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NTOCC Update: House Leadership Releases Details of SGR Repeal-and-Replace Package

Posted on 3/23/2015 by NTOCC ® in Public Policy Updates

On March 31, 2015, the current “patch” for SGR will expire. The Sustainable Growth Rate (SGR) formula, which was first implemented in 1997, calls for automatic reductions in Medicare reimbursement rates for providers if overall Medicare spending exceeds a target rate. Without further action by Congress to temporarily avoid the cuts or permanently replace the flawed formula, providers will face a 25% cut in reimbursements beginning April 1, 2015.

Recently, leadership from the Democratic and Republican parties worked together to form an SGR repeal-and-replace package that, if passed, will repeal and replace the current SGR. It will also extend the Children’s Health Insurance Program (CHIP) and other Medicare “extenders” for two years, and will make two Medicare extender programs permanent. On Friday, the leadership released a one-page summary of the bill, a working framework, and a section-by-section, which are attached to this email for your review. The SGR package is estimated to cost $213 billion, and will be partially paid for by limiting first-dollar coverage in Medigap, levying a tax on delinquent Medicare service providers, and additional Medicaid DSH savings. Other savings attached in the legislation’s cost include:

  • Starting in 2018, wealthier seniors would see an increase in their premiums for Medicare Parts B and D, which is divided into two income brackets. Individuals with an income between $133,500 and $160,000 (or $267,00 to $320,000 for a couple) will see a premium paid increase from 50 percent to 65 percent. For individuals with an income between $160,000 and $214,000 (or $320,000 to $428,000 for a couple) will see a percent increase from 65 percent to 75 percent.
  • A one percent market basket update for long-term care hospitals (LTCHs), skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), home health providers (HH), and hospice providers.

The proposed package contains a few provisions relevant to the transitional care community, including:

  • Section 1 focuses on the establishment of a streamlined incentive payment program in 2019 that will focus the fee-for-service system on providing quality and value. The incentive payment program, referred to as the Merit-Based Incentive Payment System (MIPS) consolidates three existing incentive programs—the Physician Quality Report System (PDRZ), the Value-Based Modifier (VBM), and the Meaningful Use of EHRS (HER MU)—in order to avoid redundancies. The bill will also require the Secretary to publish a list of quality measures to be used in the upcoming MIPS performance period, which will be achieved through the notice and comment rulemaking process.
  • Section 4 will establish at least one payment code for care management (CCM) services for professionals treating individuals with chronic conditions. In order to prevent duplicative payments, only one professional or group practice will receive payment for these services, and payments for CCM would not require an annual wellness visit or initial preventative physician examination as condition of payment.
  • Section 6 will require the Secretary to make data available to requesting qualified clinical data registries to support quality improvement and patient safety activities. This will be done for a fee that will cover the costs of preparing the data, and providers identified in public reports will have an opportunity to review and submit corrections.

The package also includes provisions that would require Electronic Health Records (EHRs) to be interoperable by 2018 and prohibits providers from deliberately blocking information sharing with other EHR vendor products, as well as a provision that would require the Government Accountability Office (GAO) to report on barriers to expanded use of telemedicine and report patient monitoring.


SGR One-page Summary
SGR Working Framework
SGR Section-by-Section