House & Senate Committees Issue Framework for Repealing Medicare’s SGR

Late last week, the House Ways & Means and Senate Finance Committees issued a discussion draft on how to repeal the Medicare SGR and reform physician payments. The discussion draft is a summary of the House and Senate’s bicameral framework to repeal and replace the SGR, the first and most significant work from Congress on this decade old problem. Unless Congress acts before January 1, the Medicare physician payment schedule will be reduced on average by 24%.

Key provisions:

  • The SGR formula is repealed.
  • Annual fee schedule payment updates would be frozen for 10 years; annual positive updates would begin in 2024.
  • A new “value-based performance (VBP) payment program” would be used to adjust payments beginning in 2017.  This new VBP program essentially combines all the current incentive and penalty programs (e.g., value-based modifier, meaningful use, PQRS) into one budget-neutral program.  Payments could be increased or decreased significantly, depending on how well a physician scores relative to others on a composite performance score.
  • Physicians participating in certain alternative payment models, including the patient-centered medical home, would be exempt from the VBP program.  Revenue thresholds are established for APMs other than the medical home model, and two-sided risk and a quality component would be required to qualify for a 5% bonus in 2016-2021.
  • Several proposals to “ensure accurate valuation of services” under the physician fee schedule are made.  Over a three-year period, mis-valued codes would have to be adjusted to achieve 1% in total fee schedule savings to avoid reductions in the total physician payment pool.  In addition, the Secretary of HHS would initiate a data collection effort on resource use requiring selected physicians to submit data (CMS may provide some compensation to physician for doing this) or face a one-year, 10% payment reduction.
  • Appropriate use criteria would be applied to certain imaging services; prior authorization requirements would be imposed on outliers.
  • HHS would publish utilization and payment data for physicians on the Physician Compare web site.

Comments are sought by the committees by November 12. MSNJ is evaluating and conferring with the AMA on the discussion draft. This will be a topic of debate at the AMA Interim Meeting next week. It is important to note that the draft is not legislation and provisions included in the draft could change.

About MSNJ

Founded in 1766, the Medical Society of New Jersey is the oldest professional society in the United States. The organization and its dues-paying members are dedicated to a healthy New Jersey, working to ensure the sanctity of the physician–patient relationship. In representing all medical disciplines, MSNJ advocates for the rights of patients and physicians alike, for the delivery of the highest quality medical care. This allows response to the patients’ individual, varied needs, in an ethical and compassionate environment, in order to create a healthy Garden State and healthy citizens.

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