On April 14, 2015 the Senate voted 92-to-8 to approve legislation previously passed by the House that puts an end to the SGR-based physician payment formula for Medicare services. At posting time, President Obama said he would sign the bill. The Senate-passed measure is identical to the bill approved by the House; all amendments introduced in the Senate were defeated.
After the vote, many medical societies, including the AMA and AAOS, heaped praise on Congress. In a rare moment of brevity from Capitol Hill, Michigan Rep. Fred Upton told Kaiser Health News (KHN), “Stick a fork in it. It’s finally done.”
But according to KHN, “while the law lays out a structure on how to move to new [Medicare] payment models, much of their development will be left to future administrations and federal regulators.” And an even colder rain on the parade came in a report from Paul Spitalnic, the head actuary at the Centers for Medicare and Medicaid Services (CMS). Spitalnic’s report soberly observes that the legislation about to be signed into law “raises important long-range concerns that would almost certainly need to be addressed by future legislation.” While the bill specifies physician payment-update amounts for all future years, the CMS report says that “the specified rate updates would be inadequate in years when levels of inflation are higher or when the cumulative effect of price updates not keeping up with physician costs becomes too large.”
So while orthopaedists in the twilight of their active-practice careers may be able to “stick a fork in it,” younger surgeons may be distracted by debates about physician Medicare payments that are apt to crop up again.
According to the latest Congressional Budget Office (CBO) figures, replacing the SGR-based Medicare physician-reimbursement formula over the next 10 years, as proposed in legislation introduced last year, would cost $174.5 billion. But a closer look at the CBO numbers reveals that the accrued physician-payment costs over the same 10 years would be an estimated $137.4 billion if current reimbursement rates were frozen through 2025. That’s a difference of (only) $37.1 billion.
Under current law, fees that physicians receive for Medicare services will be cut by about 21% beginning on April 1, 2015. Two pending pieces of federal legislation—HR 4015 and S 2000—would repeal the SGR formula, but the bills do not include suggestions for covering the cost of an SGR replacement.
The American Hospital Association has gone on record against the “rob-hospitals-to-pay-doctors” approach that some people have advocated, saying in January that it “cannot support any proposal to fix the physician payment problem at the expense of funding for services provided by other caregivers.”
If a permanent repeal of the SGR formula isn’t politically feasible until after the 2016 presidential election, Congress will probably approve another short-term “patch” this year. That would be the 18th time in 12 years that legislators have kicked this expensive can down the road.
Whether their political persuasions lie left, right, or center, almost all physicians agree that something permanent needs to be done about the sustainable growth rate (SGR) formula used for physician reimbursement under Medicare. Unless some legislative action is taken between now and March 31, 2015, a 21 percent cut in physician Medicare reimbursements will take effect on April 1. So, is the newly constituted Congress ready and willing to act?
Not surprisingly, the answer to that question depends on whom you talk to, according to a recent MedPage Today article. Douglas Holtz-Eakin, PhD, former director of the Congressional Budget Office and current president of the American Action Forum, says “all eyes should be pointed toward 2015” for action on SGR, because the current lame-duck session is unlikely to take much action on health care. However, after the lame ducks hobble home, Holtz-Eakin predicts movement in Congress toward answering the $180 billion question: how to pay for an SGR repeal.
Caroline Pearson, vice president of the healthcare consultancy Avalere, isn’t so optimistic. “I don’t think the SGR will have a permanent fix…until after the 2016 election,” she told MedPage Today, adding that “the ‘pay-fors’ are everything.” Hoping for a Republican president to work with beginning in 2017, GOP members of Congress will fight for entitlement reform that will include an SGR fix, Pearson predicts, opining further that “an SGR fix is unlikely as a standalone [bill].”
If Congress approves another one-year “patch” of the current SGR-based system in early 2015 instead of a repeal, it will be the 18th time over 12 years that legislators have passed such temporary stopgaps. In recent years, both the AMA and the AAOS have staunchly opposed short-term “doc fixes” in favor of a once-and-for-all scrapping of the SGR.
What do you think—will Congress repeal the SGR during 2015?
Links to previous OrthoBuzz coverage of SGR:
By a vote of 64 to 35, the US Senate approved a one-year “patch” of the current SGR-based Medicare payment formula, rather than entirely replacing the flawed system. President Obama signed the bill, which provides a 0.5% increase in physician Medicare reimbursements for the rest of 2014.
It’s the 17th such temporary stopgap Congress has passed over the last 11 years, and it came despite staunch opposition to another short-term “doc fix” by many physician groups, including the AMA and the AAOS. When the House passed the same measure a week earlier, AAOS president Frederick Azar, MD, said he was “profoundly disappointed.”
There was a last-ditch but unsuccessful effort by Senate Finance Committee chairman Ron Wyden (D-Oregon) to get his colleagues to vote on a permanent repeal of the SGR formula. Had Congress not acted at all, a 24% cut in Medicare reimbursements would have taken effect April 1, 2014. Previous patch votes have been accompanied by congressional promises to use the reprieve to hammer out a bipartisan deal to pay for a permanent SGR repeal. That has never happened, and few are optimistic that it will happen this year.
As physicians are swallowing the bitter pill of another SGR patch, some are relieved with another stipulation in the bill: a one-year delay in the implementation of the ICD-10 code set until at least Oct. 1, 2015. The AMA recently estimated that implementing the new, more complex code set could cost small practices up to $225,000, and last July the AAOS supported a bill to stop the transition to ICD-10 so physicians could develop an appropriate alternative. Another provision in the new bill gives the secretary of Health and Human Services permission to address “misvalued codes” used in the Medicare physician fee schedule.
According to Thomas Barber, MD, chair of the AAOS Council on Advocacy, “The delay in ICD-10 implementation may provide temporary relief for some, but the importance of a permanent SGR policy together with the harmful misvalued codes provision in this patch greatly outweigh any benefits.”
Read a summary of the bill’s provisions here: http://www.massmed.org/Advocacy/Key-Issues/Medicare/Summary–Protecting-Medicare-Access-Act-of-2014/#.UzrNkqJ0lyI
Up against an April 1 deadline that would see Medicare payments to physicians plunge by nearly 24%, a bipartisan group of Congressional negotiators introduced legislation that would repeal Medicare’s sustainable growth rate (SGR) formula and replace it with an annual 0.5% pay increase for five years. The proposed legislation contains additional provisions designed to transition Medicare from a pay-per-procedure system to one that promotes value through alternative payment methods (APMs) and rewards physicians for engaging with APMs. Those provisions include:
- A consolidation of three existing Medicare quality programs into one
- Incentives for care coordination
- Involvement by physicians in developing clinical guidelines, performance measures, and APMs
- Making provider-specific quality and utilization data more publicly accessible
Before we hail this as the epitome of bipartisan success, it should be noted that the legislation in its current form does not detail how Congress would pay for a permanent SGR repeal, which is estimated to cost between $120 billion and $150 billion. That significant detail will be debated if and when the full membership of both chambers considers the bill. Congress has been at similar SGR crossroads before and ended up passing short-term “patches” without permanently revising what everyone agrees is a failed formula.
David Glaser, JD, alerts us to proposed changes in the healthcare reimbursement model that would make employing physicians less appealing for hospitals. MedPAC, the Medicare Payment Advisory Commission, issued a report that details a discrepancy between higher reimbursements for services rendered in hospitals relative to those for the same services provided in clinics. Simply put, more Medicare money is available to compensate physicians when they are in a hospital outpatient setting. This MedPAC report proposes an end to the added “facility fee” that drives the discrepancy by leveling reimbursements across the board in all settings. MedPAC recommendations are not binding, and Congress has the final say about Medicare reimbursements. But in Glaser’s opinion, “the days of additional facility fee payments are numbered.”