Will mandatory Medicare payment cuts (due to the SGR) get repealed?

by 
March 2nd, 2014

Since 2003, healthcare providers have been dealing with the the short term patches to the Medicare payment system. After all this time, it now appears that Congress is making a move to address the ongoing issues with the Sustainable Growth Rate (SGR). This is the formula that has caused the payment problems with Medicare. Many professional organizations are endorsing the SGR Repeal and Medicare Provider Payment Modernization Act of 2014 (H.R. 4015, S. 2000) and encouraging providers to contact their congressional leaders and lend their support for this legislation. If you wish to join those lending their support CLICK HERE for a helpful tool to contact YOUR congressional leaders.

The SGR Repeal and Medicare Provider Payment Modernization Act of 2014 was developed jointly by the Senate Finance Committee, and the House Energy and Commerce and Ways and Means Committees. As of February 6, 2014, these bills have gone to committee which will consider it before possibly sending it on to the House or Senate. The most recent short-term "doc fix" is set to expire March 31, so time is short to avoid the scheduled 23.7% payment cut.

So just what is contained in this new legislation? The following are some key points:

• Repeal the SGR and replace it with a 0.5% increase for 2014 through 2018. Beginning in 2019, there will be a zero percent update for 2019 through 2023.
• Beginning in 2019, a new Merit-Based Incentive Payment System (MIPS) will consolidate the following incentive programs into a new payment system:
  • Electronic Health Records (EHRs) meaningful use incentive program,
  • Physician Quality Reporting System (PQRS), and
  • Value-Based Modifier payment program.
• "The Department of Health and Human Services (HHS) must publish by May 1, 2015, a plan for the development of quality measures for the incentive payment system and alternative payment model. That plan should be developed with physician feedback and updated annually. HHS will also receive $15 million annually through 2018 to develop such a plan. "The Secretary will contract with entities, which could include physician organizations, to develop priority measures and focus on measures that can be reported through an EHR," according to a summary of the bill."
• Providers participating in alternative payment systems such as accountable care organizations (ACOs) will receive a 5% bonus beginning in 2018.
• The Medicare Advantage payment system will be subject to a feasability study "addressing the feasibility of integrating alternative payment models" including the feasibility of a value-based modifier. This study must be done by July 1, 2015.

Although most parties seem to agree that an SGR fix is necessary, there is concern over how to pay for the $120-$126 billion the legislation is estimated to cost over the next ten years. But these costs should be compared to what has already been spent on all of the temporary 'fixes' enacted over the previous ten years. According to an article in California Healthline, "Since 2003, Congress has spent nearly $150 billion on short-term patches to stave off Medicare payment cuts scheduled under the SGR formula." Therefore, it seems like we'll save money just by fixing the problem once and for all.