CLINICAL NEWS
Practice Update
Congress Repeals SGR Bill.
What Now?
n April 14, 2015, the U.S. Senate passed
the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) by
an overwhelming bipartisan majority
– putting an end to the controversial
Sustainable Growth Rate (SGR) formula
that had threatened to cut physician payments
for years. Two weeks earlier, it passed the House by a
similar overwhelming majority.
For more than 10 years, the SGR had mandated
large cuts which needed to be averted by temporary
Congressional action. Eliminating the SGR formula
has been a major focus of ASH and other organizations’ advocacy efforts.
The legislation spans more than 200 pages and
covers many issues beyond the repeal of the SGR. ASH
Clinical News spoke with Samuel M. Silver, MD, PhD,
chair of ASH’s Subcommittee on Reimbursement,
about the implications of t he SGR’s much-awaited
repeal on clinical practice.
Annual Payment Updates
Most importantly, MACRA repeals the SGR, which was
used to calculate Medicare payment rates to physicians.
The SGR was put in place to control costs so that the
yearly increase in the expense per Medicare beneficiary
does not exceed the growth in gross domestic product.
Because SGR was tied to the national economy with what
most agreed to be a flawed formula, in years of economic
growth the payment rate to physicians increased; when
our national economy worsened, though, payments were
cut by more than 20 percent.
“For years, Congress did nothing. Only physicians
were being punished about how the national economy
performed; the drug and equipment manufacturers did
not have any such targets,” Dr. Silver, who is professor of
internal medicine at the University of Michigan Medical
School, explained. “Each year, at the last minute, Congress would pull a rabbit out of a hat, put a patch on the
problem, and the target would change from –21 percent
(in which, theoretically, physicians owed the government
money) to an increase of 0.5 percent.”
For practicing physicians, these last-minute fixes
meant there was no reliability in income; private practice
physicians, for instance, were not able to plan for the
costs of hiring new staff and other business expenses.
Now, the SGR formula is being replaced by a statutory
payment update that is not set by a formula. The annual
payment updates will be enacted over the next few years:
• On July 1, 2015, Medicare payments for physicians
will go up by 0.5 percent from the current rates.
• Each year on January 1, from 2016 to 2019,
payments will increase by an additional 0.5
percent. As is true today, payments for individual
services may increase or decrease, but the average
service will have payments increased by 0.5 percent.
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ASH Clinical News
• Starting in 2020, payments will be flat
for an additional five years with no
increases.
Beyond 2020, payment rates will have
very modest increases. While the rates are
not as high as in previous years of healthy
economic growth, Dr. Silver noted, “The
bottom line is that the annual payment update
provides a baseline of stability.”
The SGR formula was actually supported by
physicians when it passed. The statutory formula was
a gamble, though, and physicians lost. With this new
mechanism in place, there is no situation that would lead
to increases in physician payment of 5 percent or more,
which is what some thought the SGR could have done.
Consolidation of Quality Reporting
Programs
Under the current law, physician payments in Medicare are subject to a series of adjustments based on
three separate programs: the Electronic Health Record (EHR) Meaningful Use Program, the Physician
Quality Reporting System (PQRS), and the ValueBased Modifier pay-for-performance program. MACRA will convert all three of these adjustments into a
single assessment program referred to as the MeritBased Incentive Payment System (MIPS), which will
be implemented in 2018.
In 2015, physicians could have as much as 6 percent of their Medicare payment at risk from the existing PQRS, meaningful use, and value-based modifier
programs. The legislation just passed by Congress
actually decreases the amount at risk in the first year,
reducing it to 4 percent, but gradually increasing the
risk to 9 percent in 2021.
While this consolidation may appear to be a big
change, the programs already had significant linkages
that may make the practical effect of this change rather
modest. “The MIPS is basically a consolidation of what
we already have, but that does not mean we completely
understand these quality reporting systems,” Dr. Silver
noted. “We need to ensure that these systems are relevant to and work well for hematology. We treat many
low-volume diseases, so developing overlying quality
metrics is difficult. That is a priority for the ASH Quality Committee.”
The MIPS program will, however, require practices
to participate in clinical practice improvement activities.
These activities are defined with very broad examples, so
they could take many different forms.
One major difference in the measurement of quality
is that quality benchmarks will be established a year in
advance, and physicians or practices will receive credit
for either achievement or improvement. This measurement methodology, which is already used in the hospital,
value-based purchasing system, allows strong incentives
for both high and low performers.
Incentives to Move to New Payment Models
The establishment of very modest payment increases
followed by flat payments is intended to provide an
additional incentive to physician groups to move into
“riskier” payment models. MACRA essentially establishes two paths for physicians: one for those accepting
newer models and one for those sticking with traditional models. Those who embrace alternative payment models (to the extent that 25% of their Medicare
revenue comes from these models by 2019) will receive
an additional 5 percent bonus payment for all services.
In 2021 and 2022, the threshold for receiving this
bonus increases to 50 percent.
There are both upsides and downsides to these
alternative payment models, Dr. Silver said, and exactly
how these models will impact hematologists is unknown.
There will be a significant amount of regulation to define
how a physician or practice would demonstrate what
percentage of their payments come from these models,
particularly in cases in which a physician is considering
work with private payers.
What Will This Mean for Hematologists?
For the most part, the everyday practice and its involvement with Medicare will look very much like it does
today with the passage of this law – just without the
looming payment cuts associated with the SGR formula.
The quality reporting and other mechanisms are again
similar to today’s programs, just repackaged in a relatively
modest fashion. The incentives to move to alternative
payment models should be carefully evaluated to ensure
that groups are comfortable taking o n risk, even with the
bonus increases associated with early adoption.
“We are certainly very grateful that SGR is now repealed,” Dr. Silver said, “but that doesn’t mean that there
aren’t many more issues to work on.” And the passage of
this legislation is not an end of the advocacy work related
to physician payment. MACRA will require a great deal
of regulatory interpretation by CMS – particularly in the
realm of defining the performance improvement activities and ensuring their relevance to hematology. ●
May 2015