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Dr Steven Stack, American Medical Association board chairman

House GOP releases revised proposal for replacing SGR

Updated proposal includes specialty-specific performance measures.

By Andis Robeznieks
Posted: April 3, 2013 - 8:00 pm ET

House Republican leaders released a revised proposal to replace Medicare's sustainable growth-rate physician payment formula. The proposed system would include specialty-specific performance measures, payment rates partly based on patient experience, and development of an appeals process to contest or reconsider a provider's quality score.

Chairmen of the House Energy and Commerce and Ways and Means committees along with their respective health subcommittees issued the revised proposal on April 3 with a letter to the “provider community” (PDF) requesting comments on the new draft by April 15. It follows up on the first version, released Feb. 7, which outlined a plan to replace the SGR formula with a system featuring predictable payment rates and rewards for delivering high quality and efficient care.

The letter stated that the new draft responds to comments on the previous draft emphasizing the need for a period of stable, predictable fee-for-service payments while new payment models and performance measures are developed.

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“Based on respondent input, we envision a system where providers have the flexibility to participate in the payment and delivery model that best fits their practice,” GOP Reps. Fred Upton and Dave Camp, both of Michigan; Joe Pitts of Pennsylvania; and Kevin Brady of Texas said in the letter. “The overarching goal is to reward providers for delivering high quality, efficient healthcare,” whether in a fee-for-service system or an alternative payment model program, they said.

Instituted as part of the 1997 Balanced Budget Act, the SGR links physician fees and costs to U.S. gross domestic product, and includes a “clawback” mechanism that rolls back Medicare fees if spending targets were exceeded the previous year. After the formula resulted in a 4.8% pay cut in 2002, all subsequent SGR-driven Medicare provider fee decreases have been temporarily suspended or “patched” by Congress. Since including the first SGR patch in the Consolidated Appropriations Resolution of 2003, Congress has postponed, or “kicked the can down the road,” on coming up with a permanent solution. Instead, it has approved a series of last-minute patches to temporarily avert deep payment cuts that have grown with each passing year.

“We recognize the uncertainty over potentially devastating reimbursement cuts makes it difficult for practices to plan for the future,” the letter added. “This uncertainty affects decisions to hire necessary staff and make investments in practice improvement.”

Movement to replace the SGR gained momentum when the Congressional Budget Office issued a revised estimate on the cost of repealing the formula and freezing physician payments for 10 years. The $138 billion figure released Feb. 5 was 40% lower than the $245 billion projection released last August. That said, a 24.4% Medicare pay cut is still scheduled to go in effect on Jan. 1, 2014, unless Congress repeals the SGR or approves another temporary patch.

Initial reaction to the latest House proposal and request for feedback has been positive, with Dr. Steven Stack, American Medical Association board chairman, calling it “generally consistent” with the overall approach supported by the AMA and other physician groups.

“We are pleased that the committees are continuing to focus on this critical issue and that they are seeking input from physicians,” Stack said in an e-mail. “This is an important step toward eliminating the failed Medicare physician payment formula and moving toward building a new system that will better serve the needs of patients and physicians by supporting high quality, high value healthcare."

This sentiment was echoed by Anders Gilberg, MGMA senior vice president of government affairs.

“MGMA is encouraged by the progress being made by the House committees to develop a viable alternative to the SGR,” Gilberg said in an e-mail. “The payment reform goals outlined today will find significant support from the physician community.”

The latest SGR replacement proposal includes payment rates partly tied to performance. Performance-based payments would fall into three categories: quality measure scores, significant quality improvement from the previous year's score, and “executing clinical improvement activities.”

There are also proposals to mandate that providers receive timely feedback on performance, that HHS develop an appeals process for reconsideration of a quality score, and that any measures used be “endorsed by consensus-based organizations” such as the National Quality Forum.

The proposal called for measures that illustrate clear performance differences between providers and address one of the following elements: clinical care; safety; care coordination; and patient and caregiver experience.

The last item was cheered by the American Medical Group Association which said it is reviewing the proposal and plans on submitting formal comments.

“AMGA members have been in the forefront of providing innovative, efficient healthcare that emphasizes care coordination, the use of information technology and evidence-based medicine, and a quality patient experience in order to achieve better outcomes at a lower cost,” Donald Fisher, AMGA president and CEO, said in an e-mail. “We are encouraged to see that many of the quality measures and clinical improvements activities that AMGA members' have long employed and advocated for, such as patient experience, have been included in the proposal.”

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