You’ve seen the acronym MACRA and are probably aware that this will affect Medicare Supplement plans in 2020, but do you know why? If you want to take the time, here’s the link to the official MACRA posted on www.congress.gov. But as a busy insurance agent you most likely don’t have the time to dive into the details so below is a brief overview and links to resources you can reference in the future.
What is MACRA?
MACRA stands for the Medicare Access and CHIP Reauthorization Act of 2015 and there’s a lot more involved than just Medicare supplements. One of the main purposes is to establish new ways to pay physicians caring for Medicare beneficiaries.
Currently, Medicare Part B reimbursement rate for physicians is determined by the Sustainable Growth Rate (SGR) formula, originally designed in the 1997 Balanced Budget Act (BBA). MACRA will repeal the SGR formula initiated under the BBA by implementing a Merit Based Payment System (MIPS). Without getting into the details and overloading your brain with more acronyms, the new formula, MIPS (under MACRA), will pay physicians based on a system of value – factoring in quality, improvement, and effectiveness of care physicians provide rather than being paid on volume and factoring in the SGR formula. To simplify further, physicians will be paid based on the quality of care provided versus the quantity of care.
How MACRA Affects Medicare Supplement Plans
Under MACRA, federal law will prohibit the sale of any medical policy that provides coverage of the Part B deductible to a newly-eligible Medicare beneficiary. The reason is Part B coverage offers first dollar coverage*, which is what MACRA is trying to reduce in order to increase cost sharing.
The elimination of Part B first dollar coverage means that Medicare Supplements Plan F, High Deductible Plan F, and Plan C will no longer be available to those who are newly-eligible on January 1, 2020. Newly-eligible is defined as “anyone who: (a) attains age 65 on or after January 1, 2020, or (b) who first become eligible for Medicare benefits due to age, disability or end-stage rental disease on or after January 1, 2020.”
What makes MACRA unique is Medicare Supplement plans will not be replaced or eliminated. In fact, current Medicare beneficiaries can still have, purchase, or switch to a Plan F, High Deductible Plan F, or Plan C that is offered by Medicare Supplement carriers. MACRA only affects those new to Medicare.
Which Medicare Supplement Plans Will Be Eligible For Guaranteed Issue?
Since Plan F and Plan C will be eliminated to newly-eligible Medicare beneficiaries, Plan G and Plan D will become two of the guaranteed issued plans, under the guaranteed issue rights. In addition to these changes, Medicare Supplements will also offer a High Deductible Plan G to replace the High Deductible Plan F and some sales will be accepted by carriers as soon as June 2019.
Have more questions about MACRA?
We gave you a very brief overview of MACRA and how the law will affect Medicare Supplements. If you have more questions check out this frequently asked questions guide from the NAIC. Any further questions feel free to reach out to the Marketing Department or post a comment below.
*Just a quick side note on First Dollar Coverage: The insurance company will typically pay its share of the expense from the first paid service the patient receives under first dollar coverage. However critics claim that this places unnecessary strains on the healthcare system and drives up the prices because of those with first dollar coverage overuse health services. Others argue that without first dollar coverage patients put off visits because they have to pay out of pocket which can lead to a more serious diagnosis and large costs that could have been preventable.
Here’s a few press releases about MACRA from recent carriers that will also answer your questions:
From CMS – https://www.cms.gov/medicare/quality-initiatives-patient-assessment-instruments/value-based-programs/macra-mips-and-apms/macra-mips-and-apms.html
MACRA Act Summary – https://www.congress.gov/bill/114th-congress/house-bill/2
NAIC FAQs about MACRA – https://www.naic.org/documents/cmte_b_senior_issues_related_macra_faq_2018.pdf
Article Posted from NRHI – https://www.nrhi.org/work/what-is-macra/what-is-macra/
First Dollar Coverage – https://www.investopedia.com/terms/f/first_dollar_coverage.asp
Balanced Budget Act 1997 – https://www.cms.gov/medicare/medicare-fee-for-service-payment/sustainablegratesconfact/downloads/sgr2015p.pdf