On April 16, President Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The legislation is perhaps best known for its permanent repeal of the Medicare Sustainable Growth Rate (SGR). However, MACRA also enacts important changes to provider payments under Medicare, narrows the gainsharing prohibition, and extends funding for the Children’s Health Insurance Program (CHIP). This article summarizes some of the important issues for physicians and hospitals under this legislation.
SGR Repeal
Enacted as part of the Balanced Budget Act of 1997, the SGR was intended to stem the increase in Medicare payments for physician services by tying physician payment rates to the gross domestic product (GDP). When Medicare spending on physician services exceeded targets for a particular year, the SGR would result in an automatic negative update to the Medicare Physician Fee Schedule in the following year. For example, before the passage of MACRA, physicians faced a 21 percent fee cut that would have gone into effect April 1. However, despite significant angst over the years, Physician Fee Schedule reductions have rarely been implemented. Since 2003, Congress has passed 17 short-term stopgap bills to prevent such cuts. But all it was really doing was “kicking the can down the road.”
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