Medicare SGR repeal bill advances in House

Washington Separate approaches to eliminating the Medicare sustainable growth rate formula that helps determine physician pay are moving forward, with three congressional committees in the House and Senate working on payment system reform packages.

On July 22, the House Energy and Commerce health subcommittee was scheduled to act first by marking up its legislation to eliminate the SGR. The House Ways and Means Committee and the Senate Finance Committee also have held hearings on Medicare pay reform in 2013, but those panels have yet to introduce their bills.

The House committees first developed a joint framework for an SGR repeal in February, with Energy and Commerce members later drafting two versions of legislation. That legislation is ready for lawmakers to debate and amend, Energy and Commerce Chair Fred Upton (R, Mich.) said during a July 15 television interview. It’s his hope that the bill can be approved by the full committee before Congress breaks for its summer recess.

“We’re going to be able to approve this in our subcommittee, get it done on a very strong bipartisan basis and get it out of our committee before the August break,” Upton said.

The American Medical Association and physician specialty societies have applauded efforts to tackle the SGR aggressively in 2013. In January 2014, the payment system is scheduled to reduce physician pay by nearly 25%. Congress probably will prevent the cut as it has done since 2003, but organized medicine wants the move to be a permanent one instead of another temporary patch.

“The threat of annual cuts under the SGR, and updates well below inflation, are destabilizing the practice of medicine and demoralizing physicians,” the AMA wrote in a July 11 letter responding to a solicitation for feedback on the Energy and Commerce proposal. “Physicians are increasingly required to devote precious time and resources to a growing list of unfunded administrative requirements along with the multiple Medicare and Medicaid quality reporting and electronic record/prescribing programs, and upcoming conversion to ICD-10.”

The panel’s bill would replace SGR cuts with annual payment increases of 0.5% from 2014 through 2018. The AMA and others had called for a five-year period of stable payment updates as Medicare transitions to a new payment system.

Starting in 2019, the panel’s bill would replace the current system with a fee-for-service model that includes incentives. Payments would be derived from a physician’s performance on quality measures against a selected peer cohort. A physician would receive a score at the end of a performance period and a payment update would be assigned, with high scores receiving the largest increases and low scores getting no increase or a rate decrease.

Physicians would have the option to select alternative payment models after opting out of the fee-for-service system at any time, according to the committee. New models could include patient-centered medical homes, specialty care models and bundled payments. Physicians and others also may submit proposals for new payment models going forward.

“The AMA and 110 other physician organizations have developed principles for transitioning Medicare to include an array of payment models that allow physicians the flexibility to choose options that will help lower costs and improve the quality of care for patients,” AMA President Ardis Dee Hoven, MD, said in a statement prior to the committee markup. “The new models must be accessible to physicians in all practice sizes and settings so the country’s physicians can have a stable practice environment that allows them to invest in their practices in order to provide high value care for Medicare patients.

“Physicians want to move past the failed SGR formula and toward a Medicare program that supports the best health outcomes for their patients and provides a stable, rewarding practice environment. We will continue to work with the committee and the full Congress this year to improve Medicare for patients and physicians.”

Responding to an earlier draft of the bill, the Alliance of Specialty Medicine said it opposed a percentile update model and favored a system rewarding continuous quality improvement.

“Head-to-head comparisons encourage adversarial behavior and perverse incentives, such as an increased risk of ‘gaming,’ and may result in serious beneficiary access to care issues as providers opt to treat only the healthiest or least complex patients in order to maximize their score relative to others,” the alliance letter stated.

What CMS wants in a pay solution

Jonathan Blum, deputy administrator for the Centers for Medicare & Medicaid Services, characterized the congressional work on reform of the Medicare payment system as “a tremendous achievement” during a July 10 Finance Committee hearing.

Congress should build on quality programs added to Medicare during the past 10 years rather than restarting with a new system, Blum said. He said the latest slowdown trend in the Medicare spending growth rate is no fluke, and lawmakers should be mindful of work that has improved value and payment accuracy in the system.

“We shouldn’t step back, but step forward,” Blum said.

Blum further recommended that Congress institute four to five years of rate stability before a transition to new pay models. CMS is testing shared savings models, such as accountable care organizations, and it must continue to be able to make refinements while the health system prepares for changes.

“The vitally important point is that physicians have predictability for a period of time so they can transition to this new system,” Blum said. “We don’t think it’s helpful to have a continuing threat of a 24% to 25% payment reduction.”