The SGR Formula Has Been Repealed by the U.S. Senate | 04/14/2015
Posted: Apr 15 2015
Following the U.S. House of Representatives decision to pass legislation (the Medicare Access and CHIP [Children's Health Insurance Program] Reauthorization Act of 2015 - "MACRA") to permanently replace the Sustainable Growth Rate (SGR), the U.S. Senate has followed suit and the SGR formula has been officially (and immediately) repealed with a vote of 92-8. President Obama has stated that he will sign the bill into law.
MACRA is intended to be a bicameral, bipartisan agreement to return stability to Medicare physician payment. It will also establish an alternative set of annual payment updates & will fund CHIP and other programs important to family medicine.
What was the Medicare Sustainable Growth Rate (SGR)?
This was the method used by the Centers for Medicare and Medicaid Services (CMS) in the United States to control spending by Medicare on physician services. It was supposed to ensure that the yearly increase in the expenses per Medicare beneficiary did not exceed the growth in GDP (Growth Domestic Product). The SGR was passed into law in the Balanced Budget Act of 1997 to replace the Medicare Volume Performance Standard (MVPS), which was the previous method used by CMS to control costs.
What was the Controversy with the SGR?
According to the congressional summary document (available to download from the sources below), the SGR formula was serving as a cap on aggregate spending on physicians' services where exceeding the cap resulted in punitive recoupment in subsequent years. Since 2003, Congress has spent nearly $170 billion in short-term patches to avoid unsustainable cuts imposed by the SGR, thus failing to work in controlling physician spending.
2014 Controversy: ICD-10 made it into the SGR bill as Section 212. Both the House & the Senate ended up passing the bill with not a single elected official from either side even mentioning ICD-10 or even proposing to amend or remove Section 212...allowing the ICD-10 delay to occur once again.
What will MACRA Do?
This new policy repeals the Medicare Sustainable Growth Rate (SGR). It is intended to strengthen Medicare access by improving physician payments and making other improvements. According to the congressional summary document, it will remove the imminent threat of draconian cuts to Medicare providers and ensure a 5-year period of stable annual updates of 0.5% to transition to a new system. The new system moves Medicare away from a volume-based system towards one that rewards value, improving the quality of care for seniors.
The measure also consolidates various reporting programs, such as the Meaningful Use program for electronic health records (EHR) and several quality reporting programs, into a new, merit-based incentive payment system. The goal is to incentivize physicians to participate in alternative payment models such as accountable care organizations (ACOs). In addition, the bill extends the Children's Health Insurance Program (CHIP) as well as funding for community health centers and the National Health Service Corps.
ICD-10-CM Training Resources:
Online ICD-10-CM Training & Certification (50% off on April 22nd)
Live ICD-10-CM Training & Certification (Group Rates)
Online CEU Courses (AAPC & MMI Approved) (Group Rates)