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SGR work done, changes ahead
e-Reports, May 4, 2015
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The unprecedented happened. Physician organizations united like never before – hundreds of them from across the nation – working on your behalf, advocating for change. Something else was unprecedented. The U.S. Congress acted during April in bipartisan manner to repeal the sustainable growth rate (SGR) formula that threatened physicians since it was enacted in 1997. Thus, an 18th patch will not be needed.

ACOs are saving money
A report in the New England Journal of Medicine estimates that the 32 Medicare pioneer accountable care organizations (ACOs) saved the federal program $118 million in 2012, their first operating year. That savings was logged even though 13 ACOs dropped out of the pioneer program last fall and three paid penalties. ACOs represent one of the alternative payment models now changing the health care delivery system. See the study here.

The U.S. Senate passed the Medicare Access and CHIP Reauthorization Act, HR 2, by a 92 to 8 vote even though only one-third of its cost will be covered by added revenue or cost cutting. Your Medicare claims that were held for the first half of April are now being processed and paid at the rates in effect before the 21 percent cut was set to take effect.

“The ISMA worked diligently, along with the AMA and other state and specialty medical associations, to avoid yet another short-term patch to the critically flawed formula, ultimately allowing physicians to achieve some much needed stability in an ever-changing practice environment,” said ISMA President Heidi M. Dunniway, MD.

“Our Indiana Congressional Delegation is also to be commended for its role in this important victory for Indiana physicians and their patients. The repeal is a testament to the impact of grassroots efforts by physicians and reinforces the value of membership in the ISMA and IMPAC.”

Past President Stephen Tharp, MD, chair of the ISMA’s AMA Delegation, said, “First, it’s obviously a great relief and we need to say a big thank you to the AMA and the ISMA for leading this movement to correct the formula we knew was flawed since the SGR was first initiated. Their persistence was really one of the primary reasons we were able to explain and convince everyone this was an unsustainable system and needed reform.”

Provisions and details
A half-dozen proposed amendments to the law were voted down, including one to eliminate limits on Medicare’s physical therapy coverage. Two years of funding for CHIP were included, not four as some were seeking, and the bill allows higher premium costs for more well-to-do Medicare beneficiaries.

Some of the most important provisions of HR 2 include:

  • The SGR permanent repeal became effective immediately.
  • Positive physician payment updates of 0.5 percent are provided through 2019.
  • Physicians in alternative payment models (APMs) receive a 5 percent bonus from 2019 to 2024.
  • In 2026 and beyond, physicians in APMs qualify for a 0.75 percent update; all others will receive a 0.25 percent annually.
  • The fee-for-service payment model is retained; physician participation in APMs is entirely voluntary.
  • Technical support is provided for smaller practices, funded at $20 million per year from 2016 to 2020, to encourage participation in APMs or the new fee-for-service incentive program.
  • Funding is provided for quality measure development, $15 million per year from 2015 to 2019. Physicians retain their role in developing quality standards.
  • Current quality incentive and payment programs are consolidated and streamlined. The aggregate level of financial risk to practices from penalties has been mitigated in comparison.
  • Medicare’s two midnights policy setting 48 hours as the threshold for determining an inpatient stay is again delayed until Sept. 30.

However, much work remains. The AMA has pledged to stay vigilant, working to ensure that implementation of the new law bolsters the sustainability of physician practices and empowers physicians to provide the best possible care for patients.

As measures and criteria for APMs are identified and the models implemented, physicians and organized medicine will contribute to the debate and discussion. Challenges imposed by meaningful use of electronic health records, the Independent Payment Advisory Board and the transition to ICD-10 continue to trouble physicians. A period of change in health care has been accelerated as physicians will consider assuming more risk and endure more scrutiny on cost and quality.

No one is ruling out the need for additional legislation in the years to come. The ISMA and the AMA ask for your continued support as work continues to shrink roadblocks to care.

See a Frequently Asked Questions document about HR 2 online here.

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