iProtean—New Effort Underway to Fix Sustainable Growth Rate

Notice: The iProtean Newsletter will be on holiday from December 24 through January 1. Please look for your next newsletter on January 8, 2014. Have a peaceful holiday season and a prosperous New Year!


It looks as if a fix to the sustainable growth rate (SGR) formula for paying physicians may be realized in early 2014. Two key Congressional committees—the House Ways & Means Committee and the Senate Finance Committee—passed legislation last week that would repeal and replace the SGR. Versions must be reconciled, and a three-month patch to delay the planned cut of 20.1 percent was included in the budget bill that Congress is expected to pass this week. This will give legislators until the end of March to pass the replacement measure. (“Senate House Committees Pass Bills for Long Term Fix of Medicare Physician Pay,” AHLA Weekly News, December 13, 2013)


The SGR was part of the Budget Control Act of 1996 to control the growth of Medicare spending. However, the deep cuts in physician rates that the formula required haven’t materialized. Each year, Congress has delayed those physician payment cuts in order to preserve seniors’ access to care. (“Medicare Doc Fix Advances,” HFMA Weekly News, December 13, 2013)


The House bill provides a 0.5% update from 2014 through 2016 and a zero percent update for 2017 through 2023. The Senate bill keeps 2013 payment rates through 2023. In subsequent years, professionals participating in alternative payment models that meet certain criteria would receive annual updates of 2 percent while all other professionals would receive annual updates of 1 percent.


The Senate Finance Committee version accomplishes four main goals, according to its press release:

  1. Repeal of the SGR and tying payments to quality and efficiency
  2. Improving the fee-for-service system by streamlining Medicare’s existing web of quality programs into one value-based performance program
  3. Moving to alternative payment models to encourage doctors and providers to focus more on coordination and prevention to improve quality and reduce costs
  4. Making Medicare more transparent by giving patients more access to information and physicians access to data they can use to improve care.


Both bills also consolidate current incentive programs into a single value-based incentive program. Payments to professionals will be adjusted based on performance on a single budget-neutral value-based program starting in 2017.


According to the Senate summary, the value-based program “streamlines and improves” on the three distinct current incentive programs: the Physician Quality Reporting System; the Value-Based Modifier; and meaningful use of electronic health records (EHR).


The value-based program will assess the performance of eligible professionals in four categories: quality, resource use, EHR meaningful use and clinical practice improvement activities, according to the summary, and the funding available for value-based incentive payments will be equal to 4 percent of the total estimated spending in 2017; 6 percent in 2018; 8 percent in 2019; and 10% percent in 2020.


The summary also noted professionals who receive a significant share of their revenues through an alternative payment model that involves risk of financial losses and a quality measurement component will receive a 5 percent bonus each year from 2017 through 2022. Professionals who meet these criteria will be excluded from the value-based program assessment and most EHR meaningful use requirements.


According to HFMA, hospital advocates remain concerned that a final payment mechanism may try to offset the bill’s cost with cuts to facilities—as previously proposed. No mechanism to cover the cost of the SGR repeal was included in either bill.


For more detail about the Senate legislation, please click here.



iProtean subscribers, Part Two of Making Difficult Decisions About Services and Programs: A Portfolio Approach featuring Lisa Goldstein, Marian Jennings and Nate Kaufman is now in your library!



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