On April 14, 2015, the U.S. Senate passed H.R. 2, the “Medicare Access & CHIP Reauthorization Act of 2015,” by a vote of 92 to 8. This historic vote follows passage of the bill in the U.S. House of Representatives by a vote of 392-37. President Obama is expected to sign the bill when it comes to his desk, making the bill’s repeal of the sustainable growth rate (SGR) formula, and introduction of a new physician payment update system based in part on participation in an alternative payment models (APM), a reality. Here we examine the new Medicare physician payment programs as outlined in the bill and what they mean for physicians.To understand the need for the Medicare Access & CHIP Reauthorization Act of 2015, one must understand SGR and the difficulty it has perennially posed for physicians and patients. Under Section 1848(f) of the Social Security Act, the SGR is calculated on an annual basis using several factors, including the change in Gross Domestic Product (GDP) per capita. Over the past decade, this formula has repeatedly posed significant cuts to physician payment. Congress had to step in multiple times to divert scheduled cuts and ensure Medicare patient access to physician services, resulting in nearly $170 billion in so-called “patches,” often at the last minute with significant administrative hassle. At the same time that the SGR has come under criticism, a movement spearheaded by policymakers and other stakeholders—and further developed in the Affordable Care Act (ACA)— has been underfoot to achieve the “Triple Aim”: to improve the quality and experience of care, improve the health of populations, and reduce the per capita costs of healthcare. Under this rubric, there has been a shift among policymakers to emphasize physician payment based on the achievement of higher care quality and lower cost, rather than physician payment based on volume of services. The Innovation Center at the Centers for Medicare & Medicaid Services (CMS) and private payers have developed new payment and delivery models geared toward achieving these goals, and alternative payment models, such as bundled or pay-for-performance models, are increasingly being utilized for physician services. CMS has also instituted some reforms in its own rules and payment schedules, most notably the Value Based Modifier (VBM) program and the Physician Quality Reporting Program (PQRS), but many stakeholders say that because these programs have not been physician-driven, they suffer from significant operational problems. Within this landscape, lawmakers developed H.R. 2. Among other provisions, the bill permanently repeals the SGR and stabilizes Medicare payments to physicians. The updates are clearly defined in the legislation:
- 0% 1/1/15 - 6/30/15
- 0.5% 7/1/15 - 12/31/19
- 0% 2020 - 2025
- 0.75% for eligible APMs 1/1/2026 +, 0.25% all others
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