March 20, 2015 SGR Update

As the March 31 deadline for Congressional action to prevent a 21% cut in physician fee schedule payments approaches, we want to take this opportunity to update you on where things stand in terms of Congressional enactment of a long-term vs. short-term SGR fix.

For the past 10 days, a bi-partisan, bi-cameral group of Representatives and Senators have been working to put together a permanent fix to the SGR problem. Although the process remains very fluid, progress is being made. Some of the key components of a proposed new bill include:
1. Immediate repeal of SGR and elimination of scheduled 21% payment reduction;
2. 5-year transition to Alternative Payment Models, with guaranteed 0.5% annual updates beginning with a .5% increase in the Conversion Factor effective July 1, 2015;
3. Collapsing of three quality-based payment incentives into a single, value-based incentive program;
4. Additional incentives for providers to move into Alternative Payment Models; and
5. Improved payments for care coordination of chronic care patients.

As part of the negotiations, Congress also appears likely to reauthorize the Children’s Health Insurance Program for at least two more years. And the legislation will likely include extending various expiring Medicare provisions, such as:
- Extension of work GPCI floor;
- Extension of the therapy cap exceptions process;
- Extension of ambulance add-ons;
- Extension of the Medicare inpatient hospital payment adjustment for low-volume hospitals; and
- Extension of the Medicare-dependent hospital (MDH) program;

The Congressional Budget Office estimates that all of the above would add approximately $210 Billion to the federal deficit over the next 10 years. Although all of the details on how Congress will pay for this fix have not been released, there appears to be bi-partisan and bi-cameral optimism that a solution is at hand. Precision will continue to keep you updated on the latest developments.