Physicians can have a significant amount of hope for the revamping of payment mechanisms and the elimination of the Sustainable Growth Rate (SGR) formula. As this finishes working its way through Congress, medical practices and other medical businesses will need to be able to react and do their financial modeling to make certainthey understand the likely outcome both for government payment programs as well as other programs that end up linking to these formulas. The ability to understand and predict revenue continues to be the most important driving force in knowing when and how to attack cost control issues.
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 move toward alternative payment models (APMs), including Patient-Centered Medical Homes, and a requirement that practices receive 25% of their Medicare income via APMs in 2018-2019.
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.