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Rest in Peace, SGR

May 2015, Vol 5, No 4
Leah Ralph
Director of Health Policy, ACCC

Recent months have brought unprecedented momentum on an issue physicians and Congress have been struggling with for more than a decade: repealing the sustainable growth rate (SGR) formula. On April 14, after 18 years of wrangling and 17 short-term patches to ensure that cuts to Medicare’s physician payment rates would not go into effect, Congress finally passed a permanent overhaul of the SGR—the flawed formula created by the Balanced Budget Act of 1997 that calls for draconian cuts to physician payment rates when Medicare spending exceeds a certain target.

This was quite an accomplishment for Congress, which has struggled for years to develop the policy around—and pay for—a permanent fix. Physicians are applauding the long-overdue legislation for finally providing the predictable, appropriate payments they need to continue to provide high-quality care.

As are most things related to the SGR, getting to a permanent solution was not an easy road. Most recently, just days before the current SGR patch expired, and right before Congress’ Easter recess, the US House of Representatives overwhelmingly passed H.R. 2, known officially as the Medicare Access and CHIP Reauthorization Act. The US Senate was expected to take up the House bill, but, in keeping with the political brinksmanship Congress has employed with the SGR, on March 27 the chamber recessed for 2 weeks, leaving a very small window to consider the bill when its members returned on April 13. Meanwhile, the patch that had been enacted in 2014 expired this year on March 31, and the Centers for Medicare & Medicaid Services indicated that it would hold physician claims through April 15 to give the Senate time to reconvene and consider the bill.

Prospects for passage of the legislation looked good, but uncertainty remained. Republicans opposed the price tag, as only a third of the $214-billion bill was offset. Democrats wanted a longer reauthorization of the CHIP program (included in the bill) and opposed increased means testing and other provisions that would require Medicare beneficiaries to pay more. But by a Senate vote of 92-8, the legislation made it across the finish line.

The bill will permanently replace the SGR formula with stable payment updates through 2019, after which rates will stabilize during a 5-year transition period, from 2020 to 2025. Beginning in 2019, physicians will either transition to the newly created merit-based incentive payment system, which will reward doctors with higher reimbursements based on better overall performance under fee-for-service (FFS), or will participate in alternative payment models under which doctors move away from traditional FFS toward payments based on quality and value of care. H.R. 2 builds on last year’s bipartisan, bicameral compromise.

Upon passage of the bill in the House, Rep Michael Burgess, MD (R-Texas), the bill’s lead sponsor, said “this is the work of a collaborative body…it is time to end the SGR. Let us never speak of this issue again.” So, we can finally say good riddance to the SGR, but now we must turn to what the bill means for the future of Medicare reimbursement. Stay tuned.

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