Bipartisan Legislation Could Repeal Medicare SGR Formula

A move to repeal the Medicare SGR moved another step forward with the goal of smaller pay raises in the near future and more emphasis on quality measures.

Last week, a vote occurred in the U.S. House of Representatives' Energy and Commerce Committee, and support for repealing the Medicare sustainable growth rate (SGR) formula moved forward.

As the American Medical Association commented:

"The American Medical Association (AMA) is pleased that the Energy and Commerce Committee and other congressional leaders continue their work to end the broken Medicare physician payment system this year and move toward a Medicare program that rewards high quality care for our nation’s senior citizens and reduces costs. There is clear bipartisan support for fixing this failed formula and making improvements in the program, but the details matter considerably and there is still work to be done to ensure a strong future for Medicare."

The House Energy and Commerce Health Subcommittee approved the general tenets of the bill; however, it was agreed that there is still considerable work to be done. This is a significant move away from the fee-for-service model of Medicare reimbursement.

A full Committee vote occurred on H.R. 2810 on Wednesday, July 31, just before Congress recesses for their five-week summer break. The bill passed in a 51-0 bipartisan effort.

If enacted, the measure would eliminate the SGR formula and replace it with 0.5 percent physician payment increases from 2014 through 2018, while exploring other measures.

According to a statement from the House Energy and Commerce Committee:

"First and foremost, the bill repeals the flawed sustainable growth rate (SGR) system and replaces it with a fair and stable system of payments. Instead of looming annual cuts, physicians will be rewarded for the quality of care they provide to Medicare beneficiaries. The legislation also includes new transparency and collaboration requirements to solicit input from expert medical organizations and other groups on the development and selection of quality measures."

It goes without saying that this legislation, if it becomes law, would have a significant impact financially on physicians’ practices. This is one piece of legislation to watch closely - because, like ICD-10, the sooner the transition process begins, the better the fiscal impact in the short and long term.