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Urology Practice Management - June 2015, Vol 4, No 3 - Payment Reform
Laura Morgan

The April 14, 2015, repeal of the sustainable growth rate (SGR) formula for physician payments under Medicare is being welcomed by the healthcare community, including the American Society of Clinical Oncology (ASCO). The 392 to 37 vote to pass H.R. 2, called the Medicare Access and Children’s Health Insurance Program Reauthorization Act of 2015, came just in time to avoid the 21% cut in Medicare fees that would have come into effect after the most recent SGR patch expired on March 31, 2015.

Alternative Payment Models


Among the provisions of the SGR repeal legislation is a continued emphasis on alternative payment models. Specialists are among those being encouraged to use this approach.

Shortly before the SGR repeal, the US Department of Health & Human Services (HHS) Secretary Sylvia M. Burwell wrote that, “Our target is to have 30% of Medicare payments tied to quality or value through alternative payment models by the end of 2016, and 50% of payments by the end of 2018….We plan to develop and test new payment models for specialty care...” (Burwell SM. N Engl J Med. 2015;372:897-899).

“We think this is a vast improvement over where we’ve been over the last 5 years. And we’re really appreciative of the way Congress worked closely with the physician community over this,” ASCO’s Government Relations Committee Chair, Blase N. Polite, MD, MPH, Assistant Professor of Medicine, University of Chicago, told Urology Practice Management (UPM). “Congress’s intent, we believe, is to allow flexibility—we think there will be 3 or 4 different models for alternative payment models in oncology. You don’t want everybody to go to the same model; you want HHS to establish the ground rules, and then let innovation come from physicians.”

Merit-Based Incentive Payment System

The new bill also states that healthcare “professionals who receive a significant share of their revenues through an alternative payment model(s)” and meet several criteria will not be subject to the merit-based incentive payment system. Merit-­based incentive payment systems will come into effect in 2019 and will unify the onerous requirements of the Physician Quality Reporting System, the value-based payment modifier, and the meaningful use of electronic health records. This provides another incentive to move to alternative payment models, said Dr Polite.

“What they [HHS] want you to do is move completely away from fee-for-service reimbursement and to value-based reimbursement—they’re asking us to blow up the current system and start doing things differently. And they’re providing a strong incentive to do that in several ways, one of which is to join an alternative payment model and avoid all the requirements associated with merit-­based incentive payment systems,” Dr Polite told UPM.

Providers who avoid merit-based incentive payment systems by participating in an alternative payment model will receive a 5% bonus annually from 2019 to 2024. Then, starting in 2026, providers who participate in alternative payment models and meet various criteria will receive an annual 0.75% payment increase, whereas those still participating in other payment systems will only receive increases of 0.25% annually.

Future of the Sustainable Growth Rate

The future still remains uncertain, however, noted Robert Steinbrook, MD, Adjunct Professor of General Medicine, Department of Internal Medicine, Yale School of Medicine, New Haven, CT, in an article about the SGR repeal (Steinbrook R. JAMA. 2015;313:2025-2026).

“At some point, the cumulative effect of the new payment updates will not keep up with physician costs, unless the volume and cost of services substantially decrease, which is the same underlying issue as with the old payment updates,” Dr Steinbrook pointed out. “The SGR formula lasted 18 years. Within the decade, its replacement is likely to be under scrutiny as well.”

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Last modified: June 15, 2015
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