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Bill would reform Medicare compensation for physician practices

Monday February 10, 2014
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Members of a U.S. Senate committee and two House committees introduced a bipartisan bill that would replace the Medicare Sustainable Growth Rate physician compensation formula.

The work is not done, however, with Congress still facing the task of agreeing on a way to finance the SGR repeal.

The SGR formula has tied physician payment updates to the relationship between overall fee schedule spending and growth in gross domestic product, and “is fundamentally broken,” according to a congressional news release. Although originally introduced as a mechanism to contain the growth in spending on physician services, a decade of short-term “patches” has frustrated providers, threatened access for beneficiaries and created a budgetary dilemma from which Congress has struggled to emerge.

Over the last decade, Congress has spent nearly $150 billion on short-term SGR overrides to prevent pending cuts that would slash physician compensation by 24% and potentially lead practices to turn away Medicare patients.

The legislation “provides stability for physicians so they will no longer face the uncertainty of massive cuts, but also begins the process of improving how we pay for medical care to focus on positive results for seniors,” Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee, said in the news release.

The proposal repeals the SGR and replaces it with a system focused on “quality, value and accountability,” according to a news release, while ensuring a five-year period of annual updates of 0.5%.

A consolidated Medicare quality program would reward providers who meet performance thresholds and financially penalize those who fall short, reminiscent of the value-based purchasing program for hospitals. It would incentivize care coordination efforts for patients with chronic care needs and introduce physician-developed clinical care guidelines to reduce inappropriate care that can harm patients.

Among the incentives is a 5% bonus payment to providers who receive a certain portion of their revenue via an alternative payment model — such as an accountable care organization — or through a patient-centered medical home. To qualify, participants would need to receive at least 25% of their Medicare revenue through such models in 2018-19.

The proposal also includes several steps to expand the use of Medicare data for transparency and quality improvement.

Full proposal: www.scribd.com/doc/205242232/SGR-Repeal-and-Medicare-Provider-Payment-Modernization-Act


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