Is 2014 the Year? Congressional Committees Pass Legislation to Repeal SGR

Ellen Riker
Senior Vice President

When chatter surfaced earlier this year about repealing and replacing the Sustainable Growth Rate (SGR) formula that determines Medicare payments to physicians, those who follow the issue were understandably skeptical. Talk about doing this has been an annual event here in Washington. But, this year brought bi-partisan and bi-cameral agreements on the issue, starting in the summer with the passage of a bill by the House Energy and Commerce Committee.  Then, on December 12, 2013, the House Ways and Means Committee and the Senate Finance Committee passed very similar bills to deal with this problem.  The bills passed by the two Committees are very similar with the main difference being that the Ways and Means Committee bill provides a 0.5% update in physician fees for three years followed by a freeze in fees for seven years.  The bill passed by the Senate Finance Committee would freeze fees from 2014 – 2023.

Starting in 2017, the bills establish a Value-Based Performance Incentive Program (VBP), which consolidates and makes changes to the existing Medicare quality programs.  Under the VBP, physician performance will be assessed in four categories: 1. Quality reporting - using PQRS measures, 2. Resource Use - based on CMS’ Value-Based Modifier program’s cost measures, 3. EHR meaningful use, and 4. Clinical practice improvement activities – activities to help transition providers to Alternative Payment Models, such as Accountable Care Organizations and Medical Homes.  Funding for the incentive program in 2017 will equal 4% of Medicare spending of professionals eligible to participate in the program increasing to 12% in 2021.  Providers will be assessed and receive bonus payments or adjustments based on a composite score determined by performance in all 4 categories.

The bill also authorizes an annual 5% bonus payment for providers participating significantly in Alternative Payment Models (APMs) that involve quality measurement and risk of financial loss from 2017 - 2022.  Professionals meeting these requirements will be excluded from the bill’s Value-Based Incentive Program.

For five years, the bill provides $15 million a year for the further development of quality measures and $25 million is provided annually for technical assistance to help smaller practices improve their VBM scores or to transition to APMs.

Given the bipartisan support for the effort and a seeming change of tide on what to actually do about the SGR, it seems that maybe 2014 will be the year for big policy change. With the Congressional Budget Office’s score of repealing the SGR on blue light special – a true bargain at $116 billion  - it may be easier than ever for lawmakers to come together. Let’s just hope that trying to find a way to pay for it won’t turn out to be the Grinch who Stole Medicare physician payment reform.

Lisa Ellington

Big Thinkery, LLC, 1011 Kenilworth Court Northwest, Concord, NC, 28027