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Published 7/1/2013
Elizabeth Fassbender

House Releases SGR Replacement Legislation

Phased approach seeks shift from FFS to alternative models

On May 28, in an effort to “remove the annual threat of looming provider cuts by permanently repealing the flawed sustainable growth rate (SGR) and replacing it with a system that incentivizes quality care,” Republican members of the House Energy and Commerce Committee released draft legislation to reform the Medicare payment system.

The draft provided an opportunity for members of Congress and interested stakeholders to offer feedback and comments. A week later, on June 5, Rep. Joe Pitts (R-Pa.), chair of the Energy and Commerce Subcommittee on Health, convened a hearing on the draft.

Legislative summary
The SGR replacement legislation provides for a modified fee-for-service (FFS) program in two phases. The first phase is a period of payment stability during which an improved FFS program would be developed, including the establishment of quality goals and measurement methods. Although the length of the first phase is not yet determined, the American Association of Orthopaedic Surgeons (AAOS), in its comments to the committee, recommended a 5-year period.

The second phase would introduce quality measurements to traditional FFS payments. At any time during Phases I or II, the legislation allows providers to “opt-out” of the modified FFS system for alternative payment models, such as accountable care organizations, bundled payments, or patient-centered medical homes. The legislation also calls for new and innovative models to be created and adopted.

According to a committee press release, the draft legislation is “the latest step in the transparent process to reform the system and reward providers for delivering high-quality, efficient health care.”

Hearing summary
In his opening statement, Rep. Pitts explained that the legislation was not a complete reform proposal, but a “partial release” with some specifics left open for discussion, including the duration of payment stability and the methods of assessing providers on quality measures. Significantly, the proposal does not include an outline of how to pay for the SGR reform.

Both Rep. Pitts and House Energy and Commerce Committee Chair Fred Upton (R-Mich.), insisted that the pay-for discussion can be delayed until after the legislation is fully developed. “SGR reform will be offset with a real and responsible pay-for when it comes to the floor for a vote,” stated Rep. Upton.

Witnesses applauded the inclusion of the concept of specialty-specific processes for determining quality and efficiency that rely on risk-adjusted outcomes, including registry data. This concept has also been endorsed by the AAOS and was reinforced in the AAOS comment letter to the committee.

The AAOS comment letter also expressed support for methodologically sound patient-centered performance measures that are relevant to clinical practice and for the use of clinical improvement activities. These include the adoption of clinical practice guidelines, the application of appropriate use criteria, and participation in clinical data registries and practice development programs such as the TeamSTEPPS program.

Other issues addressed during the hearing included the role of primary care, the importance of disparities care, and the continuance of specialty care. “Whatever we do here, it has to allow for the entire panoply of practice options that are out there to exist,” stated Rep. Mike Burgess (R-Texas).

Rep. Burgess, an obstetrician/gynecologist, expressed sentiments shared by many physicians. “If you allow me to have a fee-for-service model for compensation for those [Medicare] patients, I may be more apt to continue [to see them].”

What’s next
Regarding the draft legislation, Chairman Pitts stated, “This framework continues an open and transparent process of replacing the SGR. I am grateful for all of the contributions we’ve received so far, and we are now closer than ever before to achieving a solution. I’m confident that an honest, open process can help us build a stronger, more reliable Medicare program for doctors and patients. I look forward to continued feedback from stakeholders on ways that we can improve this framework as we work toward the goal of bipartisan reform.”

Still, any SGR reform legislation will likely face a number of hurdles moving forward. Earlier this year, Chairman Upton expressed his hope that a bill would reach the House floor before the August recess. Some members of Congress believe that the lack of a firm proposal reduces the chances of permanently replacing the SGR this year.

Speaking to reporters, Rep. Allyson Schwartz (D-Pa.), a member of the House Energy and Commerce Committee, said the draft was a “missed opportunity” that fails to move dramatically from FFS toward a system that rewards quality over volume. Earlier this year, she had introduced another version of SGR reform with Rep. Joe Heck (R-Nev.) that would allow physicians to maintain their FFS payments as long as they met quality standards.

On the Senate side, the Finance Committee is working on its own SGR plan, although no timetable has been set for a hearing or action beyond collecting letters from interested stakeholders.

Elizabeth Fassbender is the communications specialist in the AAOS office of government relations; she can be reached at fassbender@aaos.org