Parties on Capital Hill continue to make progress by enacting a bi-partisan legislation to repeal and replace the current Sustainable Growth Rate (SGR) formula that is used to update annually, Medicare Physician Fee Schedule payments.
Even though it is earlier in the year but still a very important step, on July 31, the House Energy and Commerce Committee, by a vote of 51 – 0, approved legislation (H.R. 2810) repealing and replacing the SGR formula effective January 1, 2014.
Here is what the legislation is supposed to do:
1. Repeal the current SGR formula, effective for services provided on or after January 1, 2014;
2. Sets a 0.5% increase in the Conversion Factor (CF) for each year for the next 5 years (2014 – 2018).
3. The CF would continue to be permanently updated with 0.5% increases starting in 2019.
4. Also starting 2019, fee schedule payments would also be adjusted by “quality adjusters”
5. “Eligible professionals” would have the option to move from traditional fee-for-service payments using the fee schedule and the conversion factor, to an alternative payment model.
6. CMS will work with physician organizations and other stakeholders to develop the alternative payment models (APMs) beginning 2014.
7. APMs can be approved any time after 2014;
8. A list of approved APMs can be listed on the Federal Register by the Secretary beginning 2015.
9. The legislation anticipates multiple alternative payment models will be developed (presumably specialty specific)
10. Eligible Professional Organizations (peer cohorts) shall develop clinical quality measures applicable to that cohort;
11. The Secretary shall establish a quality adjustment scale based upon the clinical quality measures. Scores will range from 0 – 100;
12. The quality adjustment score shall have three outcomes: 1% increase, 0% increase or -1% adjustment based upon the providers score on the quality adjustment scale;
13. Each year’s score will only affect payments for that year;
14. New providers payments will be frozen (i.e. score of 0) for one year after entering the program (i.e. no increase or decrease)
15. If a provider opting for the Alternative Payment Model fails to report quality measures, the provider”s payments would be based upon 95% of the fee schedule amount;
16. CMS is directed to coordinate the new initiative with both the PQRS program and the EHR incentive program;
17. If an APM results in higher payments than would have otherwise occurred or if the APM results in lower quality than the Secretary deems appropriate, the Secretary is authorized to immediately terminate the APM;
18. Directs the Secretary of HHS to publish an annual report on how well these new payment models are working. Reports are also to be produced by GAO and MedPAC.
Unfortunately, the legislation gave no indication as to how it will be “paid for”. The Congressional Budget Office (CBO) said that repealing the SGR formula would “cost” the Medicare Trust Fund approximately $139 Billion over 10 years. The House Leadership also said that whatever formula is put into place, will be “paid for”. Thus meaning there will be offsets.
The House Ways and Means Committee shares jurisdiction over Medicare Part B issues with the Energy and Commerce Committee (E&C). They will now build on the E&C Committees work trying to report out a plan for repealing and replacing the SGR. They will however not be able to make any action until Congress returns to session in September.
Changes to H.R 2810 are not likely at this time, but that could change in the up coming months.
The Ways and Means Committee has sole jurisdiction over all other Medicare programs (Part A, C & D) and handles raising revenue and legislation. That is where we will see how Congress plans to pay for fixing the SGR.
A bi-partisan group of Senators announced they are working on their own version of an SGR repeal and replace bill. The are planning to announce their proposal when Congress returns from recess in September. There are indications that they will have some of the same concepts as H.R. 2810 but could have significant differences in terms of details.
Should the House and Senate pass the SGR repeal and replace legislation these bills will have to be reconciled. President Obama has indicated he supports repealing and replacing the SGR and if the House and Senate reach a solution , the President will sign that legislation into law.