You’ve seen the acronym MACRA and are 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, the 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 it even 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.
Should you enroll your clients already in Medicare in a Plan F, High Deductible F, or Plan C? You can, but keep in mind there are no new or younger 65 year olds coming into the plan, only clients that are getting older and using their plan more. So the carrier will need to balance the amount of claims with an increase in premiums. Now, there’s no guarantee that this will happen but it just makes sense as a future possible outcome. Consider enrolling your client into a plan that is an open book of business so they can avoid the possibility of a surprise increase in the future.
Which Medicare Supplement Plans Will Be Eligible For Guaranteed Issue?
Typically if your existing client on Medicare has a guaranteed issue period with a Medicare Supplement they can purchase Plans A, B, C, F, High Deductible F, K or L under the guaranteed issue right. But with Plan F, High Deductible F, and Plan C no longer being available for beneficiaries new to Medicare in 2020 there needs to be other plan options. For those new to Medicare on or after January 1st, 2020, Plan G, High Deductible Plan G, and Plan D can all be purchased under the guaranteed issue right.
Now here’s where the guaranteed issue right can be confusing. As I mentioned above, if your client has Medicare prior to 2020, their guaranteed issue plan options are only A, B, C, F, High Deductible F, K or L. If your client enrolls in Medicare on or after January 1st, 2020 their guaranteed issue plan options are A, B, D, G, High Deductible G, K and L. So you’ll need to keep this in mind when working with your clients to find them a Medicare Supplement plan under the guarantee issue right.
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 any further questions feel free to reach out to the Marketing Department or post a comment below.
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*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 are a few Frequently Asked Questions guides on MACRA from Medicare Supplement carriers:
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