On October 31, 2013, House Ways and Means Chairman Dave Camp (R-Mich) and Senate Finance Committee Chairman Max Baucus (D-Mont) unveiled a proposal to permanently repeal Medicare’s Sustainable Growth Rate (SGR) formula. The proposal would gradually replace Medicare’s fee-for-service (FFS) reimbursement system with a value-based performance system. Under the proposal, FFS payments would be frozen at current levels for 10 years, while physicians and other healthcare professionals would be eligible to receive performance-based incentive payments or annual bonus payments beginning as early as 2016. Comments from the medical community are requested by November 12, 2013.
Background
Under the current SGR formula, unless Congress intervenes as it has annually in every year since 2003, physicians are due for a payment cut of approximately 24.4% effective January 1, 2014. The Congressional Budget Office (CBO) has recently scored the cost of repealing the SGR and freezing physician payments at current levels at $138 billion over 10 years—a marked decrease from prior estimates, which have been as high as $316 billion over 10 years.
This past summer, on July 21, 2013, the House Energy and Commerce Committee unanimously approved an earlier bill to repeal the SGR, H.R. 2810. That bill was scored by CBO at an estimated cost of $175.5 billion over 10 years. (To read our Health Headlines article discussing H.R. 2810, please click here.) One key difference between the Energy and Commerce bill and the current proposal is that the earlier bill would permit annual payment increases of 0.5 percent over 5 years, whereas the current proposal would freeze physician payments at current levels for the next 10 years, through 2023. Although CBO has not yet scored the current proposal, it is expected to be less costly due to the 10-year payment freeze. Like the earlier bill, the current proposal does not identify revenue increases or spending cuts that will be necessary to finance the new system.
Summary of Proposal
Under the proposal, beginning in 2017, performance-based incentive payments for physicians and other healthcare professionals would be available based on their performance in a prior period. Penalties currently assessed under the Physician Quality Reporting System, the Value-Based Modifier, and the Electronic Health Record Meaningful Use programs would remain in the physician payment pool and would be used to fund the incentive payments. For purposes of awarding incentive payments, performance would be assessed using the reporting measures and metrics from each of these programs. Professionals would receive a composite score encompassing their performance with respect to each of the following four categories: 1) Quality; 2) Resource Use; 3) Clinical Practice Improvement Activities; and 4) EHR Meaningful Use.
As an alternative to the performance-based incentive payments, if professionals receive a significant portion of their revenue from alternative payment models that include both financial risk and quality measurement components, they would be eligible for 5% annual bonus payments between 2016 and 2021. The revenue threshold to qualify for the bonus payments would be at least 25% of their Medicare revenue for 2016 and 2017, increasing to at least 50% of either Medicare or all-payer revenue in 2018 and 2019, and at least 75% of Medicare or all-payer revenue in 2020 and 2021. Bonus payments would end in 2021.
The proposal also includes measures that would establish new payment codes for complex chronic care management services and goals for identifying and revaluing misvalued services under the physician fee schedule. Under the proposal, professionals ordering advanced imaging and electrocardiogram services would be required to consult with “appropriate use criteria” to be specified by HHS in consultation with stakeholders.
A copy of the Discussion Draft of the proposal, including instructions on how to submit comments, is available by clicking here.
Reporter, Susan Banks, Washington, D.C., +1 202 626 2953, sbanks@kslaw.com.
