Congress gets suggestions for replacing SGR Medicare payment formula

June 6, 2012

Organizations representing physicians and healthcare executives think the current method for setting Medicare fees is unfair. Here's what they would do instead.

Many of the professional organizations representing you and your colleagues think the sustainable growth rate (SGR) formula Congress uses to set Medicare’s fee schedule is unfair and should be replaced-and they have plenty of ideas for how you should be paid for Medicare services instead.

In April, the U.S. House of Representatives’ Ways and Means Committee asked the American Medical Association (AMA) and other healthcare organizations for comments on, and possible alternatives to, the SGR formula. Among the organizations that responded were the American College of Physician Executives (ACPE) and the Medical Group Management Association-American College of Medical Practice Executives (MGMA-ACMPE), in addition to the AMA.

All three organizations stressed that the SGR formula should be repealed and replaced over time with a “menu” of different payment and delivery models.

“This menu should go beyond shared savings and accountable care organizations based on total costs, and should also include innovations such as bundled payments, performance-based payments, global and condition-specific payment systems, warranties for care, and medical homes,” James L. Madara, MD, executive vice president and chief executive officer of the AMA said in that organization’s statement to the committee.

In addition, Madara urged the committee to facilitate payment reform by waiving regulations such as the Ethics in Patient Referrals Act-also known as the Stark Law-for physicians experimenting with delivery models that “promote quality, increase coordination, and reduce costs.”

Susan Turney, MD, MS, FACP, FACMPE, president and chief executive officer of the MGMA-ACMPE, said in her letter that it is important to apply innovative payment methodologies appropriately for different types of practices and patient care. To that end, “Medicare should offer timely data sharing and financial incentives to assist medical practices that wish to experiment with alternative approaches to achieving savings,” she wrote. In addition, Turney said, doctors should get credit under Medicare Part B for savings they achieve under Part A.

The ACPE, in its response, said that a new Medicare reimbursement formula needs to be:

value-driven,

evidence-based,

quality-centered,

safe,

measured,

fair,

innovative,

streamlined, and

physician-led.

“Our board discussed what we wanted our message to be and came up with these points,” Peter Angood, MD, ACPE’s chief executive officer, tells Medical Economics. “Financial reform is obviously an important piece of it, but ultimately it’s about reforming healthcare.”

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