BREAKING: President Obama Signs SGR Repeal Legislation, Shifting Medicare Physician Payment Incentives

April 17, 2015
On Apr. 16, President Obama signed into law a bill that repeals the long-problematic SGR formula for Medicare physician reimbursement, and ushers in a new era in value-based physician payment

On Thursday afternoon, April 16, President Barack Obama signed the Medicare Access and CHIP Reauthorization Act of 2015, or “MACRA,” a bill passed by the House of Representatives on March 26 and by the Senate on April 14 that now permanently repeals the long-maligned Sustainable Growth Rate (SGR) formula for Medicare physician payment.

As the Washington Post reported, in signing the bill into law, the President praised the bipartisan nature of the legislation, cobbled together in the House by Speaker John Boehner (R-Oh.) and Democratic Leader Nancy Pelosi (D-Calif.) for negotiating the terms of the legislation. He further said that “It also improves it [physician reimbursement] because it starts encouraging payments based on quality, not the number of tests that are provided or the number of procedures that are applied but whether or not people actually start feeling better. It encourages us to continue to make the system better without denying service,” he added.

Congress’s passing of this legislation and the President’s signature on it, end a series of 17 so-called “doc fixes” since 1997 when the SGR formula was passed into law but never fully implemented because of physician uproar, the MACRA legislation averts what would have been a 21-percent cut to Medicare physician payment, replacing it with 0.5-percent “updates,” or physician payment increases, in 2015, 2016, 2017, and 2018.

More broadly, MACRA ends physician payment incentives  under the meaningful use program within the HITECH (Health Information Technology for Economic and Clinical Health) Act, and those under the Physician Quality Reporting System (PQRS), replacing the incentives in those programs with a new program called the Merit-based Incentive Payment Program, or MIPS. Physicians will also be able to opt for an alternative program involving slightly higher payments in return for participation in certain Alternative Payment Models, or APMs.

As Healthcare Informatics’ analysis of the legislation noted last month, it targets four key areas: quality, resource use, clinical practice improvement (including care coordination and improvement activities), and the meaningful use of electronic health record technology.

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