SGR Repeal Bill Headed for Senate Following House Approval

A bill to repeal the Sustainable Growth Rate (SGR) formula garnered critical support in the House of Representatives, with an overwhelming 392 to 37 vote.

The bill is headed to the Senate, where Majority Leader Mitch McConnell believes it will pass; although the Senate won’t take action on the measure until it returns from its Easter/Passover break on April 13. This delay will push a repeal past an April 1 deadline, causing a brief 21% cut in reimbursement. If passed by the Senate, President Obama has promised to sign the bill into the law.

The replacement bill, called the Medicare Access and CHIP Reauthorization Act of 2015 (HR 2), would permanently repeal the SGR and incorporate $200 billion in spending, along with a raise in physician pay of 0.5% in the latter half of this year and then each year through 2019.

"We applaud the House of Representatives for passing legislation that eliminates the Sustainable Growth Rate formula and takes a giant leap toward meaningful and urgently needed Medicare physician payment reform,” ASCO said in a statement. “Cancer incidence among Medicare beneficiaries is expected to increase by 67% by 2030, and maintaining a fundamentally flawed payment system could compromise healthcare access for this growing patient population. The bill passed today goes a long way to restoring stability in one of cancer care's most vital programs.”

In place since 1997, the SGR was designed to keep physician payments in step with changes in gross domestic product (GDP); however, the formula was blamed for encouraging physicians to increase their volume of billing to make up for payment cuts. For their part, doctors complained that the swings in payment played havoc with their finances.

With the new bill, the emphasis in Medicare payment would shift from fee-for-service (FFS) to a quality incentive-based system. Providers could earn a 5% bonus depending on how well they adapt to patient-centered medical home models of care, among others that have quality-based care as their focus. Clinically based guidelines for quality care would be developed to measure how well physicians are performing; efforts would be made to improve the quality of Medicare data available from the Centers for Medicare & Medicaid Services (CMS). The latter initiative would ensure that various institutions could do analyses of data to aid in medical decision-making.

In addition, current incentive program payments, including the 2% penalty for failure to participate in the Physician Quality Reporting System (PQRS) and the 3% to 5% negative payment adjustment for failure to meet meaningful use guidelines, would be eliminated by 2019.

In an op-ed Wednesday in The Hill, two doctor-lawmakers, Rep. Ami Bera, MD (D-CA) and Rep. Larry Bucshon, MD (R-IN), said the time has come for action on a permanent SGR repeal. They noted that the formula has been amended some 17 times in the past decade.

“Under the current formula, cuts are indiscriminate and across the board; high-quality, cost-effective doctors are penalized just as much as those who are inefficient,” Bera and Bucshon wrote. “For more than a decade, the financial uncertainty caused by the SGR has left many doctors no choice but to reduce the number of Medicare patients they see and to delay investments in new equipment and innovative practice.”

They said approximately one in four Medicare patients has difficulty finding a primary care doctor.

The House package also extends the Children's Health Insurance Program (CHIP) for two years. In a statement Saturday, Senate Finance Democrats said they were “united by the necessity of extending CHIP funding for another four years.”

Congress came close to repealing the SGR last year, but the measure ultimately failed. This year, healthcare advocates are cautiously optimistic. President Obama has expressed support for the law.

"I've got my pen ready to sign a good, bipartisan bill," Obama said, according to Capital New York. In his healthcare newsletter Thursday, Capital's Dan Goldberg said, “The bill does not have unanimous support but it looks to have enough Democrats in the Senate to push it over [the] finish line.”

If the bill is enacted, three major Medicare incentive-based quality reporting programs would be integrated for smoother operation: electronic health records, PQRS, and the value-based modifier. The goal is to eliminate administrative redundancies that have frustrated physicians trying to report quality measures through different platforms.

A new, unified program called the Merit-Based Incentive Payment System would be established to improve physician accountability based on the following measures: clinical quality, resource utilization, meaningful use, and ongoing practice improvement.