SGR Repealed In Historic Bipartisan Agreement

This article was originally published March 27, 2015. It was edited and republished on April 17, 2015.

The sustainable growth rate (SGR) component of the Medicare payment formula was repealed when the U.S. Senate approved the bipartisan Medicare Access and CHIP Reauthorization Act (MACRA) on April 14, and President Obama signed the legislation into law a day later. The House had approved the bill two weeks earlier, just as Congress was heading out of town for its spring recess.

MACRA permanently repeals the SGR and averts a 21 percent across-the-board cut in physician pay that was scheduled to go into effect on April 15.

For more than a decade, repeal of the SGR has been an advocacy priority for APA, the AMA, and other medical groups. Each year, the SGR—which mandates cuts in physician reimbursement to offset increases in overall Medicare volume—has required increasingly steep payment cuts that have been averted by last-minute congressional action; the cumulative cost of the yearly “patches” enacted by Congress is estimated at $170 billion.

APA, along with the AMA and many other physician groups, hailed passage of the new law as a welcome—and too-long deferred—relief from the yearly drama of scheduled payment cuts and last-minute patches by Congress.

“Senate passage of the SGR reform bill is a major step toward a reliable and rational payment system for Medicare beneficiaries and their physicians. It is long overdue,” said APA President Paul Summergrad, M.D. “APA, our members, and the entire medical community advocated strongly for this legislation, which will eliminate uncertainty from the Medicare system to make sure patients and families can get the care they need and deserve from their physicians.”

APA CEO and Medical Director Saul Levin, M.D., M.P.A., said passage of the new law is a victory for APA’s advocacy efforts. “Repealing the SGR has been a decades-long process that has involved the advocacy of thousands of APA members and other medical experts—a grassroots effort that will truly benefit both patients and physicians,” he said. “I commend the president and Congress for their leadership and efforts in this process.”

Importantly, the legislation will provide stable updates of 0.5 percent in physician payment for the next five years, from this year until 2019. In 2019, it establishes a streamlined incentive payment program, known as the Merit-Based Incentive Payment System (MIPS), which will focus the fee-for-service system on providing value and quality. The MIPS would consolidate the three existing incentive programs—the Physician Quality Reporting System, the Value-Based Modifier Program, and Meaningful Use of Electronic Health Records—in a cohesive program that avoids redundancies.

It also provides financial incentives for professionals to participate in alternative payment models (APMs) that meet defined criteria.

The payment rate in 2019 will be maintained through 2025—that is, there will be no update—but physicians will be able to receive additional payment adjustments through the MIPS. In 2026 and subsequent years, professionals participating in APMs that meet certain criteria will receive annual updates of 0.75 percent, while all other professionals will receive annual updates of 0.25 percent.

The payment-reform legislation also extends and funds the Children’s Health Insurance Program (CHIP) through September 30, 2017, and the Community Health Center program.

The bill is estimated by the Congressional Budget Office to cost $141 billion, which will be only partially offset by several provisions in the package, including an income-related premium adjustment for some seniors. Starting in 2018, this policy will increase the percentage that beneficiaries pay toward their Part B and Part D premiums in two income brackets: for individuals with an annual income between $133,500 and $160,000 ($267,000 and $320,000 for couples), the percentage of premium paid above the standard premium will increase from 50 percent to 65 percent. For those with incomes between $160,000 and $214,000 ($320,000 and $428,000 for couples), the percentage will increase from 65 percent to 75 percent. ■