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SGR Repeal: Another Step for Value-Based Payment

But some Medicare doctors still face temporary pay cuts

Hospital and physician groups applauded the April 14 Senate vote to repeal Medicare’s sustainable growth rate (SGR) formula for paying physicians. The Medicare Access and Children’s Health Insurance Program (CHIP) Reauthorization Act, approved 92 to 8 and previously OK’d by the House of Representatives, replaces the SGR with annual payment increases of 0.5% starting July 1 and continuing through 2019.

According to Kaiser Health News, the measure encourages better care coordination and chronic care management, and rewards providers who receive a “significant portion” of their revenue from an “alternative payment model” or patient-centered medical home with a 5% payment bonus.

Rich Umbdenstock, president and CEO of the American Hospital Association (AHA), commended the structural reforms to the Medicare program included in the legislation. “It fixes the physician payment problem and includes policy changes that move their payments to reflect the transformation happening in health care that hospitals already have embraced.”

James L. Madara, MD, executive vice president and CEO of the American Medical Association, said in a statement, “Passage of this historic legislation finally brings an end to an era of uncertainty for Medicare beneficiaries and their physicians — facilitating the implementation of innovative care models that will improve care quality and lower costs.”

While the SGR repeal won nearly universal praise from providers, Umbdenstock said the AHA will continue to push issues not included in the final bill, including “broad-based RAC reform and a sociodemographic adjustment to the readmissions penalty program, along with corrections to regulatory issues like the critical-access hospital 96-hour rule and physician supervision for outpatient therapy.”

Moreover, some Medicare doctors will still face a temporary 21% hit to their pay this month, even after Congress met the government’s Wednesday deadline to stave off the cuts, according to The Hill.

The bill passed just before 10 p.m. on April 14, which Senate leadership said would be enough to halt the payment cuts. But the Center for Medicare and Medicaid Services (CMS) wrote in a notice to providers on April 15 that “a small volume of claims” will be paid using the reduced rate. Those providers will be reimbursed at a later date after CMS re-processes their claims.

Sources: H&HN Daily; April 15, 2014; and The Hill; April 15, 2015.

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