House Subcommittee Approves Permanent SGR Fix

Twitter icon
Facebook icon
LinkedIn icon
e-mail icon
Google icon

The draft bill to permanently repeal the now 15-year-old Medicare sustainable growth rate (SGR) formula was approved by a voice vote by the House Energy and Commerce Health Subcommittee and will now be considered by the full Committee. However, it is unlikely to reach a floor vote by the full U.S. House of Representatives before the August legislative recesses.

The goal of the proposed legislation is to control Medicare costs in a more realistic manner than the SGR formula, which simply adjusts physician reimbursement downward when Medicare costs rise faster than the national gross domestic product (GDP). Because U.S. health care spending has been outpacing economic growth and inflation since the SGR was voted into existence along with the Balanced Budget Act of 1997, Congress has had to repeatedly pass temporary legislative fixes to prevent the SGR from being applied to Medicare physician payments. When the current fix expires on January 1, the current cut to physician payments may exceed 25 percent unless Congress acts.

The permanent SGR fix proposed by the House Energy and Commerce Health Subcommittee would replace the SGR with an annual payment increase of 0.5% until 2019. That year, a new Physician Quality Reporting Program kicks in. Under the program, physicians would receive either a 1% bonus or a payment reduction based on their personal performance on some yet-to-be-determined quality measures and clinical practice improvements.

Physicians can opt out of reporting quality information, but it means continuing to receive a payment reduction under the Physician Quality Reporting Program.

Recognizing that moving to an alternate payment setting system for physicians that still attempts to hold down costs is controversial, the subcommittee has made a point of seeking comments from stakeholders. The American College of Radiology was one of the 88 groups that submitted comments. However, like many others, it noted that so many specifics are still undefined in the proposed legislation that it is hard to give specific feedback.

Of concern to the ACR and others is that the proposed legislation does not specify how the government will cover the cost of not making the currently mandated SGR cuts for 2014 and beyond. It also does not specify how the 0.5% payment increase will be paid for. The only cut it mentions is instructing Medicare to find “improperly valued services” and reduce the amount the government pays for these services until it achieves a net reduction of 1% of the anticipated expenditures during 2016 through 2018.

Naturally, most Medicare providers would say the services they provide are “improperly valued” because the reimbursement for the service is too low, not too high.