Sustainable Growth Rate (“SGR”) Repealed After 10 Years of Effort

The Senate recently voted to repeal the SGR and avert a 21% reduction in Medicare payments to physicians. The House had repealed this legislation on March 25, 2015.

Congress did pass the Medicare Access and Children’s Health Insurance Program (“CHIP”) Reauthorization Act. There are three major components to this legislation as follows:

  1. Eliminates a 21% payment cut that went into effect April 1, 2015 and eliminates any future erases future SGR cuts. The legislation also provides a 5-year period of stable, annual updates of 0.5% in order to transition to a new payment system. 
    • Physicians will receive an annual update of 0.5% in each of the years 2015 through 2019. The first 0.5% update will begin July 1, 2015. The second 0.5% update will begin January 1, 2016.
  2. Financial incentives are included for physicians who move into alternative payment models (“APMs”). 
    • There’s an opportunity to earn a 5% bonus for eligible professionals who receive a significant share of their revenue through an APM from 2019 through 2024.
  3. Sunsets the financial penalties associated with the Physician Quality Reporting System (“PQRS”), the value-based payment modifier (“VBPM”), and meaningful use (“MU”) in 2018. Established a new program called the Merit-Based Incentive Payment System (“MIPS”).

The legislation also reverses the Center for Medicare & Medicaid Services' decision to eliminate the use of 10- and 90-day global surgical codes in Medicare. There has been a significant amount of lobbying and hard work by many health care professional organizations to influence Congress to initiate these legislative changes.

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