It seems legislators are finally moving toward replacing the Medicare Sustainable Growth Rate (SGR), a payment model that has plagued physician reimbursements for nearly a decade.
Last Thursday, the Senate Finance Committee and the House Ways and Means Committee passed a resolution to stabilize physician Medicare payments until March, an effort that should postpone any cuts scheduled for 2014.
In the meantime, the two chambers are working on bills that would permanently repeal the SGR.
“The time has come for the temporary patches and trend of uncertainty to end. Now, Congress must move a permanent repeal of the SGR physician payment formula, which will bring security to providers and the millions of seniors who rely on Medicare for their healthcare,” said House Ways and Means Committee Chairman Dave Camp in his opening statement for the passing of H.R. 2810.
Medicare Patient Access and Quality Improvement Act
The bills, which go to vote early next year, would:
– Repeal the SGR
– Provide a 0.5% Medicare pay increase for physicians through 2017
– Consolidate existing payment incentive programs into the Value-Based Performance Incentive Program that would funnel payment increases to the highest-performing health professionals
– Provide a 5% bonus for physicians using alternative payment models that meet government benchmarks
– Require use of advanced diagnostic imaging
– Make provider payment data publicly available
– Set a 2017 deadline for electronic health record vendors to make their EHRs interoperable
The 0.5% payment increase was much sought after by physician groups, as initial proposals didn’t contain any Medicare payment increases over the next 10 years.
“This is much more than a fix,” said Rep. Sandy Levin of Michigan, the top Democrat on the House Ways and Means Committee. “This is an effort to create a new framework for physician payments in Medicare.”
However, although there is great momentum building for eliminating the SGR, lawmakers won’t be able to pass a bill before the end of the year. The 3-month patch is only a temporary fix meant to prevent Medicare payments from being slashed by 24%.
What is the Medicare SGR?
Legislated as part of the Balanced Budget Act of 1997, the SGR determines how much Medicare pays for physician services.
Under the SGR, total Medicare spending on medical services is supposed to follow a target path that is contingent on the rates of growth in physicians’ costs, Medicare enrollment and economic GDP.
If spending during the year exceeds the pre-determined SGR goal, then the payments physicians receive for services are supposed to be reduced the following year to get total spending back on track.
Flawed System
Congress originally expected the SGR to only slightly lower payment rates because, at the time, the volume and complexity of physician services were growing more slowly than expected.
But as growth picked up in the early 2000s, the SGR began to produce a 4.8% cut in payment rates, which was far more than anticipated. Since then, the payment cuts have jumped to almost 27%, forcing Congress to overturn the cuts every year.
The Cost of Repeal
The Congressional Budget Office’s recently announced the cost of permanently fixing the SGR might be cheaper than originally anticipated. The estimated 10-year cost of repeal would land somewhere around $116.5 billion instead of the $139.1 billion projected price tag.
Neither the Senate nor House bills include ways to fund the repeal, though, creating a hurdle for lawmakers wishing to do away with the SGR.
The resolution passed on Thursday gained the support of the American Osteopathic Association, the American Academy of Family Physicians, the American College of Radiology, the American College of Cardiology (ACC) and numerous other groups.
But not all medical societies were supportive of potential SGR repeals. The American Urological Association, American College of Surgeons and several other surgical groups urged congressional leaders to oppose the bills or postpone a decision.
The groups were primarily concerned with the Value-Based Performance Incentive Program and nonexistent Medicare payment increases in the bills.
Regardless of what both sides agree on, it looks like some much-needed change is coming to an inherently flawed payment formula. Hopefully, lawmakers will pass legislation that will support physicians during a year when reimbursements are anticipated to decline.
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