Plan to Replace SGR is Gaining Traction in Congress

Lawmakers on Thursday released a bipartisan draft framework for a “doc fix” deal that would permanently replace the widely panned Medicare physician payment formula.

The draft, developed jointly by the Senate Finance and House Ways and Means committees appears similar to a bipartisan sustainable growth rate (SGR) replacement plan passed by the House Energy and Commerce Committee over the summer. The Congressional Budget Office (CBO) estimated the total cost of the legislation developed by the Energy and Commerce Committee would be $175.5 billion over a decade.

Committee aides said the new bicameral draft proposal likely would cost less than the Energy and Commerce proposal, because it would freeze physician payments for 10 years, while the Energy and Commerce bill included 0.5% annual updates over five years.

Under the latest draft proposal, physicians would be allowed to stay in Medicare’s traditional fee-for-service system or move to alternative payment models, such as ACOs, bundled payment models, and patient-centered medical homes. Physicians who receive at least 25% of their revenue from alternative models in 2016 and 2017 would be eligible for a 5% bonus.

Break Away from the Static

The proposal also would consolidate Medicare’s three existing quality programs into a single value-based quality program that would offer incentives to providers who deliver quality care. Aides said the program likely would begin in 2015, with incentives starting in 2017. In addition, the draft proposal would:

  • Freezing annual fee schedule payment updates for 10 years; annual positive updates would begin in 2024.
  • Create new payment codes for services provided to patients with complex chronic health problems.
  • Establish a target for correcting mis-valued services in the physician fee schedule. Over a three-year period, mis-valued codes would have to be adjusted to achieve one percent in total fee schedule savings to avoid reductions in the total physician payment pool.
  • Require HHS to publish physician utilization and payment data and other clinicians on the Physician Compare website.
  • Appropriate use criteria would be applied to certain imaging services; prior authorization requirements would be imposed on outliers.

Comments on the draft are due to the committees by November 12th, after which they plan to release more formal language.  ADVOCATE will continue to provide information on this topic and others impacting radiology as they arise.

Best regards,
Kirk Reinitz, CPA