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Congress agrees on framework to replace Medicare SGR

Physicians may have another reason to celebrate at their New Year’s Eve parties this year: the abolition of the annual January 1 anxiety over the Medicare sustainable growth rate (SGR).  The Senate Finance and House Ways and Means Committees have agreed on a framework intended to scrap the hated SGR for Medicare payments and replace it with a stable rate while leaving room for the ongoing shift to value-based payments and potential financial incentives for quality care.

Since 1997, providers have watched Capitol Hill closely at the beginning of the year, hoping that Congress would pass the yearly bill postponing a 25% cut in Medicare reimbursements.  But each year that lawmakers put off SGR reform, the price tag continues to grow.  Recent estimates put a permanent fix at anywhere between $139 and $175 billion, but unanimous agreement among the members of the House Energy and Commerce Committee earlier this year that something needs to be done should give providers hope that progress is being made.

“For years, Medicare payments to doctors have been at risk of getting slashed, limiting seniors’ access to high quality care,” said Senate Finance Committee Chairman Max Baucus (D-MT). “Enough with the quick fixes. Our proposal is for a new physician payment system that rewards value over volume.”

The current plan would fix the current rate of Medicare reimbursements as new quality-based payment models are developed and tested.  In 2017, some existing quality programs would be combined with new accountable care initiatives to reward value-based service.  Using PQRS and other quality measures, providers will be rated against their peers.  High performing providers who meet a certain threshold will have the opportunity to earn a 1% bonus payment based on previous performance, while low performing providers will see a 1% reduction in payments, according to the proposed legislation from July of this year.

“Building on the strong foundation laid this summer by the House Energy and Commerce Committee, the framework…is an encouraging development and represents a pivotal step toward stabilizing and improving the Medicare program on behalf of America’s seniors and physicians,” said AMA President Ardis D. Hoven. “Congress is demonstrating that they understand that ending the failed SGR this year is fiscally responsible, and that the current Medicare payment system is a barrier to adoption of health care delivery and payment reforms that will improve health care for America’s seniors and rein in overall costs.”

The committees will be accepting comments on the proposal until November 12.

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