Skip to content Skip to navigation

'Fix the SGR 2.0' heading your way

February 13, 2015
by Bob Gatty
| Reprints

I guess you could call this “Fix the SGR 2.0,” because it looks like there is at least an outside chance that Congress could well take action to prevent Medicare physician fees from skyrocketing when the latest “doc fix” runs out March 31.

Last month, in what we can call SGR 1.0, we asked whether Congress will find the will to solve the perennial Medicare physician payment problem. Since then, there actually has been some meaningful action.

You will recall that late last year key House and Senate committees agreed on legislation to repeal the sustainable growth rate (SGR) formula. Lawmakers, however, running up to an election, could not agree on a way to pay the estimated $144 billion 10-year cost.

Much of the medical community endorsed that bill, and since, it appears to have gained increased support.

Significantly, after the new Republican-controlled 114th Congress took office, the first hearing by the House Energy & Commerce Health Subcommittee, held Jan. 21 and 22, focused on “A Permanent Solution to the SGR: The Time is Now.”

There was universal agreement during the hearing by witnesses and Republican and Democratic lawmakers alike that the SGR must be repealed and that another “doc fix” patch should be avoided. Unless such action is taken, that patch will be required by March 31 to avoid a 21.2 percent Medicare payments cut.

The sticking point continues to be how to pay the cost of the reform. Some committee members (Democrats) even suggested that it could be done without Congress specifying how that expense would be covered. Republican committee leaders, however, strongly disagreed.

“If members are serious about seizing this historic moment to pass SGR reform, as a purely practical matter, for the bill to pass the House of Representatives and Senate, it must include sensible offsets,” said Subcommittee Chairman Joseph Pitts (R-PA).

Rep. Fred Upton (R-MI), chairman of the full committee, cautioned against framing discussions on “merely budgets or beneficiaries.” Contending that the “out-of-control” Medicare budget is on the “fast track to insolvency,” he said Medicare’s precarious financial situation threatens long-term access to care for seniors who depend on the program.

“So the most pro-beneficiary reforms we can adopt this Congress are ones that will not only remove the threat of the SGR, but also shore up the Medicare program with sensible reforms that make the program more sustainable for years to come,” Upton said. 

That comment seemed to indicate that Upton will be pressing for broader Medicare reform, not just finding a solution to the SGR. That effort, of course, would be complex and time-consuming.

A couple weeks after that hearing President Obama submitted his FY 2016 federal budget to Congress. Although GOP congressional leaders quickly dismissed the president’s budget as “dead on arrival,” it did contain a call for Congress to repeal the SGR and reform Medicare physician payments “in a manner consistent with the reforms included in recent bipartisan, bicameral legislation,” a reference to last year’s bill.

The budget proposal includes numerous initiatives to generate more than $415 billion in Medicare savings over the next decade, and it called for the end of sequestration, cuts triggered by the Budget Control Act of 2011 that slashed Medicare rates by 2 percent through 2021. President Obama urged implementation of three key strategies:

  • Modify healthcare payment structures to reward providers for optimal care.
  • Support practice redesign and create better capacity to improve care delivery.
  • Improve access to information to encourage data-driven decision-making by consumers, providers and businesses.

To encourage providers who deliver better care and outcomes for patients, the administration set a goal for 2016 of making 30 percent of Medicare payments through alternative payment models that link payment to delivery of efficient, high-quality, coordinated healthcare rather than for volume of healthcare services. The goal by 2018 would be 50 percent. Reforming the SGR would help achieve that, the president said.

Coincidentally, Mark Parkinson, president of the American Health Care Association/National Center for Assisted Living, noted that the organization has been “in the process of finding smarter ways to inject greater accountability and savings into the Medicare payment structure.”

Parkinson, commenting after an announcement by the Department of Health and Human Services regarding moving the Medicare program toward a quality-based payment system, said he is encouraged that the administration has made this a priority.

“We hope we can continue working with the White House, CMS and other stakeholders to determine the best path forward for achieving the administration’s aggressive goals without sacrificing access to high-quality skilled nursing care for our nation’s seniors,” he said.

Back to the SGR.

Last year’s legislation would have provided positive payment updates of 0.5 percent for the first five years, and then would have frozen payments for an additional five years to allow for the development and adoption of new, innovative payment and delivery models. Then, payments would be determined by many factors, including performance in the newly created Merit-based Incentive Payment System (MIPS) for those who remain in the fee-for-service payment system. Physicians in qualifying alternative payment models would receive a five percent bonus for five years.