House approves Medicare SGR repeal bill

March 21, 2014

Last week, the U.S. House of Representatives approved Medicare payment reform legislation that would eliminate the Sustainable Growth Rate (SGR) from the Medicare physician fee-setting formula and move the government health program toward a merit-based payment system.

Washington, DC-Last week, the U.S. House of Representatives approved Medicare payment reform legislation that would eliminate the Sustainable Growth Rate (SGR) from the Medicare physician fee-setting formula and move the government health program toward a merit-based payment system.           

However, the legislation includes a controversial GOP-backed provision to offset the cost of the SGR repeal by delaying the Affordable Care Act's individual insurance mandate. For that reason, the measure is widely expected to be defeated when it comes before the Democrat-controlled Senate next week. President Barack Obama has said he will veto the legislation as passed by the House.

The apparent stalemate over the bill raises the prospect that physicians could face a 23.7% reduction in the Medicare reimbursements effective April 1. Under the SGR fee-setting formula, Medicare physicians were to see reimbursements cut on January 1, 2014. However, Congress late last year passed a temporary “pay patch” bill, providing a 0.5% increase through March 31.

During last Fridays's House debate, speakers noted that Congress could have as little as 5 working days in which to enact another patch bill to prevent the pay cut from taking effect in April. Should the cut go into effect next month, practitioners may wish to hold Medicare claims until a new patch measure is passed; thereby eliminating any need to re-file claims, billing experts say.

"The repeal of the SGR and moving to alternative payment models will hopefully create greater stabilization of the reimbursement system for physicians and remove the end of the year 'rescue ritual' that creates so much anxiety within our healthcare system. Optometrists, like all defined physicians, will benefit from long-term change," says John Rumpakis, OD, MBA, president of Practice Resource Management, Inc., speaking exclusively to Optometry Times.          

The Medicare payment reform package-formally known as the SGR Repeal and Medicare Payment Modernization Act of 2014 (S. 2000, HR 4015)-was praised as a breakthrough in bipartisan cooperation when it was jointly released on February 6 by the House Ways and Means, House Energy and Commerce, and Senate Finance committees.

The Medicare payment reform legislation is widely supported by practitioner organizations, including the American Optometric Association, and patient advocacy groups.            

"The SGR was enacted as part of the 1997 Balanced Budget Act and linked physician fees to growth in the U.S. gross domestic product. It included a 'clawback' mechanism for rolling back or reducing physician fees if spending exceeded the previous year's budget targets," says Dr. Rumpakis. However, instead of limiting annual Medicare Part B reimbursements, the revised formula has prompted the U.S. Centers for Medicare and Medicaid Services (CMS) to annually propose increasingly steep reimbursements cuts.

"Starting in 2003, Congress began enacting a series of legislative 'patches' to prevent the cuts from taking place, resulting in deeper cuts being threatened every year which required more expensive patches each time. In every year, except for 1, Congress has passed this 'emergency legislation' to prevent the increasingly greater reimbursement cuts for physicians," says Dr. Rumpakis.    

The SGR repeal would cost $138 billion over the next 10 years, according to the Congressional Budget Office (CBO). Delaying the individual mandate would save about $9 billion over the same period, according to the CBO. The version of the legislation passed last week by the House would delay the mandate for 5 years.

In addition to repealing the SGR, the Medicare payment reform bill would encourage practitioners to either participate in a new Merit-Based Incentive Payments System (MIPS) or alternative payment models (APM) that require providers to bear financial risk.

Bob Pieper is a freelance healthcare writer. He is the former senior editor for AOA News.