Medicare Sustainable Growth Rate Formula Gets Permanent Fix

The dreaded sustainable growth rate (SGR) formula, and the numerous temporary “doc fixes” associated with it, has finally been “fixed.” This fix means the SGR has been replaced with a permanent legislative solution. The new legislation passed by Congress and signed into law effectively ends the SGR formula used to create the Medicare physician fee schedule, replacing it with a permanent reimbursement plan and value-based care incentives.

Implemented in 1997, the SGR is a formula designed to limit growth of Medicare Part B spending by linking changes in reimbursement to the growth of the U.S. economy as a whole. Since that time, proposed cuts in the SGR have been delayed 17 times by so-called “doc fix” bills, with short-term fixes often paid for through physician payment reductions. Diagnostic imaging, for example, was particularly hard hit, with advanced diagnostic imaging services such as CT, MRI and PET/CT experiencing repeated payment reductions. These temporary fixes simply delayed the inevitable while increasing financial pressures and uncertainty for health care providers.

No matter how one feels or what one knows about “the fix,” what it brings to medical practices, including radiology groups and imaging centers that medical marketers work with every day, is stability and predictability. Not surprisingly, the bureaucratic complexity and questions of implementation remain. This does, however, quell the economic storm that has been swirling around the SGR for the past 17 years.

Without the permanent fix, the Centers for Medicare and Medicaid (CMS) was planning a predicted 21 percent cut in Medicare reimbursements. With the repeal and replacement of the old methodology, regulators have developed a new payment model that incorporates a base fee increase of .5% to the Medicare fee schedule annually over next 5 years, with bonuses for quality care improvements and patient centered medical home participation. At that point, individual physicians could earn incentive payments through either an Alternative Payment Model (APM) program or the new Merit-Based Incentive Payment System (MIPS).

Starting in 2019, CMS will establish MIPS as part of its efforts to move from a fee-for-service payments system to a value-based system. The MIPS payment program assesses the performance of each eligible provider based on quality of care, resource use, clinical practice improvement and meaningful use of electronic health record technology.

Medicare physician payment rules and guidelines remain extraordinarily complex, and a myriad of policy details remain to be worked out. However, the bottom line for the medical community is that a stable Medicare fee schedule will result in a positive effect on the revenue cycle and payments, allowing more accurate and successful business planning and marketing.

Sources and resources: 

H.R.2 – Medicare Access and CHIP Reauthorization Act of 2015

The most important details in the SGR repeal law

A primer on Medicare physician payment reform and the SGR

Obama Signs SGR Repeal Legislation; Value-Based Payment Model Comes Into Full Force in 2019

 



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