Lawmakers Agree on a Plan to Repeal Sustainable Growth Rate Payment Model

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Lawmakers have moved to reform Medicare's troublesome physician payment formula with an update that uses a single conversion factor to determine the physician fee schedule.

Lawmakers have moved to reform Medicare’s troublesome physician payment formula with an update that uses a single conversion factor to determine the physician fee schedule. The House bill (HR 574) called, “Medicare Physician Payment Innovation Act of 2013,” repeals the sustainable growth rate (SGR) payment methodology and holds the reimbursement rate steady for 2014.

The bill provides physicians with a 0.5% increase in pay for five years before transitioning to an alternative payment model structure. It’s expected to cost Medicare about $126 billion over 10 years, but details about how Medicare will pay for this change are not included in the bill.

The new bill enhances the existing fee-for-service model by promoting value over volume. It promotes care coordination efforts for patients with chronic care needs, implements improved payment accuracy to individual providers, and requires the development of quality measures and collaboration between physicians and other stakeholders.

HR 574 combines the work of the Senate and two House committees: Energy & Commerce, and Ways and Means. Democrats and Republicans have worked together for nearly a year to draft legislation that repeals the SGR. However, the bill still requires the approval of both chambers.

A short-term payment fix to physicians and the extension of certain Medicare programs expires on March 31.

A summary of the bill is available here.