Three-Month Payment Patch Should Give Congress Time to Repeal SGR

December 18, 2013 10:45 am News Staff

Editor's Note: The U.S. Senate passed a budget resolution on Dec. 18 that includes the three-month payment patch to the sustainable growth rate.

As the year winds its way to a close, family physicians are once again asking themselves what they can expect in terms of payment from Medicare in 2014. This year, however, a permanent fix for the dysfunctional sustainable growth rate (SGR) formula is on the horizon, even if it doesn't happen until the new year.

[A red button with the word Reform on it]

For the first time in the annual rush by Capitol Hill to patch the SGR so physicians don't have to face significant Medicare payment cuts, Congress is offering a bipartisan, bicameral solution. The House Committee on Ways and Means and the Senate Committee on Finance released an SGR repeal proposal in early November, and the two committees have since met to revise their respective bills.

Although the original proposal called for a 10-year freeze on Medicare physician payments, the House bill now would provide a 0.5 percent positive update for 2014-2016. The Senate bill, however, retains the full 10-year payment freeze. Many of the other details, however, remain the same. For example, the bills, called the Medicare Patient Access and Quality Improvement Act in the House and the SGR Repeal and Medicare Beneficiary Access Improvement Act in the Senate, would

  • repeal the SGR;
  • provide funding to shift emphasis toward new payment models that focus on quality of care rather than fee-for-service;
  • provide $125 million to help small physician practices transform to payment models based on the quality of care;
  • consolidate existing quality improvement programs, such as meaningful use, the physician quality reporting system and the value-based modifier, into a single Value-Based Performance Payment program that would reward high performing practices and that also would decrease penalties assessed on physicians who do not participate in quality programs;
  • create a Medicare payment for complex chronic care services, which also will compensate physicians for services provided remotely; and
  • create a process to identify misvalued services and redistribute savings on those services within the physician fee schedule.

The bills need to be reconciled, but it is expected that they will be debated in the full House and Senate early in 2014.

In the meantime, physicians are facing a significant cut in payments as of Jan. 1. To alleviate this cut and give Congress more time to pass the SGR repeal legislation, the House-approved budget includes the Pathway for SGR Reform Act, H.R. 2810(, which would stop the SGR-scheduled cut of 20.1 percent and instead establish a temporary update in payment of 0.5 percent until March 31. This would give Congress three months to work on passing the SGR repeal legislation. The Senate is debating the proposal this week.

"The revised H.R. 2810 (SGR repeal bill) lays the groundwork for significant reforms that encourage new models of care, such as the patient-centered medical home, simplifies and reduces the administrative burden on physicians, and gives CMS additional tools to address misvalued physician services," said AAFP President Reid Blackwelder, M.D., of Kingsport, Tenn., in a statement from the Academy. "Importantly," he added, "the bill provides financial support to practices as they transition away from the traditional, procedures-focused model of care that responds to illness and move toward a comprehensive, coordinated and outcomes-based model that strives to prevent health problems and improve patients' health."

In addition to SGR repeals and payment updates, Congress also is dealing with the sequester issue. According to Kevin Burke, AAFP's director of the AAFP's Division of Government Relations, the sequester provision in the budget would reduce overall funding for physician services by 2.9 percent for the first six months of 2014, and then drop to 1.1 percent for the remainder of the year. This reduction would be partially offset by the 0.5 percent House-suggested increase, but the overall pool of money for physician services would be reduced.

However, budget cuts called for by the sequester also are under discussion as the House and Senate work to present a budget for this fiscal year. In addition, the repeal of the SGR, which the Congressional Budget Office now estimates will cost $116.5 billion( for the next 10 years, needs to be paid for, and both the House and the Senate have yet to produce a plan that says how they would pay for a repeal.

Even if the SGR is repealed, however, Blackwelder points out that primary care physicians face cuts from other sources, including the sequester and the proposal in the Patient Protection and Affordable Care Act that brings Medicaid payments up to at least Medicare levels in 2013 and 2014. This program is set to end in 2014, "creating significant challenges for our members who have accepted additional Medicaid patients into their practices," said Blackwelder. "As Medicaid pays on average only 2/3 of Medicare, this will hit primary care physicians especially hard."

The AAFP is actively working on encouraging Congress to extend the program for at least an additional two years to truly give it a chance to work, as state-based delays in payment have led to many physicians not receiving the enhanced payment.

According to Blackwelder, "Much needs to be done to continue to move payment reform to a system that values primary care and pays for value, not volume." He noted that these are issues the AAFP will continue to work on during 2014 and beyond. In addition, the Academy will be watching as regulations promulgated by the SGR bill are implemented to ensure there are no unintended consequences for family physicians.