MACRA rules change all of that, while placing more of a burden on physicians to understand just how their Medicare-related payments will be decided. “What [MACRA] means is that Medicare is going to change on the doctor side,” as Kaiser Health News' Julie Rovner told NPR, explaining the new law as a move to pay doctors “according to outcomes, to how well they do to how healthy they keep their patient.”

Basing Medicare payments on value rather than volume, MACRA also scales year to year, meaning that the performance reported in one year will decide rates for the next. For instance, the Medicare compensation that physicians receive in 2019 will be decided on how they perform this year, in 2017.

That’s the broad view. Let’s take a closer look at the payment deals in an effort to better understand MACRA and what it means for you and for your future Medicare-based compensation.

Understanding MACRA: MIPS & Advanced APMs

MACRA decides Medicare compensation by letting physicians choose from two payment tracks:

  • The Merit-based Incentive Payment System (MIPS) 
  • Advanced Alternative Payment Models (APMs)

What’s the difference? Physicians who “qualify for the APM payment track can earn favorable financial rewards,” writes Krista Teske for The Advisory Board Company. “However, only clinicians or groups who are part of risk-based payment models will qualify, thus incentivizing a shift toward risk.”

According to the American Academy of Family Physicians (AAFP), most physicians — specifically, those “who participate in Medicare, provide Medicare Part B services, and are not part of a recognized Advanced APM” — will participate in the Merit-based Incentive Payment System (MIPS).

Stay tuned for part 2 in this series.

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