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Physician Pay Fix Update

Jan 26, 2015

As far as health care reform goes, the only item unresolved longer than ICD-10 is the issue regarding the repeal of the sustainable growth (“SGR”) formula. This past week we saw the first efforts to either temporarily or permanently repeal the SGR formula used to calculate Medicare physician payments .

These efforts came in the form of a two-day hearing held by the House Energy and Commerce Health Subcommittee.  This first hearing was entitled “A Permanent Solution to the SGR: The Time Is Now.”

As we know, the current deadline set for the SGR to go forward is March 31.  From the first round of testimony, it was reported that there is an agreement that one of the greatest challenges Congress faces is how to pay for repeal of the SGR--and not with a new Medicare payment policy for physicians. Last year, the committees in charge agreed on a plan which would have instilled a legislative package that would repeal the SGR and replace it with stable rates which could also be altered based upon performance-based incentives. This plan passed the House but went no further due to a lack of consensus about how to offset the cost.

Some suggestions that were provided on how to appropriately pay for SGR reform included the implementation of the new physician incentive payments from 2023 to 2018, allowing non-physician providers to participate, and increasing deductibles.

Subcommittee Chairman Joe Pitts (R-PA) said House leadership has stated that “only an SGR bill that can be paid for will be considered and that efforts to move a bill that is unpaid for is unrealistic.” Other committee members argued that “offsets are not needed for repealing the SGR but that if offsets are used they should come from a combination of tax increases and unused funds from military operations, not from the Medicare program.”

In this first round of meeting, there was no discussion, however, about cutting non-physician Medicare providers although that remains a strong possibility. Some of the provider cuts Congress is considering currently are cuts to graduate medical education, critical access hospitals, inpatient rehabilitation facilities, skilled nursing facilities, long term care hospitals, home health, clinical lab services, Medicare bad debt, and durable medical equipment.

We will continue to stay tuned as the next rounds of talks are completed.

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Steven Bisciello

Steven Bisciello is a Health Care Services Group, Partner experienced in revenue enhancement programs, health care litigation, compliance and physician practice management.

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