Deal on SGR Repeal and Reform Policy Reached

Today leaders of the congressional committees with jurisdiction over Medicare announced a deal on a sustainable growth rate (SGR) repeal and replacement policy. Agreement was announced with 53 days remaining before the current patch preventing drastic cuts to Medicare physician payments expires.

ASNC is satisfied with the deal based on preliminary review and believes it affords physicians the opportunity they have long fought for -- permanent repeal of the flawed SGR.

The deal reflects a compromise among SGR bills passed last year by the Senate Finance, and House Energy and Commerce and Ways and Means Committees. The committees have been working against the SGR patch deadline and the exit of the Finance Committee Chairman Max Baucus (D-MT), who has been confirmed as U.S. Ambassador to China. Sen. Ron Wyden (D-OR) is set to take over chairman of the committee, and it is unclear what impact that transition will have on the pace of advancing an SGR bill.

Still missing from the deal is a way to pay for it. Committee staff who briefed physician organizations today, including ASNC, said not to read into the lack of offsets at the moment. What is clear is that lawmakers are awaiting the reaction of the physician community to the deal before making some potentially unpopular decisions about offsets. The message to physician groups was clear -- there is an opportunity to put an end to the SGR, but the unified support of the physician community is going to be needed. While suggestions of another SGR patch were rebuffed by committee staff, if another patch is considered, it could delay SGR repeal indefinitely, and the cost of repeal could rise.

ASNC staff will be analyzing details of the legislation. key components of the deal are:

SGR Repeal and Replacement

  • Full repeal of the SGR.
  • 10 years of payment stability during transition to a new payment system: .5% annual updates 2014-2018, followed by a five-year payment freeze.
  • Creation of a new incentive payment program -- the "Merit-Based Incentive Payment System" (MIPS). This program will consolidate three current incentive programs: the Physician Quality Reporting Program, the Physician Value-Based Program, and the Medicare and Medicaid Electronic Health Record Incentive Program. 
  • Under the MIPS, eligible professionals will receive a composite score of 0-100 based on their performance in four performance categories, which will be compared to performance threshold. Eligible professionals with scores above the threshold will receive an incentive payment, and those below will get a negative adjustment. Both the incentives and adjustments will be capped. Negative payment adjustments will fund incentive payments, although the program will not be budget neutral. 
  • $500 million per year (2018-2023) will be made available for additional incentive payments for eligible professionals with exceptional performance.
  • Eligible professionals will be encouraged to transition to participation in alternative payment models, which will include a bonus structure (2018-2023). An example of an APM is a medical home, but the bill establishes a Technical Advisory Committee to review and recommend physician-developed APMs, an added provision that could help to bring more specialty specific APMs online.
Misvalued Codes
  • The list of criteria for CMS to identify potentially misvalued services will be expanded to include codes: that account for a majority of spending under the physician fee schedule; with substantial changes in procedure time; for which there may be a change in the site of service or a significant difference in payment between sites of service; services that may have greater efficiencies when performed together; or with high practice expenses or high cost supplies.
  • The target for identifying misvalued services is 0.5% of estimated fee schedule expenditures in 2015, 2016, 2017, 2018.
  • The Government Accountability Office is required to study the AMA/RUC process and for making recommendations on the valuation of physician services.
Appropriate Use
  • Establishes a program that promotes the use of appropriate use criteria for advanced diagnostic imaging. The bill does not include language to give the Secretary authority to expand appropriate use criteria to other services, including clinical diagnostic laboratory services. However, the GAO is required to report to Congress regarding other Part B services to which appropriate use requirements could be applied.