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What's in the new SGR bill? Alternative payment model bonus; fixed increases

Price estimates for the repeal have ranged from $140 to $210 billion over the next 10 years.

Susan Morse, Managing Editor

The bill proposes to increase payment accuracy, encourage physicians to adopt proven practices, supply doctors with data to improve care, and, for patients, to make Medicare more transparent by them more access to information.The bill proposes to increase payment accuracy, encourage physicians to adopt proven practices, supply doctors with data to improve care, and, for patients, to make Medicare more transparent by them more access to information.

Thursday’s proposed repeal of the Sustainable Growth Rate woul give a 5 percent bonus to providers who receive a significant portion of their revenue from an alternative payment model or patient-centered medical home.

Participants need to receive at least 25 percent of their Medicare revenue through an APM in 2019-2020, according to Democrats in the Ways and Means Committee.

This threshold increases over time and the policy incentivizes participation in private-payer ATMs.

It establishes a Technical Advisory Committee to review and recommend physician-developed APMs based on criteria developed through an open comment process.

The switch from fee-for-service to value-based reimbursement in Thursday’s proposed bipartisan bill moves Medicare payment into the modern realm of healthcare practices.

The bill would repeal the current SGR formula and institute a 0.5 percent payment update each year for five years.

[Also: SGR bill is released]

The American Medical Association has long supported SGR’s repeal. The American Association of Neurological Surgeons and Congress of Neurological Surgeons also praised the move.

The bill proposes to increase payment accuracy, encourage physicians to adopt proven practices, supply doctors with data to improve care, and, for patients, to make Medicare more transparent by them more access to information.

Price estimates for the repeal have ranged from $140 to $210 billion over the next 10 years. The cost is expected to be addressed in a broader bill that would also include an extension to the Children’s Health Insurance Program.

House and Senate leaders on Thursday introduced the new bill to end the SGR formula. They needed to act by April 1 or physicians who accepted Medicare faced a 21 percent pay cut as mandated by SGR. Legislators have averted these physician fee cuts 17 times since 2003 by overriding the SGR with temporary “doc fixes.”

[Also: SGR momentum on social media]

The bill is nearly identical to bipartisan legislation introduced in the House and Senate last year that failed to advance because of disputes over how to fund it.

The Congressional Budget Office has estimated that maintaining a flat payment rates for the future, rather than letting the SGR cuts take effect, would cost an estimated $137 billion.

The new deal would be only partially paid for in the first decade, according to a report in Politico. Lawmakers would pay for $70 billion of the total package, with most of the savings at the back end of the 10-year budget window, it stated.

About half of that $70 billion would come from cuts to health care providers, such as hospitals, acute-care providers and insurers, according to Politico. Most of the cuts are not expected to take place immediately.

Opponents believe the bill would add millions in unpaid costs to the deficit. There is also the fear senior citizens would be funding a significant portion through cuts to Medicare beneficiaries, such as additional means testing for high-income seniors.

SGR was intended to constrain Medicare Part B physician spending by adjusting the annual fees for reimbursement of Medicare.

The bipartisan legislation was led by House Minority Leader Nancy Pelosi, D-Calif. and House Speaker John Boehner, R-Ohio. 

Twitter: @SusanMorseHFN