Healthcare News & Insights

Will Medicare’s sustainable growth rate finally get fixed?

173353332Every year now for what seems like forever, Medicare threatens physicians with a severe cut in Medicare pay, and Congress has to step in at the last minute and save the day. Reason: Medicare’s sustainable growth rate (SGR) formula is severely flawed. That’s why this year Congress released a draft SGR-replacement proposal on Oct. 31.

The American Medical Association’s policymaking House of Delegates (AMA) recently voted on whether or not to support Congress’ repeal of the Medicare payment formula. The coalition believed it was important for the AMA to be seen as united, and the vote was nearly unanimous to support the repeal, despite a huge problem with the proposal.

Stumbling block

The problem? The SGR-replacement proposal advocates a 10-year pay freeze. Obviously, that didn’t go over well with the AMA. However, the delegates realized that the SGR-replacement proposal was just a draft, and that there was still time to push for changes. Plus, the fact that Congress is seriously considering replacing the SGR is cause for celebration.

AMA President Dr. Ardis Dee Hoven believes now is not the time to give up, but rather work with Congress to get a proposal that would work for all involved. In addition, she told Medpage Today that the price is right to do the repeal now. The cost this year to repeal the SGR is $138 billion. Last year it was $297 billion over 10 years.

Plus, there’s bipartisan and bicameral support to fix the SGR, which may also never happen again. “The fact that Congress has come to agree on anything … is itself an incredible accomplishment and proof of the widespread recognition that SGR has to go,” said Dr. Hoven.

 AMA’s recommendations

In a letter to the Senate Finance and House Ways and Means committees, the AMA thanked them for the opportunity to offer “constructive recommendation to build upon and strengthen” their proposal to achieve a shared goal of creating a stronger and better Medicare payment and delivery system.

With the end goal being to create a system that allows physicians to practice  patient-centered care in an environment without a lot of erroneous administrative burdens, the AMA made the following key suggestions:

  • Include positive updates to reflect the increasing costs of practicing medicine, the expense of purchasing, upgrading and maintaining electronic health records, quality reporting programs and other regulatory requirements. In addition, payment updates are needed to support practice investments that allow for advancements in care delivery and clinical practice improvement activities.
  • Set the maximum penalty under the proposed Value-Based Performance (VBP) program at 4%. While still being a strong incentive for physicians to improve quality and participate in new APMs, it would also help prevent further erosion of access to care for seniors and the disabled.
  • Make performance comparisons for the VBP program among practices of similar size, based upon groupings of the number of eligible professionals (EPs). And establish tiers of physician practices that would allow similarly situated practices to be compared with each other (e.g., practices with fewer than 10 EPs, those with 10 – 50 EPs, those larger than 50).
  • Develop a methodology for prospectively determining physicians’ level of involvement in APMs in a way that allows multiple pathways to reach various thresholds that would qualify for the 5% APM participation bonus payment, exemption from VBP penalties and/or credit toward clinical practice improvement activities.
  • Eliminate the proposed provisions that would require a reduction in fee schedule payments of up to 1% in the years 2016, 2017, and 2018, unless misvalued services producing 1% in savings can be identified each year. This could potentially lead to the permanent removal over three years of close to 3% of funds from the physician payment pool. Alternatively, the target for identifying savings for misvalued services should be lowered to a more reasonable 0.5 % in each of the three years. And that any cuts or value adjustments be subject to budget neutrality (as with the VBM program) rather than being permanently removed from the physician payment pool.
  • Include a rigorous program of assistance and support for small, independent physician practices beyond what the proposal provides for in rural areas and health professional shortage areas (HPSAs).


Subscribe Today

Get the latest and greatest healthcare news and insights delivered to your inbox.