Comprehensive SGR Repeal and Reform Legislation Sidelined for 12-Month Patch

Less than a day before a 24 percent cut to Medicare physician payments was scheduled to take effect on April 1, Congress acted again with a temporary solution, leaving little hope for full repeal of the sustainable growth rate (SGR) formula and payment reform this year.

The new SGR "patch" represents the seventeenth such congressional intervention, and is a particularly disappointing outcome after more than a year of policy negotiations that led to a bipartisan and bicameral bill (H.R. 4015 / S. 2000 hinged on the ability of Congress to reach agreement on how to pay for SGR repeal. Unfortunately, bipartisan budgetary negotiations gave way to political gamesmanship, resulting in another patch. 

Congress passed the latest patch (H.R. 4302) despite strong opposition from physicians. The bill extends the current 0.5 percent payment update through the remainder of this year, and sets the update at 0 percent on Jan. 1, 2015 until the patch expired on March 31, 2015. The conventional wisdom is that a 12-month patch sets up physicians for another temporary fix in early 2015. It is unlikely that Congress will take on SGR repeal before the November elections or during a lame duck session of Congress. Consequently, the issue will be left to a new Congress, with newly elected lawmakers, potential leadership changes, and the need for the introduction of a new SGR repeal bill. Given these factors, it is hard to envision Congress will take meaningful action on the SGR before the new patch expires. Despite these obstacles, ASNC will continue to press Congress to finish its work on a comprehensive repeal and reform bill.

The bill also includes provisions aimed at quality improvement and those that could result in additional payment cuts to physicians -- provisions with drew the opposition of many in the physician community.

  • The bill reduces Medicare payments for computed tomography (CT) services that do not meet dosage standards as set forth by the National Electrical Manufacturers Association (NEMA). The bill also incorporates a provision from the in H.R. 4015 / S. 2000 that promotes appropriate use criteria for advanced imaging services provided by in the office, hospital outpatient department and ambulatory surgery centers. Beginning Jan. 1, 2017, professionals who furnish an advanced imaging test must document the ordering professional's consultation of appropriate use criteria in order to be paid for the service. The bill also directs the Centers for Medicare and Medicaid Services (CMS) to require prior authorization for ordering professionals who are outliers.
  • The bill requires consultation of appropriate use criteria by any practitioner who orders advanced imaging. The ordering practitioner will use clinical decision support mechanisms to prove they have consulted appropriate use criteria. The furnishing physician will not be paid unless the ordering professional has consulted with appropriate use criteria. The clinical decision support tools must make appropriate use criteria available, specify which criteria is being used, determine the extent to which the ordered imaging appropriate, be updated in a timely manner, meet privacy and security standards, and other requirements that the Secretary may require. Ordering professionals who are outliers (after data has been collected for two years) will be subject to prior authorization. Emergency services, inpatient care, and practitioners who can show significant hardship (i.e. rural areas without internet) are exempt from the requirements under the new program.
  • The bill expands CMS' misvalued codes initiative by expanding the screens the agency has at its disposal to identify potentially misvalued codes. The expansion includes, but is not limited to, codes that account for a majority of physician fee schedule spending and those which have experienced the fastest growth. Beginning in 2017 and through 2020, the bill sets an annual target of 0.5 percent in savings that must be achieved from misvalued Medicare Physician Fee Schedule services. If the target is met, the savings are redistributed to other services, and excess savings can carry forward to future years. If the target is not met, across-the-board cuts apply, which are not budget-neutral. The bill's language does not protect codes that have been recently resurveyed.
  • The bill realigns the Medicare sequester in 2024. Sequestration imposes a 2 percent cut to Medicare physician payments, which is to be applied over the entire year of sequestration. The bill stacks sequestration in 2024 to 4 percent in the first six months. This realignment could increase the overall cut for the year, since most of Medicare payments are made in the beginning of the year.
Also, notably, the bill provides at least a one-year delay for implementing ICD-10, moving the implementation date from Oct. 1, 2014 to not before Oct. 1, 2015.

ASNC will continue to engage with relevant authorities to make sure these policies work for our members. To learn more about ASNC's efforts on SGR and payment delivery reform, visit