On Thursday afternoon (2/6) the House Ways and Means Committee, House Energy and Commerce Committee, and Senate Finance Committee leadership introduced a bi-partisan/bi-cameral bill to repeal and replace the Medicare Sustainable Growth Rate (SGR) formula. The Congressional sponsors have provided a section-by-section summary for your review.

In addition to formally repealing the SGR, the bill:

• Provides for annual automatic payment updates of 0.5% for five years (2014 – 2018)
• Discontinues automatic updates for five years, beginning in 2018
• Consolidates the three existing Medicare quality programs into a single value-based incentive the Merit-based Incentive
• Payment (MIP) Program
• Provides for increased Medicare payments based upon score on a (MIP), beginning in 2018
• Would resume annual automatic updates beginning in 2024. All providers would receive an update, but the amount of the automatic update would vary from .5% to 1%
• Provides incentives, such as a 5% bonus to providers who receive a significant portion of their revenue from an APM, for providers to switch to alternative payment models (APMs)
• Expands the availability of Medicare data to patients and certain qualified entities

The bill does not include separate payment provisions known as “extenders.” (see below)
 
While this framework agreement is encouraging, and represents significant progress on repealing and replacing the much maligned SGR formula, none of the sponsors of the legislation have formally provided any information on how they propose to pay for this fix. Although official estimates have not been finalized, preliminary estimates appear to put the cost of this proposal somewhere in the neighborhood of $120-$130 billion over 10 years.

This means that before the bill can be voted upon, the sponsors must identify savings or new revenue of a comparable amount.

Several Congressional offices expressed considerable disappointment that the so-called Extenders were not included in this proposal. They indicated that they intend to continue pushing House and Senate leaders to include the Extenders in the final package. They noted that because the budgetary offsets have not been finalized, an opportunity to include the Extenders is possible if they can find the money necessary to pay for the extensions. The Extenders not included in the agreement are:

• The Therapy Cap
• The work GPCI floor
• Ambulance add-ons
• The Medicare-dependent hospital (MDH) and low –volume hospital programs

Congress has until March 31st to pass legislation to prevent a 24% reduction in Medicare physician fee-schedule payments from occurring. All of the so-called Extender initiatives are also slated to expire on March 31st unless Congress adopts legislation to “extend” those initiatives.

Thanks to the HBMA GR Committee for writing the above article.