Key congressional committees reach major agreement on permanent SGR fix

Feb. 10, 2014

The Senate Committee on Finance, House Committee on Energy and Commerce and House Committee on Ways and Means have reportedlyreached a major agreement on a permanent Medicare Sustainable Growth Rate (SGR) Fix.  The compromise includes components of HR 2810 and S 1871 from last year. 

The proposed solution would include a 0.5 percent increase in Medicare physician payments over five years. Conferees have not reached agreement on budget offsets to pay for the replacement as is required by the Pay-As-You-Go principles.  The five years of modest increases would help adjust to the proposed SGR replacement system which is heavily reliant on improved quality programs as part of Medicare traditional fee-for-service system, or in alternative pay-for-performance payment models.  The current short-term SGR payment fix expires March 31, 2014.

In addition, the bill consolidates the three existing physician quality-related programs into a streamlined and improved program that rewards providers for meeting performance thresholds.  The three existing quality programs that would be consolidated in the new program consist of: (1) the Medicare EHR incentive program for meaningful use of certified EHR technology; (2) the physician quality reporting system (PQRS): and, (3) the physician value-based payment modifier.

Moreover, the new quality performance program is intended to reduce inappropriate care, and would include incentives for coordination care for patients with chronic conditions.  It would also provide for a five percent bonus for providers who receive a significant portion of their revenue from an alternative payment model or a patient-centered medical home.   To improve patients’ decision making capability, the bill contains provisions to expand the availability of Medicare data such as posting quality and utilization data online.  

While this bicameral, bipartisan deal to reform Medicare's long standing physician reimbursement problem is encouraging, a major obstacle to passing legislation remains the agreement on how to pay for the bill. According to the Congressional Budget Office, the various proposals would cost between $121.1 billion and $153.2 billion over ten years. 

In addition to other Congressional leaders, Senate Finance Committee Chairman Max Baucus (D-MT) has been instrumental in pushing through this compromise. Chairman Baucus is expected to be confirmed by the Senate as the new ambassador to China which could prove to be problematic for permanent SGR fix legislation.

The Committees provided this brief summary of the bill.

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