Congress passed the Medicare Access and CHIP Reauthorization Act (MACRA) in 2015. This landmark United States healthcare legislation provided a revised way for the Centers for Medicare and Medicaid Services (CMS) to pay healthcare providers.
Although the significant changes governed healthcare providers’ payments, Medicare beneficiaries also saw changes in available Medigap plans and premium costs for Part B and Part D.
This article explores MACRA and how the act applies to Medicare Advantage and Medigap plans. It also looks at how MACRA affects a person’s Medicare costs.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
U.S. Congress passed MACRA in April 2015 and signed the act into law with effect from April 16, 2015.
The government designed MACRA to ensure more patient-focused care, rather than a fee-for-service system.
This person-centered approach encourages high quality patient care and efficiency over the volume of care that healthcare professionals provide.
MACRA aimed to:
- reduce Medicare spending and discourage unwarranted doctors’ appointments
- increase the quality of care a person receives
- make healthcare providers more accountable for the care they provide to individuals
Following MACRA, Medicare introduced new rules about paying and reimbursing doctors and other healthcare providers.
The changes that MACRA brought about may not be widely known, as only membership cards and specific plans saw variations.
Learn more about the changes below.
Changes to Medicare membership cards
One noticeable change was that MACRA called for Medicare to issue new membership cards to everyone with a Medicare plan.
The reason for this was to remove an individual’s Social Security Number (SSN) from the membership card to protect their personal and claim data.
Each person now has a Medicare Beneficiary Identifier (MBI), which Medicare uses for transactions such as billing and prior authorization.
Despite the MBI not containing any reference to a person’s SSN, the CMS advise that a person treats the number in the same way they would treat any other personally identifiable information.
Medigap and Medicare Advantage
If a person has original Medicare, they may also have a supplemental insurance plan known as Medigap.
MACRA primarily affects Medigap plans, but it also impacted Medicare Advantage plans, Medicare Part B, and Part D prescription drug plans.
Private health insurance companies administer Medigap plans. The policies help cover out-of-pocket costs, such as deductibles, copayments, and coinsurance.
Plan providers offer a range of 10 Medigap plans, all with varying levels of coverage. They typically include:
- the Part A deductible
- the Part A copayment
- the Part B coinsurance
- emergency healthcare costs while traveling abroad
Before MACRA, some Medigap plans also covered the Part B deductible, which in 2021 is $203.
Because MACRA aimed to reduce unnecessary doctor’s visits, the new regulations stated that Medigap plans could no longer cover the Part B deductible effective from January 1, 2020.
Plans that included coverage of the Part B deductible included:
If an individual had Medigap Plan C or Plan F before January 1, 2020, they can keep it and continue to receive coverage. Anyone who became eligible for Medicare before January 1, 2020, may also still purchase Plan C or Plan F.
However, those new to Medicare after January 1, 2020, may find alternative Medigap plans that provide similar cover to Plan C and Plan F. The most similar are Medigap plans D, G, and N.
A person can look for a Medigap plan on the Medicare website.
Private health insurance companies also administer Medicare Advantage, or Medicare Part C, plans.
By law, Medicare Advantage plans must provide at least the same coverage as original Medicare, but they frequently offer additional benefits.
Currently, individuals will not notice many MACRA-mediated changes to their Medicare Advantage plans.
However, for the healthcare providers who participate in Medicare Advantage plans, MACRA changes include the Merit-Based Incentive Payment Systems (MIPS) and the Alternative Payment Models (APM).
With MIPS, healthcare providers receive higher payments and bonuses in return for providing high quality patient care.
The APM system resembles MIPS in that it rewards healthcare providers for providing high quality care. Different versions of this model are available and require approval by the CMS. Providers using this model receive a 5% annual bonus.
Health providers participating in Medicare can currently choose between MIPS and APM, though this may change with further MACRA rulings.
Original Medicare’s Part B coverage has a standard premium of $148.50 in 2021. This premium applies to those with an individual income of $88,000 or below or a joint income of $176,000 or below.
Premiums for Part D depend on the plan someone chooses and the private insurer that administers the policy.
Both Part B and Part D premiums cost more if an individual has a higher income. This is called an income-related monthly adjustment amount (IRMAA).
Medicare bases IRMAAs on the amount a person filed on their income tax return from 2 years previously, so the surcharge someone pays in 2021 relates to their gross income filed in 2019.
Initially, five income brackets existed. In 2018, however, MACRA added another, meaning that filing taxes of $138,000–$165,000 per year as an individual or $276,001–$330,000 as a couple would result in a higher IRMAA.
A person would pay an additional $386.10 for their Part B premiums and $51.20 for their Part D premiums each month in the new bracket.
MACRA regulations mainly affect healthcare providers and how they receive payment, though people with Medicare may also notice some changes.
These changes include new Medicare cards without an individual’s SSN displayed and changes to the availability of some Medigap plans.
From January 1, 2020, individuals newly eligible for Medicare can no longer purchase Medigap plans C or F that cover the Part B deductible.
If an individual makes over $138,000 annually, as of 2018, they will see a shift in their IRMAA for Part B and Part D premiums because MACRA introduced a new income bracket.