NCPA - National Center for Policy Analysis

The Senate Should Not Rush Approving MACRA

April 9, 2015

Late last month, an overwhelming bipartisan majority in the House of Representatives approved the Medicare Reauthorization and CHIP Extension Act (MACRA), a fiscally irresponsible approach to increasing the amount the federal government spends on Medicare's physicians' services. Medicare's Physician Fee Schedule is tied to an inflation formula that is inadequate to pay physicians enough to keep seeing Medicare patients. While Congress has had to increase this amount every year, those increases have always been funded by offsets from other federalspending.

The bill faces a lot of pressure to pass the Senate next week, especially because Medicare will have to start paying doctors according to a significantly lower fee schedule on April 15. Therefore, the Senate needs to fix the bill very quickly before approving it, says NCPA senior fellow John R. Graham.

Graham offers the following recommendations:

  • Equalize payments for similar services performed in different settings ($30 billion) such as hospitals or physicians' offices.
  • Modernize Medicare Part A and Part B cost-sharing rules (up to $80 billion) by reforming deductibles, coinsurance and copays.
  • Restore "provider tax" threshold to reduce the incentives for states to tax hospitals in order to distribute that money right back to providers and then receive a federal match on that contribution ($10 billion to $75 billion).
  • Reduce Medicare coverage of beneficiaries' unpaid debts to hospitals by 25 percent ($35 billion) or eliminate entirely ($55 billion).
  • Encourage low-cost physician-administered drugs ($10 billion) by paying a flat fee instead of a markup on drugs for injection.
  • Introduce competitive bidding to determine payments to Medicare Advantage plans ($10 billion).

The first four alone should be enough to offset the necessary $141 billion. Of course, these expenditures are revenues to members of the Obamacare coalition that supported MACRA in the House of Representatives, which will resist losing them.

Source: John R. Graham, "Paying for the Medicare Doc Fix is Easy," National Center for Policy Analysis, April 8, 2015. 


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