How Does MACRA Affect My Medicare Plans?

What is MACRA?

In April 2015, MACRA was signed into law. MACRA made several changes to both Medicare and the Children’s Health Insurance Program (CHIP). Most of these started between 2018 and 2020.

There are several aims of MACRA, including:

• reducing Medicare spending
• increasing accountability for healthcare facilities
• encouraging high-quality care
• discouraging unnecessary doctor’s visits

Major changes include new rules about the payments and reimbursements physicians receive from Medicare. Different parts of Medicare are affected differently by the law, so your experience with MACRA regulations will depend on what parts of Medicare you use.

How does MACRA affect Medicare?

If you’ve been enrolled in Medicare for a few years, you might not realize that you’ve already seen a MACRA change. In 2019, the Centers for Medicare and Medicaid Services sent out new Medicare cards to all enrollees. The new cards don’t have social security numbers on them because this was a change required by MACRA. Other changes you might have noticed include:

• certain Medigap plans that are no longer available
• Medicare Advantage plan changes
• costs for Medicare Part B
• costs for Medicare Part D

Next we’ll go into more details about each of those changes.

Medigap

Medicare supplement insurance plans, often called Medigap, are plans from private insurance companies that help cover some of the out-of-pocket costs of Medicare parts A and B.

There are 10 different Medigap plans and each offers slightly different coverage. Commonly covered costs include:

• Part A deductible
• Part A coinsurance costs (including those for hospital and skilled nursing facility stays)
• Part B coinsurance costs
• emergency medical care while traveling abroad

Medigap plans saw the biggest changes under MACRA. One of the goals of MACRA was to cut down on unnecessary doctor’s visits, which in turn will reduce overall Medicare spending.

As a way of reaching this goal, MACRA regulations state that Medigap plans are no longer allowed to offer coverage for the Part B deductible. The Part B deductible in 2020 is $198.

This means that as of January 1, 2020, Medigap plans that include Part B deductible coverage can no longer be sold. The affected plans are:

• Medigap Plan C
• Medigap Plan F
• Medigap Plan F (high deductible)

However, this rule only applies to Medicare beneficiaries who became eligible after December 31, 2019. Even if you didn’t already have a Medigap plan, you can still buy or keep Plan C or Plan F if you were eligible for Medicare before 2020.

If you’re new to Medicare in 2020, you won’t be able to buy those plans. Instead, you can look into plans that are very similar to C and F. Popular options include:

• Medigap Plan D
• Medigap Plan G
• Medigap Plan N

The plans above don’t include coverage of the Part B deductible, but they do cover most of the other costs covered by Plan C and Plan F.

Medicare Advantage

Medicare Advantage, also called Medicare Part C, are plans sold by private insurance companies who contract with Medicare to provide coverage. Medicare Advantage plans cover all the same services as Medicare Part A (hospital insurance) and Medicare Part B (medical insurance), together often called original Medicare.

Medicare Advantage plans have their own pricing and networks, and many cover services original Medicare doesn’t. Advantage plans can also vary depending on where you live and the insurance company you choose.

The effects of MACRA on Medicare Advantage are still developing. Most initial rules weren’t made with Advantage plans in mind. However, there are some parts of MACRA that might make changes to Medicare Advantage, including:

• Merit-Based Incentive Payment System (MIPS). Under MIPS, healthcare providers are reimbursed at a higher rate for providing high-quality care. Providers receive bonuses for meeting quality goals.
• Alternative Payment Models (APMs). Like MIPS, APMs reward facilities for quality patient care. With an APM, providers are not paid under Medicare’s traditional fee-for service model but with a variety of different models. A 5 percent bonus is given yearly to participating facilities.

Medicare-approved providers can choose the path in which they wish to participate. As MACRA continues to be rolled out, Medicare Advantage plans might be considered an APM. If this comes to pass, prices and plan offerings for Medicare Advantage might see some changes.

Medicare Part B and Part D

Both Medicare Part B and Part D (drug coverage) come with monthly premiums.

Part B has a standard premium in 2020 of $144.60, while Part D premiums are based the plan you choose. However, you’ll pay more in premiums for both parts if you have a high income.

If you have a higher income amount, you’ll pay an added surcharge to your premiums. This added fee is called an income-related monthly adjustment amount (IRMAA). Any IRMAA you have will be based on your gross income from your income tax return 2 years ago. For example, 2020 rates will be based on your 2018 filing.

Before MACRA, there were five income brackets. MACRA added a sixth income bracket in 2018 for individuals who made between $133,501 to $160,000 per year. People in the added bracket will now pay a higher IRMAA than those who made between $107,000 and $133,500.

The brackets have changed slightly in 2020 to adjust for average incomes in the United States. The current income brackets and Part B premiums are as follows:

There are different brackets for married couples who file separately. If this is your filing situation, you’ll pay the following amounts for Part B:

• $144.60 per month if you make less than $87,000
• $462.70 per month if you make between $87,000 and $413,000
• $491.60 per month if you make greater than $413,000

Income brackets for the Part D premium in 2020 are as follows:

The takeaway

While many of the regulations of MACRA affect healthcare providers, Medicare beneficiaries will also notice a few changes. If you’ve been enrolled in Medicare for a while, changes that could affect you include:

• a new Medicare card without your social security number displayed on it
• a change to your IRMAA for Part B and Part D premiums if you make over $136,000 individually per year

If you first became eligible for Medicare in 2020, the change that affects you the most is around Medigap plan offerings.

Medigap plans are no longer allowed to cover the Part B deductible, so you won’t be able to buy Plan C, Plan F, or Plan F (high deductible). You can still purchase those plans if you were eligible for Medicare on December 31, 2019 or earlier.

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