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Historic Vote: SGR Repealed

Late Tuesday night, the Senate passed the Medicare Access and CHIP Reauthorization Act of 2015, eliminating the payment cut of 21.2% scheduled to take effect on April 1. After more than a decade of last-minute changes to the scale, the flawed payment formula based on the Sustainable Growth Rate (SGR) has finally been eradicated. The Senate vote came as a surprise to many, as conservatives raised significant concerns about financing the bill, particularly after CMS Actuary Paul Spitalnic released a report on April 9, revealing that the net cost of the bill is $102.8 billion – and that new Medicare payment model would not be sustainable in the long-term. Spitalnic concludes: “we expect access to Medicare-participating physicians to become a significant issue in the long term,” which rallied the AARP lobby.

Despite these concerns, the bill passed the Senate overwhelmingly, with a 92 to 8 vote.

Although the bill is expected to be signed by the President at any moment, the Centers for Medicare & Medicaid Services (CMS) had instructed its Medicare Administrative Contractors (MACs) to begin to process April claims on a “rolling hold” as of April 15. CMS issued the order on Monday:  “Beginning on April 15th, 2015, CMS will release held MPFS [Medicare Physician Fee Schedule] claims, paying at the reduced rate, based on the negative update, on a first-in, first-out basis, while continuing to hold new claims as they are received.  CMS will release one day’s worth of held claims, processing and paying at the rate that reflects the negative update…to provide continuing cash flow to providers…” After the Senate’s vote last night, CMS issued another memorandum explaining that a “small volume of claims will be processed at the reduced rate.” However, CMS instructed the MACs to process any claims paid at the reduced rate, with the new fee schedule. In sum, you may receive remits this week for your early April dates of service at the 21.2% cut, but recognize that your claims will be reprocessed.

Short of this “rolling hold” hiccup, what can you expect from the Medicare fee schedule that replaces the flawed SGR? Through June 30, 2015, the answer is nothing. Indeed, the bill calls for a 0.0 percent update. However, on July 1, 2015, the payment rate will be bumped by 0.5% through the end of 2015, followed by an annual raise of 0.5% each year through and including 2019. 2020 will see a return to the 0.0 percent update, which will remain intact through 2025. Starting in 2026, the fee schedule will split – one will be physicians who participate with the government’s alternative payment models (APM) – and the other who do not. The first group will receive 0.75% increase each year in perpetuity, with the remaining cohort only gaining 0.25% per annum. The law also outlines an extra 5% payment to the “eligible alternative payment entity,” such as the shared savings organization administering the APM.

The legislation also covers some other very important issues:

  • Halting the Meaningful Use penalties in 2018, welcome news to those physicians who chose not to adopt an electronic health record (EHR).
  • Replacing the government’s quality programs with an over-arching Merit-based Incentive Payment System (MIPS) that will assign a “composite performance score” based on quality, resource use, clinical practice improvement activities and meaningful use, for physicians beginning in 2019. The program will bring about substantial decreases in reimbursement for poor performance – 4% in 2019, 5% in 2010, 7% in 2021 and 9% in 2022 and subsequent years – making today’s small decreases pale in comparison.
  • Extending the work GPCI floor through January 1, 2018; it expired on April 1, 2015.
  • Lengthening the funding for the Children’s Health Insurance Program (CHIP) through 2017.
  • Modifying the DME face-to-face encounter documentation requirement, replacing it with the ability to document that such “physician, physician assistant, practitioners or specialist has had a face-to-face encounter.”
  • Reversing the elimination of the global surgery package rules, which was intended to take effect in 2017 (10-day) and 2018 (90-day), replacing the packages with a 0-day global period. However, the government revealed its intention to assess the situation, indicated that a sample of physicians will be chosen to report the “number and level of medical visits furnished during the global period…”

Although an amendment was proposed in the House of Representatives to halt ICD-10 for one more year, it was not included in the final legislation.

Woodcock & Associates: Changing the Way You Work