Is the end of SGR near?

September 20, 2013

The widely unpopular Medicare sustainable growth rate enacted under the Balanced Budget Act of 1997 has threatened cuts to Medicare payments to physicians for years. This year there is hope that a solution to the perennial problem will be enacted into law.

Based on a partnership with Urology Times, articles from the American Association of Clinical Urologists (AACU) provide updates on legislative processes and issues affecting urologists. We welcome your comments and suggestions. Contact the AACU government affairs office at 847-517-1050 or info@aacuweb.org for more information

The widely unpopular Medicare sustainable growth rate (SGR) enacted under the Balanced Budget Act of 1997 has threatened cuts to Medicare payments to physicians for years. This year there is hope that a solution to the perennial problem will be enacted into law.

The year began with a flurry of activity with respect to SGR. The American Taxpayer Relief Act of 2012, passed in early January, postponed cuts under SGR that were to take place in 2013. In February, the Congressional Budget Office (CBO) released a revised estimate of $138 billion for the cost of repealing SGR and fixing Medicare rates for the next 10 years. This estimate was down significantly from the CBO’s November 2012 estimate of $244 billion.

Two other developments occurred in February. Representatives Allyson Schwartz (D-PA) and Joe Heck (R-NV) reintroduced H.R. 574, the Medicare Physician Innovation Payment Innovation Act of 2013, after having introduced a similar bill in the previous Congress. While their bill has attracted 37 co-sponsors, it has not made much progress in committee. Also in February, majority members of the House Energy and Commerce and Ways and Means Committees released a statement of principles for SGR repeal and reform.

Subsequently, on July 24, Rep. Michael Burgess (R-TX) introduced H.R. 2810, the “Medicare Patient Access and Quality Improvement Act of 2013,” which has garnered 40 co-sponsors (28 Republicans and 12 Democrats). It was originally referred to the House Energy and Commerce Committee, the House Ways and Means Committee, and the House Judiciary Committee. After a number of amendments, the bill passed the full House Energy and Commerce Committee on July 30 with a 51-0 vote. Ultimately, this bill will have to be brought to a vote before the entire House and pass before moving on to the Senate.

As currently written, H.R. 2810 would repeal SGR, effective 2014, and replace it with new methods for calculating Medicare reimbursement that are phased in over a number of years. Beginning in 2014 and continuing to 2018, Medicare fee schedule payments would increase 0.5% annually. Starting in 2019, the annual 0.5% increase (or “update,” as the bill states) would continue, but an additional adjustment based upon quality performance measures under a new Quality Update Incentive Program (“QUIP”) would be applied to the payment. Depending on the assessment of quality performance measures, a physician’s Medicare fee schedule payments may be adjusted up another 1%, down 1%, or stay the same. These quality adjustments are to be made annually without regard to the adjustment made the previous year.

Physicians also could opt out of the fee-for-service system and agree to participate in an Alternate Payment Model (APM). H.R. 2810 contains a number of other provisions, including those that provide for the development, evaluation, and implementation of APMs and those that seek to expand access to Medicare data and encourage care coordination for patients with chronic care needs. There is also a provision that prevents provisions of the Affordable Care Act from being used to establish the standard of care or a duty of care in medical liability and certain product liability cases.

On Sept. 13, 2013, the CBO issued its cost estimate for H.R. 2810, predicting that it would increase direct spending under Medicare by about $175 billion over the next 10 years. This figure is greater than the CBO estimates from earlier this year for the cost of repealing SGR and freezing rates for the next 10 years, but it is still less than the CBO’s November 2012 estimate. The House Ways and Means Committee and the Senate could still release their own versions of an SGR bill. If a bill is not passed to repeal SGR, and if Congress takes no action to address cuts scheduled for 2014 under the current SGR formula, physicians will see a 24.4% cut to Medicare reimbursements beginning in the new year.

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