Published 5/1/2015
Elizabeth Fassbender

Finally! Congress Repeals SGR Formula

Paves way for new payment model

After more than 10 years and 17 short-term patches, the Senate last month passed the Medicare and Children’s Health Insurance Program (CHIP) Reauthorization Act (HR 2), permanently repealing the flawed Sustainable Growth Rate (SGR) formula. The measure passed by an overwhelming margin (92 to 8), just hours before a 21 percent cut in physician reimbursements was scheduled to go into effect.

This much-needed legislation ensures the highest quality of care for Medicare patients and ends the threat of substantial payment cuts in physicians’ Medicare reimbursement. The House passed the legislation in March with a bipartisan vote of 392 to 37, and President Barack Obama signed it into law on April 16.

“The American Association of Orthopaedic Surgeons (AAOS) commends the Senate for passing a permanent repeal and replacement of the flawed SGR formula,” stated David D. Teuscher, MD, AAOS president. “On behalf of the more than 38,000 AAOS members, we thank Congress for the tremendous bipartisan effort put into SGR reform and congratulate legislators for enacting a bill that implements meaningful reforms to the Medicare program.

“The SGR has plagued the healthcare industry for more than a decade,” said Dr. Teuscher. “AAOS has consistently called for the permanent repeal of the SGR, and orthopaedic surgeons around the country have emailed, called, and visited their members of Congress, urging legislators to understand the importance of repealing the SGR for good. That effort helped achieve today’s result.”

HR 2 includes a number of important provisions in addition to the permanent repeal of the SGR formula. (See “Key Provisions of HR 2” on page 28.)The legislation institutes a 0.5 percent payment update each year for the next 5 years. This provision is significantly better for physicians than the 10-year payment freeze that was part of an earlier draft last year.

The legislation also expands availability of Medicare data by allowing qualified clinical data registries to purchase claims data for purposes of quality improvement and patient safety. Further, the bill protects providers from having quality metrics used against them in medical malpractice suits by clarifying that development of any quality or clinical guideline in Medicare or through other laws cannot be construed to establish a standard of care or duty of care. The AAOS fought hard to ensure that this provision became part of the law.

“This can serve as a template of how things should work around here,” stated Senate Finance Committee Chair Orrin Hatch (R-Utah) of the rare bipartisan agreement. House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) said simply, “Stick a fork in it, it’s finally done.”

However, due to the last-minute passage of the legislation, some physicians may have received payments that reflected the 21 percent reduction. CMS will automatically reprocess those claims and reimburse providers appropriately.

Global payments
Importantly, HR 2 also reverses the harmful global payments policy included in the 2015 Physician Fee Schedule (PFS) Final Rule by the Centers for Medicare & Medicaid Services (CMS). CMS had announced its intention to convert all 10- and 90-day global procedure codes to 0-day global codes last October. AAOS aggressively lobbied Congress to take steps necessary to reverse this decision.

“Because this policy will have a wide-ranging negative impact on patients, physicians, hospitals, third-party payers, and CMS, we recommend that Congress take the necessary steps to prevent CMS from implementing this policy,” the AAOS wrote in a December 2014 letter to Congress.

The AAOS applauds Congress for following this recommendation and addressing the important global payments issue in HR 2.

Quality improvement programs
Additionally, this legislation replaces the existing Physician Quality Reporting System (PQRS), Value-Based Modifier, and Meaningful Use of Electronic Health Records (EHR) programs with a new, single Merit-Based Incentive Payment System (MIPS) program. The new program will remove many of the reporting burdens faced by physicians and will be based on performance measures selected by each physician from a menu of performance measures created by specialty-specific associations.

Further, the bill promotes collaboration by allowing professional organizations and other relevant stakeholders to identify and submit quality measures and updates to be considered for selection and used in the performance program.

“This bill ensures Medicare’s solvency and improves care delivery, while ending the reckless system of short-term patches that has been harmful to the economy and to Medicare patients seeking access to specialties they desperately need,” stated Thomas C. Barber, MD, chair of the AAOS Council on Advocacy, who led February’s multispecialty advocacy day and virtual fly-in (see below and “AAOS and Medical Specialties Urge Congress to #Fix SGR Now.” AAOS Now March 2015)

“The AAOS has worked closely with congressional and committee leadership to ensure the legislation provides the highest quality of care for Medicare patients, reduces reporting and other administrative burdens, adds needed flexibility for physicians, and allows for medical specialty input in development of quality measures,” he continued. “We thank Congress for their hard work and continued dedication to finding a viable solution to the flawed formula.”

AAOS leadership and staff will continue to ensure patients have access to orthopaedic surgeons and will be providing input as the quality metrics and other regulations surrounding this bill are developed.

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

What it took to repeal the SGR
The SGR was enacted under the 1997 Balanced Budget Act in an attempt to restrain healthcare costs in Medicare. Instead, it resulted in physician payments that failed to keep pace with increases in practice costs. Finally repealing the SGR took the following:

  • 17 patches since 2003
  • $153.7 billion (cost of the 17 patches)
  • A decade of advocacy and visits to members of Congress by thousands of healthcare professionals, including—in one month alone (February 2015)
  • A unique multispecialty lobbying effort on Capitol Hill led by AAOS Council on Advocacy Chair Thomas C. Barber, MD. This included more than 50 different in-person Hill visits and a virtual lobby day in partnership with the American College of Surgeons, the American Academy of Ophthalmology, the American Urological Association, and the American Congress of Obstetricians and Gynecologists.
  • More than 780 emails to members of Congress through the AAOS Legislative Action Center
  • Outreach to more than 134,000 unique individuals through social media (Twitter)
  • More than 900,000 Twitter posting views

Additional Information:
Watch the SGR Vote

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