SGR Repeal Emphasizes Move to Value-Based Payments

After a long and winding road, the sustainable growth rate (SGR) is finally part of history and the move to value-based payments has renewed urgency now that the Medicare Access and CHIP Reauthorization Act of 2015 (Act) has become law. The Act became law April 16, repealing the SGR and establishing the conversion factor updates we detailed in the most recent issue of National Intelligence Report: 0.0% for January 1, 2015 through June 30, 2015; 0.5% for July 1 through December 31, 2015; 0.5% for 2016-2019; 0.0% for 2020 to 2025; and for 2026 and thereafter, 0.75% and 0.25% depending on “alternative payment model” participation. As in prior years, physicians escaped at the last minute some major cuts to reimbursement threatened under the SGR methodology. This time, it’s for good: “It’s a fix, more than just a Band-Aid,” notes Dora L. Hughes, M.D., M.P.H., a senior policy advisor at Sidley Austin and former senior Obama Administration official. “The most important message is that this is a tremendous victory, not just for seniors and all Medicare beneficiaries, but also for the health care providers who care for them,” adds Patricia DeLoatche, also a policy advisor at Sidley Austin LLP and former Health Policy Director for Senator Orrin Hatch. “The stability of having ongoing physician payment is really important.”
Significance The new law is a watershed moment in health care reimbursement according to Hughes. She describes the legislation as “transformative,” and “just as revolutionary” for physician reimbursement as next-generation sequencing is for research. A recent White House blog celebrating the legislation’s enactment notes that Centers for Medicare and Medicaid Services (CMS) actuaries, “estimate that the percent of Medicare physician payments in payment models that encourage higher quality care would more than double in four years, from 25 percent this year to 60 percent in 2019 as a result of this law.” “This is a significant victory,” adds DeLoatche, in particular because of the bipartisan efforts over the course of two years that achieved this success. “The fact that this was passed in a bipartisan manner, by overwhelming margins and signed into law by the President” is reaffirming, says DeLoatche. “I think it speaks volumes.”
More Work Ahead This repeal is not an end, however, but just the start of more hard work for pathologists and other physicians. “There’s so much left to come, just in terms of moving the system away from volume to value,” adds Hughes. “So celebrate this great moment but on the other hand, this is a marathon and we are only half of the way through in terms of getting where we need to be.” This legislation puts the rubber to the road in terms of the switch to value-based reimbursement. “By hook or by crook the system is now going to be based on value,” she says, explaining that “it becomes more real for those who have not fully engaged or participated in alternative payment models, shining a spotlight on the need for individual physicians and groups to focus on quality of care.” The challenge, says Hughes will be “establishing the quality measures for physicians broadly, but understanding that they will need to be tailored for the specialty providers. Those measures could be harder to define, particularly given the range of providers that will be affected.” She explains that developing quality measures for reimbursement purposes is more difficult for specialties such as pathology, where the provider doesn’t have direct patient contact. “One of the important issues moving forward is that it’s important that there is collaboration—with different specialties and understanding the unique challenges that some of these specialties face—just taking time to make sure there is discussion back and forth with these different specialties,” adds DeLoatche. “Truly the devil is in the details on this one,” says Hughes. For pathologists, some of the quality measures “will need to be tailored to take into account unique aspects of laboratory medicine. There will be continued effort by laboratories to make sure they aren’t adversely impacted by the decisionmaking. [But] for all of the difficulty, this is going to be a welcome challenge for all parties,” says Hughes. Takeaway: Pathologists have once again escaped threatened pay cuts but hard work remains for the adjustment to value-based payment methodologies.