Proposed SGR Fix – It’s Different This Time

Year after year, physicians live for months with the uncertainty and angst of threatened, often draconian, Medicare reimbursement cuts born out of the Sustainable Growth Rate (SGR) budgeting formula.  And every year, intense lobbying and complex negotiations lead to short-term patches that maintain or slightly increase reimbursement rates—these solutions are commonly referred to as the Doc Fix. This year’s fix is set to expire at the end of March, which would leave physicians facing a 23.7% reduction—but on Thursday, a bipartisan piece of legislation proposed a repeal of the SGR and the creation of a new payment model that would reward quality, rather than volume of care provided. All that’s left now is to figure out how to fund the $128 billion price tag over the next 10 years.

Although I haven’t read the 200-page bill, the following is a summary of its major provisions:

  • The SGR fix would increase Medicare physician reimbursement rates by 0.5% annually for the next 5 years, i.e., through 2018. This would provide income predictability and stability for providers.
    • 2018 rates would be maintained through 2023.
    • From 2024 on, physicians who participate in Alternate Payment Models would see a 1% annual increase; non-participants would receive 0.5% increases.
  • It would create a new payment system called MIPS (Merit-Based Incentive Payment System) by 2018, which would roll up meaningful use, PQRS, and the Value-Based Payment System into one program that would tie physician reimbursement to quality and cost. Physicians would be assessed in 4 areas:
    • Quality: based on current and future quality measures from the PQRS and Meaningful Use programs
    • Resource use: assessment of cost structure using a method similar to that currently in use in the Value-Based Payment Program
    • Meaningful Use: satisfying current meaningful use requirements demonstrated by use of a certified EHR
    • Participation in practice improvement activities: a new area of measurement related to clinical improvement.
  • Physicians would receive a composite score on all of the above.  Based on total score relative to other physicians, they would receive either:
    • A negative adjustment of up to 4% in 2018, 5% in 2019, 7% in 2020, and 9% in 2021
    • No adjustment
    • A positive adjustment of as much as 3 times the maximum negative adjustment for that year.
  • The new payment system would provide additional incentives (5% per year from 2018 to 2023) to providers who derive a substantial part of their income from alternative payment models that base payment on quality assessment and financial risk sharing rather than volume of services provided, (e.g., ACOs, Medical Homes, or other new healthcare delivery models).
  • It would encourage cost savings by incentivizing care coordination and adherence to Clinical Decision Support (CDS) mechanisms and Appropriate Use Criteria (AUC) aimed at reducing unnecessary testing—specifically in the area of advanced diagnostic imaging:
    • Effective 2017, physicians would be paid for advanced diagnostic imaging only if the claim shows consultation with CDS mechanisms and AUC.
    • Effective 2020, the 5% of physicians with the lowest adherence rates would require prior authorization for such tests.
  • Beginning in 2015, patients would have access to quality and cost data regarding individual physicians that would be made available on the Physician Compare Site.

MIPS would rely heavily on quality measurement, data sharing, and interoperability, so one thing is abundantly clear:  Robust EHRs and extensive data management capabilities will be critical tools for physician success in the future, even more so than they are today.



4 thoughts on “Proposed SGR Fix – It’s Different This Time

  1. You left out deleting the penalty for delaying EHR implementation, I wonder why?

    [Evan Steele Says:]
    The bill does not affect meaningful use until 2018–it does not eliminate the meaningful use penalties that are in effect for 2015, 2016, and 2017. Beginning in 2018, meaningful use would become part of the Merit-Based Incentive Program, and the 3% to 5% penalties that were associated with the initial meaningful use program would be replaced by a new set of penalties based on a broader set of requirements that include meaningful use. Those penalties grow from 4% in 2018 to 9% in 2021.

  2. What are alternative payment models?

    [Evan Steele Says:]
    Alternative Payment Models (APMs) are arrangements other than straight fee-for-service reimbursement that typically involve risk sharing and quality measurement, such as an Accountable Care Organization or Patient Centered Medical Home. The bill establishes a process for the review of newly created models and assistance for physicians who want to become involved in APMs.

  3. By 2018 we will have fallen about 10% behind inflation even if the inflation rate remains at the current abnormally low rate. By 2023 we will be about 25% behind.

    Different isn’t necessarily good, it is just better than the existing alternative.

    However, I appreciate you providing an easy to read summary.

  4. Totally ridiculous-not being paid for necessary tests according to diagnosis is critical. Once again not everyone will benefit from proposal – doctors pitted against doctors. Penalties!! Why the hell would anyone see Medicare patients. Meaningful Use concept is a joke – they more or less have nothing to do with reality for specialists. One meaningful use measure in MU2 requires 5% of patients to use portal to get their records. REALLY?? And what do we do if they do not use computers, or only use mail that they put a stamp on. And how do we force the other people to participate? Another stupid idea by our pals in D.C. Patients should have option to use the portal but it should not be mandatory. Vague quality measures being suggested, but we do not know what they are. I have a proposal. It is time for physicians to stand up and have some pride and say we will participate in Medicare with its already obscenely low rates, BUT will not accept one more cut. Any more cuts, we all go non-par. Patients will scream and then vote politicians out of office. After all, only doctors can take care of sick people. The only reason Medicare costs are going up is that more people are in Medicare. People are living longer and still enter at age 65. Dialysis patients and disabled people were added later on. Therefore, many more people in the Medicare system. Deductibles hardly go up year after year.

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