Medicare Changes to Reward Quality and Cost-Effective Care

This article discusses recent changes in Medicare.

The Department of Health and Human Services recently released a final rule governing Medicare payments,1 implementing a 2015 law that eliminated the sustainable growth rate formula, which will give prescribers enhanced flexibility to meet requirements that tie Medicare payments to patient care.

MACRA (the Medicare Access and CHIP Reauthorization Act) will implement a Quality Payment Program to reward providers for high-quality care.

Some points:

  • Makes the qualifying individual (QI) program that subsidizes Medicare Part B premiums who earn 120% to 135% of federal poverty level permanent.
  • MACRA replaces the sustainable growth rate (SGR) formula, which was a flawed formula resulting in yearly cuts that Congress voted every year for 13 years to temporarily delay until the next year. As a result, physicians were facing a 21% cut in Medicare physician fees in 2015.
  • Extends the Medicare Advantage special needs plans (SNPs) through the end of 2018.
  • Extends the Children’s Health Insurance Program (CHIP) for 2 years.
  • Removes social security numbers from newly issued Medicare cards by April 2019 with new cards issued no more than 4 years later.
  • Cuts Medicare spending by decreasing funding to supplemental Medicare plans (Medigap plans) from 2020 onward. You can keep the one you have but new ones will not be available.
  • Higher premiums for seniors who make more than $133,500 starting in 2018.
  • New quality measures that reward quality over quantity in care.

Note the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) costs $214 billion and is projected to add $141 billion to the deficit.


1. Department of Health and Human Services. Medicare Program; Merit-based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models.