Ding Dong the Medicare Sustainable Growth Rate is Dead!

United States CongressIn a vote late Tuesday evening the Senate voted 92-8 to kill the Medicare Sustainable Growth Rate (SGR) formula ending an almost 18 year headache for physicians and Congress. The bill will now go to President Obama. Obama has already expressed his support for the bill and is expected to sign it into law. Without congressional action, physicians would have faced a 21% cut in payments.

What is the SGR?

The SGR is a legislative mechanism established in 1997 that was intended to slow the growth of Medicare expenditures on physician services automatically adjusting individual service payment amounts when combined payments exceeded a prescribed target. The SGR first became a problem in 2002, when the formula mandated a 4.8% cut to Medicare payments. Congress allowed that cut to proceed, but that was the last time an SGR-related cut was allowed to proceed by Congress. In every year since, Congress has elected to act (17 times in all) to prevent excessive cuts to physician services.

Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)

MACRA repeals the SGR formula and replaces it with the following statutorily prescribed updates:

  • Beginning July 1, 2015, and effective January 1 of each subsequent calendar year through 2019, Medicare physician payments will be updated 0.5%.
  • Beginning January 1, 2020, and carrying through 2025, physician payments will not be updated.
  • Beginning January 1, 2026, and effective January 1 of each subsequent calendar year, physician payments will be updated 0.75% for physicians who adequately participate in qualified APMs, but only 0.25% for those who do not.

The legislation consolidates various reporting programs, such as the Meaningful Use program for electronic health records and several quality reporting programs, into a new, merit-based incentive payment system and would incentivize physicians to participate in alternative payment models. It also includes two years of funding for the Children’s Health Insurance Program, whose funding expires at the end of September, and $7.2 billion for community health centers over two years—avoiding a September expiration of a funding program set up through the Affordable Care Act.

Additional Provisions

While changes to physician payment provisions were the initial driver behind the bill, it also includes dozens of other provisions of great interest and import for many other healthcare providers and interested parties including hospitals, post-acute care providers, ambulance services, payors including:

  • Geographic Practice Cost Index - MACRA extends the work GPCI floor through 2017.
  • Global Periods - MACRA prohibits CMS from eliminating 10- and 90-day global periods beginning in CY 2017 and CY 2018, respectively but does not prohibit the agency from revaluing individual procedures that it believes may be mis-valued. MACRA further requires CMS to gather information necessary to determine whether surgical procedures with global periods are indeed mis-valued.
  • Therapy Services - MACRA extends the therapy exception and directs CMS to utilize manual medical review of exceptions requests on suppliers of therapy services who, among other things, have high denial rates, have a history of aberrant billing or are new enrollees.
  • Two-Midnight Rule - Delays enforcement of the rule through Sept. 30 2015.

Join Our Newsletter

Get Updates Direct to Your Inbox. Gain access to a rich library of articles, white papers, webinars, podcasts and more. Register today to receive eMDs Insights newsletter.

Specialty *
State *