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SGR Fix - Can This Really Be Happening?

By David Harlow posted Sun February 09,2014 12:03 PM


The Sustainable Growth Rate mechanism creating a zero-sum game for Medicare Part B reimbursement rates (dropping rates as volume picks up) has long been unsustainable, and so Congress has been messing around with short-term SGR fix legislation for years now. Every six to twelve months we've been hearing about the impending 20% or 30% Medicare pay cut about to hit physicians' pocketbooks, and the likely exit of physicians from the rolls of participating providers. However, the stars are now aligned in such a way that real progress seems likely: multiple powerful Congressional committees have signed off on a deal to replace the SGR rule with something more workable: A unified approach to financial incentives to physicians and other medical professionals who are Medicare participating providers intended to promote quality and enrollment in alternative payment arrrangements.

The full text of the bill will be available here: It's H.R. 4015. Check out the SGR fix section-by-section-summary and the websites of the House Energy & Commerce Committee and the Senate Finance Committee too. The substance of the proposal is discussed below.

How has this happened?

One of the sticking points involved in fixing this problem is that the price tag for a permanent SGR fix has long been seen as too high. How do we know the price? and How high is too high? you may ask. Well, Congress looks at CBO projections of the cost of implementing legislation over a ten-year planning horizon. When physician cost trends are on a steep increasing slope, that ten-year budget number looks bigger. When the trends flatten out a bit, the big number gets smaller. At present, that ten-year cost projection is "only" $125 billion, and Congress has spent over $150 billion on short-term fixes. So the time is right.

Sen. Max Baucus, Senate Finance Committee Chairman, has just been confirmed as U.S. Ambassador to China, and this is a problem he has wanted to solve for some time now, so the time was right on that front as well.

As is always the case at a time like this, the AMA and a number of specialty societies got involved in the conversation, and have ensured that their memberships are protected in various ways, as you can see from some of the bullet points below.

So, more details on the SGR fix (or doc fix) bill:

  • The current rule is repealed, which takes the April 2014 23.7% cut off the table.
  • Part B base professional payment rates will increase 0.5% per year in years 2014-2018 and then held flat through 2023.
  • All PQRS, VBM and MU (Physician Quality Reporting System, Value-Based Modifier and EHR Meaningful Use) incentives (carrots and sticks) will be sunset at the end of 2017 and net dollars added back into the base Part B payments to professionals.
  • From 2018 forward, a consolidated Merit-Based Incentive Payment System (MIPS) will govern incentive payments, based on assessment of professionals' performance in four categories (the first three will draw on existing measures; the fourth will require development of new measures):
    • Quality
    • Resource use
    • EHR Meaningful Use
    • Clinical practice improvement activities
  • MIPS quality measures will be updated annually, and professionals will be able to select what measures to use in rating them.
  • Each provider will be scored on a scale of 0-100 each year, and the composite score will be comapared to a performance threshhold to determine whether, and how much of, an incentive payment will be made, or a negative adjusment will be made.
  • An additional incentive payment for superstars will be available, capped at an aggregate amount of $500 million for each of the years 2018-2023.
  • GAO is to issue MIPS evaluation reports in 2018 and 2021.
  • Technical assistance will be available to small practices (<15) to help improve MIPS performance or transition to alternative payment models (APMs), with priority given to low-performing and rural practices, and some technical assistance funding specifically reserved for practices in health professional shortage or medically underserved areas.
  • From 2024 on, professionals participating in certain APMs will receive annual updates of 1% while everybody else gets 0.5% updates. (Providers who recieve "significant" payments through APMs will not be eligible for MIPS payments.)
  • Professionals who make a "significant" portion of their revenue through APMs with downside financial risk and a quality component get a 5% annual bonus in 2018-2023. Patient-centered medical home APMs are exempt from the downside risk requirement. 
  • APM and quality measure development and review processes are spelled out.
  • Care management for chronically ill beneficiaries is to be promoted by creating one or more payment codes for such services. [This FFS notion seems to cut against the general movement towards APMs - Ed.]
  • GAO is required to study the AMA RUC process and file a report within a year. HHS is permitted (not required) to collect information from providers about potentially misvalued services and adjust the MPFS accordingly (some aspirational targets are included: identify misvalued services worth at least 0.5% of the MPFS spend each year, 2015-2018), and is asked to consider smoothing RVUs within groups of services as well. Beginning in 2015, any downward RVU adjustment of 20% or more will be phased in over two years.
  • Clinical appropriateness for advanced diagnostic imaging is to be determined by criteria developed in consultation with stakeholders, that are based on stakeholder consensus, are evidence-based, are based on publicly-available studies, and are not developed by HHS acting alone.
  • Clinical decision support (CDS) mechanisms for advanced diagnostic imaging are to be identified by April 1, 2016; beginning 2017, payment may not be made unless the claim includes evidence of consulting a qualified CDS mechanism; beginning 2020, outliers (docs with low adherence with the CDS requirement; up to 5% of all docs) will be subject to a prior authorization requirement. GAO has 18 months to recommend other areas that should be treated similarly (e.g., radiation therapy, clinical lab services).
  • Utilization and payment data will be reported on the Physician Compare website (July 2015 for physicians, 2016 for other professionals).
  • The bill promotes broader avialability of claims data to providers and provider associations.
  • Evidence of participation/nonparticipation in MIPS cannot be used in med-mal litigation.
  • MedPAC is tasked to submit reports on the 2014-2018 experience (impact on beneficiary access to services and quality of care) and recommendations for future tweaks, and (in 2017 and 2021) on the relationship between Part B payments and Part A, C and D payments (since those are driven by the professionals paid under Part B).
  • EHR interoperability required by 2017.
  • HHS to issue report on how to develop a permanent physician-hospital gainsharing program.
  • GAO to report on barriers to expanded use of telemedicine and remote patient monitoring.
  • HHS to publish information used to establish multiple procedure payment reduction policy for imaging.

And, um, the bottom line: Congress still needs to find $125 billion to fund this thing.

This represents a bold move to try to rationalize a number of parallel regulatory structures. Here's hoping that this bill has legs and that it will do what its sponsors think it can.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

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