SGR Repeal Talks Continue

By Scott Hultstrand, SCMA General Counsel

On the heels of a bipartisan US House Energy and Commerce Committee bill that eliminates SGR and provides for new, value-based methods for physician payment, the US Senate Finance and US House Ways and Means Committees have released a joint proposal for physician payment reform.  This is the first bipartisan/bicameral effort to repeal SGR, which threatens physicians with an approximate 24.4% cut in 2014.

So what are the terms of the proposal?  Here they are:

#1:       Permanently repeal SGR.  Replace SGR with a physician payment freeze until 2023.  Physicians participating in alternative payment models after 2023 will receive 2% updates, and all others will receive 1% updates.

#2:       Terminate Physician Quality Reporting System (PQRS), Value-Based Modifier, and Meaningful Use programs and replace them with one unified physician payment plan beginning in 2017.  Penalties that would have been assessed to physicians for failure to participate in the three terminated programs will remain in the physician payment pool, resulting in $10 billion extra from 2017-2023. 

#3:       Medicare Fee-for-Service in 2017 and beyond will be paid based on the following four categories, with 8% of spending (increasing to 10%) allocated to an incentive payment pool for the physicians who score highest according to the methodology:

a.         Quality measures (similar to current PQRS measures, with emphasis on outcomes) – 30% of payment

b.         Resource use (based on expenditures eventually tied to specific episodes) – 30 % of payment

            c.         Clinical practice improvement activities (with the goal of transitioning physicians to    
            alternative payment models) – 15% of payment

            d.         EHR meaningful use – 25% of payment

#4:       Pay bonuses to physicians who opt for alternative payment models (APMs).  APMs must involve two-sided risk and a quality measurement component.  Physicians will receive a 5% bonus in years 2016-2021 as long as they have at least 25% of their Medicare revenue through an APM in 2016-2017, and then in 2018-2021 have 50% or more of their Medicare revenue in an APM, or 50% of all-payer revenue in an APM (with at least 25% of Medicare revenue).  Significantly, physicians who opt for APMs would be excluded from many of the Medicare fee-for-service payment measurement categories and the EHR meaningful use information exchange and quality reporting requirements.

#5:       New payments to both primary care and specialist physicians for care coordination of patients with complex chronic conditions.

#6:       New attention paid to proper valuation of physician services, with overpayments redistributed throughout the physician fee schedule.

#7:       Advanced imaging and electrocardiogram services would be held to uniform standards of use criteria, with refusal of payment for failure to meet criteria.  Criteria are to be developed or endorsed by national medical specialty societies or other entities.

#8:       HHS would be required to publish utilization and payment data for physicians on the Physician Compare website.

This is still in the early stages, and in fact has not even been reduced to statutory language at this

time.  Even though it is early, because this is a bipartisan/bicameral effort coming from the two premier US and Senate committees it should carry a lot of weight.

Stay tuned for developments.