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Price Cut Generates Momentum Behind Push to Revamp SGR

by Daphne Howland •

  • Total SGR repeal;
  • Stable, predictable fee schedule updates;
  • Quality performance incentives;
  • Efficiency incentives;
  • Opt-out provisions; and
  • Provisions for review.

At press time, only the bill co-sponsored by Reps. Allyson Schwartz (D-Pa.) and Joe Heck, DO (R-Nev.), is specific about payment updates and transition time. Schwartz-Heck, also called HR 574 or the Medicare Physician Payment Innovation Act of 2013, permanently repeals the SGR and establishes a five-year transition period while gradually modifying the payment formula. Schwartz-Heck, which is the only bill formally introduced so far, calls for positive physician payment updates for all physicians of 0.5 percent each year for four years. The framework for the Energy and Commerce legislation calls for transition time and payment updates but leaves the details open.

A staff member familiar with work in the House who asked not to be named said the Energy and Commerce Committee is less interested in the more gradual approach outlined in Schwartz-Heck. Because of disagreement on transition and payment schemes, the bills are on different tracks, the source said.

On the Senate side, Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Orrin Hatch (R-Utah) joined these efforts in the House on May 10, calling for stakeholder input on legislation to repeal the SGR formula and replace it with alternatives that “promote efficiency and reward care based on quality and value, rather than volume.” In a letter to physicians groups, Baucus and Hatch asked for answers to specific questions on reforms.

The Reforms

It helps that the price of reform has dropped, but success depends on the feasibility of replacement, said Dr. Denneny and congressional sources. “There seems to be a sort of momentum, and we’re hopeful the momentum can continue,” said Greg Lemon, spokesperson for Rep. Heck, the Republican co-sponsor of the Ways and Means bill. “Basically, there needs to be a shift from fee-for-service to a more merit-based, performance-based quality of care system.”

Such a structure will likely include performance-based payments, with emphasis on primary care services. Essentially, payments for quality care and for efficient use of resources would be added to a base payment rate.

Physicians are concerned that quality and efficiencies must be carefully defined and stringently evidence based, that there is sufficient time to pilot changes and that they have support in paying for new infrastructures.

Lawmakers acknowledge that physicians shouldn’t be penalized for treating higher-risk populations. Furthermore, some specialties have large amounts of available data on a few common procedures, and their practices are often large. By contrast, collecting such data is tricky for specialties like otolaryngology that have a diverse sub-specialization, provide services that treat a wide variety of ailments and age groups and usually have small practices. These factors make capturing quality measures or economies of scale difficult, said Dr. Denneny.