A plan to repeal the sustainable growth rate (SGR) formula that determines the annual update to the Medicare physician fee schedule is being circulated for feedback by Republicans on the House Ways and Means Committee. The SGR has triggered physician fee cuts over the past decade that Congress has repeatedly stepped in to block. In place of the SGR, the plan would freeze fees during the transition to a performance-based payment system using quality measures endorsed by physicians and medical societies. Proposal’s Three-Phase Approach Phase 1: The SGR would be fully repealed, and Medicare payments for physicians would be frozen for a set period of time (unspecified). Phase 2: Physician fee schedule payment updates would be based on performance of meaningful, physician-endorsed measures of care quality and participation in clinical improvement activities, such as reporting clinical data to a registry or employing shared decisionmaking tools. Phase 3: This involves further reform of Medicare’s fee-for-service payment system to account for the efficiency of care provided. After several years of quality-based payments, physicians who perform well on quality measurement would be afforded the opportunity to earn additional payments based on the efficiency of care they deliver. Cost Is Key Question The Medicare […]
A plan to repeal the sustainable growth rate (SGR) formula that determines the annual update to the Medicare physician fee schedule is being circulated for feedback by Republicans on the House Ways and Means Committee.
The SGR has triggered physician fee cuts over the past decade that Congress has repeatedly stepped in to block. In place of the SGR, the plan would freeze fees during the transition to a performance-based payment system using quality measures endorsed by physicians and medical societies.
Proposal’s Three-Phase Approach
Phase 1: The SGR would be fully repealed, and Medicare payments for physicians would be frozen for a set period of time (unspecified).
Phase 2: Physician fee schedule payment updates would be based on performance of meaningful, physician-endorsed measures of care quality and participation in clinical improvement activities, such as reporting clinical data to a registry or employing shared decisionmaking tools.
Phase 3: This involves further reform of Medicare’s fee-for-service payment system to account for the efficiency of care provided. After several years of quality-based payments, physicians who perform well on quality measurement would be afforded the opportunity to earn additional payments based on the efficiency of care they deliver.
Cost Is Key Question
The Medicare overhaul proposal is clear up front that SGR repeal must be budget-neutral, that is, fully paid for and not increase the deficit, but does not specify how this would be done. This has been a key obstacle to SGR reform efforts in past Congresses. The proposal notes that the Congressional Budget Office has estimated the cost of SGR repeal at $245 billion over 10 years.
SGR Triggers Short-Term Fixes
The SGR formula, included in the 1997 Balanced Budget Act, limits the yearly increase in costs per Medicare beneficiary to the nation’s annual growth in gross domestic product. Because of the size of reimbursement cuts that would be required, Congress has resorted to a series of short-term fixes over the last decade. The latest fix, passed Jan. 1, cancels a cut of 26.5 percent that had been scheduled to take effect for 2013 and continues the freeze on fees.
Hearings on a permanent fix reportedly could be held soon by the Ways and Means health subcommittee. Its chairman, Rep. Kevin Brady (R-Texas), said in a Jan. 15 statement that he intends to draft legislation to repeal the SGR.
