The Medicare Sustainable Growth Rate Repeal: Implications for Your Health System

Sustainable Growth Rate Editor’s Note: The Sustainable Growth Rate (SGR) Repeal and Medicare Provider Payment Modernization Act of 2014, introduced to Congress on February 6, 2014, is a bipartisan attempt to address perceived failings of the current Medicare physician payment system, the so-called “Doc Fix.” Below, two industry experts provide commentary on the bill’s proposed changes and the implications for health systems and providers.

Commentary from Laura Dietzel, Director of Regulatory Knowledge at Health Catalyst

Those who are familiar with the Value-Based Purchasing program in place for hospitals will recognize the same basic structure in the Merit-Based Payment System (MIPS) program being introduced as part of the Sustainable Growth Rate (SGR) Repeal and Medicare Provider Payment Modernization Act of 2014 now being considered by Congress. During the years of 2018 through 2023, the MIPS program would annually calculate for the provider a composite score determined by performance in four domains:

  • Quality (includes measures in the current PQRS, VBM, and MU programs)
  • Resource Use (includes measures in the current VBM program)
  • Meaningful Use (meaningful use of a certified EHR would continue to apply)
  • Clinical Practice Improvement Activities (a new reporting requirement)

The annual MIPS score is then compared to a national benchmark resulting in a positive, negative, or neutral payment adjustment for the provider with the highest performing providers receiving proportionally larger incentive payments.

The SGR bill also proposes methods for stabilizing annual fee updates, encouraging care management for patients with chronic conditions, ensuring accurate valuation of services, promoting the use of appropriate use criteria for advanced diagnostic imaging, improving physician service transparency, and expanding access to claims data.

Though MIPS does not appear to reduce the individual reporting requirements now in place for ambulatory care, and actually introduces a few new ones, the alignment and organization of multiple reporting efforts into a single program would be a welcome one.

And as was true for many hospitals when faced with the implementation of Value-Based Purchasing, physician practices responding to the MIPS program would need the analytic tools that can both report on the individual metrics and help track estimated MIPS scores throughout the year. Otherwise, practices may find it difficult to avoid incurring a negative year-long payment adjustment.

Quick access to data about the patient care process is key to facilitating quick improvements – and if the SGR bill passes, it will also be key to avoiding payment reductions in the world of value-based reimbursement.

Commentary from Guest Contributor Brian Ahier of

Although they have not yet determined how it will be paid for, the House (bill referred to Committee on Energy and Commerce et al.) and Senate (bill referred to Senate Finance) have agreed on a permanent fix to the sustainable growth rate (SGR) formula that sets physician payment in the Medicare program. Under the deal Medicare will increase the amount it pays physicians by 0.5% each year for the next five years. The plan provides financial incentives for healthcare providers to participate in tests of alternative payment models (APMs). The deal also includes offers of bonuses to providers that agree to have their reimbursements based more on outcomes than on the volume of services they provide. The bill would also consolidate three different Medicare incentive programs, including the one for meaningful use of an electronic health record system (EHR) wildstar gold.
Starting in 2018, payments under the new system would be adjusted based on performance in the new incentive system, the Merit-Based Incentive Payment System (MIPS), which consolidates three incentive programs: the Physician Quality Reporting System (PQRS), which provides incentives for physicians to report on the quality of care measures; the Value-Based Payment Modifier, which adjusts payment based on quality use of resources; and meaningful use of electronic health records. MIPS will assess performance in four categories:

  1. Quality – In addition to measures used in the existing quality performance programs (PQRS, VBM, EHR MU) HHS will develop additional measures. Measures used by qualified clinical data registries may also be used to assess performance under this category.
  2. Resource Use – The resource use category will include measures used in the current VBM program.
  3. Meaningful Use – Current EHR meaningful use requirements, demonstrated by use of a certified system, will continue to apply in order to receive credit towards incentives in the new system. However, to prevent duplicative reporting, professionals who report quality measures through certified EHR systems for the MIPS quality category are deemed to meet the meaningful use clinical quality measure component.
  4. Clinical Practice Improvement Activities – Professionals will be assessed on their effort to engage in clinical practice improvement activities. Incorporation of this new component gives credit to professionals working to improve their practices and facilitates future participation in APMs.

At the end of 2017 some incentive program penalties are sunset, including the 2 percent penalty for failure to report PQRS quality measures and the 3 percent (which would have increased to 5 percent in 2019) penalty for failure to meet EHR meaningful use requirements. The legislation would also require that EHRs be interoperable by 2017 and prohibit providers from deliberately blocking information sharing with other EHR vendor products. Another provision would require HHS to publish a list of clinical-decision support tools by April 1, 2016, that would be used in a program promoting the appropriate use of advanced diagnostic imaging. After Jan. 1, 2017, Medicare will pay only for images ordered by a clinician who has consulted one of these qualified systems and whose order adheres to what are called applicable “Appropriate Use Criteria.”

There is flexibility to participate in MIPS in a way that best suits a particular practice environment. These options could include: use of EHRs, use of qualified clinical data registries maintained by physician specialty organizations, and the option to be assessed as a group, as a “virtual” group, or with an affiliated hospital or facility. Technical assistance would also be available to help practices with 15 or fewer professionals improve MIPS performance or transition to APMs. Overall, there will be very strong incentives to participate in APMs.

This bill will consolidate plans proposed last year by the Senate Finance, House Ways and Means, and House Energy and Commerce committees. How to pay for this new plan is still a big task ahead, although there seems to be enough momentum behind the effort to get this done. With the 0.5 percent increase, the cost for the SGR repeal comes to about $125 billion over 10 years, according to the Congressional Budget Office. A powerful array of provider organizations have expressed strong support including:

  • The American Medical Association
  • The American College of Physicians
  • American Academy of Family Physicians

But the final product still needs to pass both houses of Congress and then be signed by the President. And hospital groups may be the first to try to guard their share of revenue. Already earlier this week the Federation of American Hospitals published a chart describing recent cuts on its blog entitled “Enough is Enough.” There will be jockeying to determine funding, but I think we are closer than ever before to finally resolve this incredibly important issue, and at the same time make some smart moves in consolidating and simplifying programs while moving towards a payment system that rewards quality instead of quantity in healthcare.

Your turn: What do you think the bill will mean for the future of healthcare?

Learn more about the move from meaningful use to meaningful analytics.

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