SGR deal revamps incentive programs, focuses on quality measures

February 11, 2014

Congress has agreed on legislation to repeal the Sustainable Growth Rate (SGR) formula. But the changes not only affect physician reimbursements. The proposed legislation also overhauls current incentive programs, establishing the Merit-Based Incentive Payment System.

 

Congress has agreed on legislation to repeal the Sustainable Growth Rate (SGR) formula used to set Medicare reimbursements for healthcare providers. Over the next five years, as new payments models are phased in, Medicare providers would be guaranteed annual .5% reimbursement increases.

Changes to the SGR formula not only affect physician reimbursement. The proposed legislation also overhauls current incentive programs, establishing the Merit-Based Incentive Payment System (MIPS). The new incentive program combines Meaningful Use, the Physician Quality Reporting System, and the Value-Based Modifier programs. A new assessment of physician using quality, resource use, EHR Meaningful Use, and clinical practice improvement will reward value over volume, according to a press release from the U.S. House Ways and Means Committee.

Other incentives include a 5% bonus for practices that can demonstrate they are moving to adopt alternative payment models (APMs), including Patient-Centered Medical Homes. To qualify for the bonus in 2018-2019, a practice must meet the threshold requirement of obtaining at least 25% of its revenue from a Medicare APM during the most recent time period for which data are available. Over subsequent years the requirements will evolve in terms of revenue threshold, payer mix for determining the revenue threshold, and payment arrangements.

Also, the proposed law will establish a Physician Compare website for patients to research data on quality and care, and will allow qualified clinical data registries to purchase claim data to analyze patient safety and quality metrics.

Doctor’s groups, including the American Medical Association, the Medical Group Management Association, the American College of Physicians, and the American Academy of Family Physicians are expressing optimism that the new legislation will be a step in payment reform that pays physicians for quality instead of quantity. The legislation must still be passed by both houses of Congress and signed by President Barack Obama before it becomes law.

Congress established the SGR in 1997 as a way to limit healthcare spending by linking Medicare payments to the overall inflation rate. But Congress has avoided declines annual fixes. Since 2003, Congress has spent $150 billion in short-term patches to avoid extreme cuts to physician pay; the most recent will expire on March 31.

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