On Thursday, February 6th, a bipartisan group of congressional lawmakers announced they had reached a deal on legislation to repeal Medicare's widely criticized sustainable growth rate formula, replacing volume-based payments with measures that reward care efficiency and quality. The legislation is described below, but stakeholders should be cautious about its prospects given the remaining political hurdles it faces.
SGR Repeal and Medicare Provider Payment Modernization Act
The bill, the SGR Repeal and Medicare Provider Payment Modernization Act, was jointly announced by the chairmen and ranking minority members of the Senate Finance Committee, House Ways and Means Committee, and House Energy and Commerce Committee. It would repeal the SGR formula and institute a 0.5% annual payment increase for physicians between 2014 and 2018. This increase would be maintained until 2018 in an effort to offer payment stability and help doctors transition to new care models. A thorough summary of the bill's sections can be found here.
Physicians beginning in 2018 would participate in a new merit-based incentive payment system -- called MIPS -- that would consolidate three existing incentive programs: (1) The Physician Quality Reporting System; (2) The Value-Based Payment Modifier; and (3) Meaningful use of electronic health records. As reported, MIPS would apply to: (1) Chiropractors; (2) Certified registered nurse anesthetists; (3) Clinical nurse specialists; (4) Dental surgery or dental medicine; (5) Nurse practitioners; (6) Physician assistants; (7) Physicians of medicine or osteopathy; and (8) Podiatric medicine. However, other health care professionals could be added to MIPS starting in 2020.
According to a summary of the legislation, the new payment system would:
Encourage care coordination initiatives for patients with chronic illnesses;
Increase public access to provider payment data;
Replace disvalued codes to improve payment accuracy; and
Require development of quality measures in collaboration with physicians.
In addition, the bill would award a 5% bonus to physicians who collect at least 25% of their Medicare revenue from an alternative payment model in 2018. Such models include accountable care organizations, patient-centered medical homes and other public or private payer initiatives. The 25% threshold would increase with time.
The proposal also would create a "technical advisory committee" that would review and recommend physician-developed alternative payment models based on "criteria through an open comment process".
It is also reported that the bill introduces several measures to improve the use of Medicare data, including the public posting of quality and utilization data, as well as measures allowing certain clinical data registries and other "qualified entities" to obtain and analyze claims data to improve patient care quality and safety, subject to relevant privacy and security laws. The goal of this is to simplify and combine the current system of quality measure reimbursement including PQRS, Meaningful Use and eliminate the 2% sequester cuts.
Medicare Data Access for Transparency and Accountability Act
While current version of the SGR Repeal and Medicare Provider Payment Modernization Act does address Medicare data as described above, it does not contain provisions of the Medicare Data Access for Transparency and Accountability Act.
In our predictions for 2014 post last December, we noted: "Buried within [SGR] repeal is the Medicare Data Access for Transparency and Accountability Act, this legislation would require Medicare to publish all sorts of Medicare payment data on healthcare providers available in a publically available and searchable database. The problem with this is that this data could easily be taken out of context and used against physicians for procedures that are new or newly tested or as a database for malpractice tort claims."
A refresher about the proposed database can be found here:
"The Iowa Senator and healthcare transparency advocate commended WSJ for its work and recognized that for programs like Medicare, "the federal government needs all the help it can get to identify and combat fraud, waste and abuse, and that is why a searchable Medicare claims database should be made available to the public."
The database would include:
1) the amount paid to each provider of services or supplier;
2) the items or services for which such payment was made; and
3) the location of the provider or supplier.
The database would be organized "based on specialty" or "type" of provider or supplier and it would be searchable based on the type of item or service furnished.
The legislation also requires the database to include a "disclaimer that the aggregate data in the database does not reflect on the quality of the items or services furnished or of the provider of services or supplier who furnished the items or services." Providers and suppliers would be identified by their National Provider Identifier (NPI) number."
Funding and Reaction
As reported by California Healthline, although lawmakers touted the agreement, they have yet to determine a way to cover the cost of repealing and replacing the SGR, National Journal reports. According to a GOP aide, the bipartisan proposal would cost about $126 billion over a decade.
Additionally, immediately former Senate Finance Committee Chair Max Baucus (D-MT) in his good bye appeal praised lawmakers for agreeing on policies that modernize physician payments. "Congress has spent a decade lurching from one 'doc fix' to the next, creating a new, unnecessary threat to seniors' care each time. Enough is enough," he said, adding, "This bill is the product of years of hard work, and I hope Congress comes together to pass it".
American Medical Association President Ardis Dee Hoven welcomed the deal and urged lawmakers to act quickly. In a statement she said, "Congress has been debating the shortcoming of the SGR policy for more than decade. Continuing the cycle of short-term patches by merely addressing the 2014 cut that is imminent on April 1 without solving the underlying problem would be fiscally irresponsible and further undermine the Medicare program".
However, as reported by MedPage Today, there is some opposition:
"But does this new program -- backed by groups from the American Medical Association, American College of Physicians, American College of Cardiology, and too many others to list -- have the same enthusiastic support from its rank-and-file members?
It's impossible for those groups to represent the voice every one of the thousands of its members, but how is Washington supposed to know the true feelings of the medical community if they don't.
'(The) SGR is replaced by a flawed system where physicians are forced into the new MIPS (Merit-Based Incentive Payment System) and face cuts ranging from 4% to 9% (2018-2021) based on the government's notion of 'merit,' ' the letter stated."
This is not yet a done deal, writes Billy Wynne, Founder and CEO of Healthcare Lighthouse, and Partner at Thorn Run Partners. Wynne says the deal: "represents as much of a step back as a step forward, at least relative to their aspirations and timeline for accomplishing them."
Wynne describes the political reality:
Only in the past week did the key committees acknowledge that achievingagreement on offsets by this deadline was unattainable, but finalization of the so-called "extenders," a hodge podge of Medicare payment plus-ups and other polices perennially included with the doc fix, was still the goal.
(Recall that the Senate Finance Committee passed an SGR replacement bill with extenders in December, but their House counterparts have yet to do so.)
In negotiations on that extenders element, House Republican leads reportedly would not agree to include beneficiary-oriented policies, such as funding for outreach to Medicare enrollees regarding low-income subsidy programs and for Family-to-Family Health Information Centers.
While some Democrats involved in the talks may have been inclined to make this concession, others sharply objected, scuttling a deal on this front and demonstrating the difficulty of compromise on this relatively non-controversial topic.
Furthermore, and has always been the assumption, identifying offsets for the package continues to be an exponentially heavier lift than any other aspect of the process. On that front, the key camps have outlined their broad parameters for what they might accept.
House Republican leads desire and likely require meaningful cuts to ACA-related spending as well as a substantial balance of Medicare beneficiary-impacting cuts, such as those relating to premiums and coinsurance.
On the other hand, Senate Majority Leader Reid, for example, has repeatedly voiced his opposition to any policies deemed adverse to Medicare beneficiaries being used as an offset to an SGR bill, not to mention his outright dismissal of cuts to central ACA programs. Senator Reid has gone so far as to say that he'd only accept cuts to the Offshore Contingency Operations (OCO) fund as a pay-for for the permanent SGR bill.
Part of Leader Reid's position relates to the potential vulnerability of the Democrats' control of the Senate in the 2014 election cycle. Try this understatement on for size: It's hard to imagine a viable path to circumventing the stand-off between his position and that of the House Republicans.
While these various challenges to passage of a permanent SGR bill have been reasonably expected for some time (some of you have a faint "duh" percolating), it's the past 5-10 days, including Thursday's release, that actually demonstrate the odds of achieving this goal are truly minimal. In short, a breakthrough was possible but did not come to pass.
The Hail Mary was thrown, tipped, bobbled and … Richard Sherman just told me they shouldn't try again. Take it from this Broncos fan, he's probably right.
So it's time for a field goal. A fallback is already in the works, at least in some corners. There's a fairly unified assumption that a nine-month traditional doc fix will be that default option. The cost of that fix is approximately $15 billion, and we expect that soon the committees will turn their attention to finding the offsets to pay for that. So it's more like a 57-yarder than a chip shot, but it's a pretty good bet it'll get done.
Getting all of the leaders of the committees of jurisdiction – in both chambers and on both sides of the aisle – to agree to a unified approach to reforming Medicare physician payments is an historic achievement, and those who have labored so devotedly to the task for more than a year deserve an extraordinary amount of credit.
But it's really what Thursday's package lacks, at this point, that tells the story. And that story, which began with the establishment of the ill begotten SGR formula in the Balanced Budget Act of 1997, doesn't look like it's going to end any time soon.