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SGR Fix Becomes Law

On April 16, President Obama signed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) into law. The Senate passed the bill on April 14 with an overwhelming bipartisan majority. Two weeks earlier, it passed the House by a similar overwhelming majority. These actions eliminate the long-standing issue of the Sustainable Growth Rate (SGR) formula that for more than ten years had mandated large cuts which needed to be averted by temporary Congressional action. Eliminating the SGR formula has been a major focus of ASH advocacy for that same time period. Countless number of Congressional visits by ASH members to discuss the issue undoubtedly contributed to the SGR finally being overturned. Only two weeks ago, the ASH Committee on Government Affairs met with their respective members of Congress to strongly advocate for this repeal. The legislation spans more than 200 pages and covers many issues beyond the repeal of the SGR. 

Annual Payment Updates

First, the payment cuts of more than 20% that had come from the SGR formula are replaced by a statutory payment update which is not set by a formula. On July 1, 2015, Medicare payments for physicians go up by 0.5% from the current rates. Each year on January 1 from 2016 to 2019, payments will increase by an additional 0.5%. As is true today, payments for individual services may increase or decrease, but the average service will have payments increased by 0.5%. Starting in 2020, payments are flat for an additional five years with no increases. Going further into the future, payment rates have very modest increases. 

This is clearly the big story of the legislation. Although many physicians may not remember it, the SGR formula was supported by physicians when it passed. The statutory formula agreed to was a gamble and physicians lost. Going forward with this new mechanism, there is no situation which would lead to increases in physician payment of 5% or more, which is what some thought the SGR could have done. 

Consolidation of Quality Reporting Programs

Today under current law, physician payments in Medicare are subject to a series of adjustments based on three separate programs – the Electronic Health Record Meaningful Use Program, the Physician Quality Reporting System (PQRS), and the Value-Based Modifier pay-for-performance program. The approved legislation will convert all three of these adjustments into a single assessment program referred to as the Merit-Based Incentive Payment System (MIPS) which would be implemented in 2018. While this consolidation may appear to be a big change, the programs already had significant linkages that may make the practical effect of this change rather modest. ASH expects that physician groups will continue to be required to show their use of electronic medical records and report on quality measures of some type. The one addition to the MIPS program is the requirement for practices to participate in clinical practice improvement activities. These activities are defined with examples, but vary broadly. They could include activities similar to those used for Part IV of Maintenance of Certification or could be simpler than those programs. In 2015, physicians could have as much as six percent of their Medicare payment at risk from the existing PQRS, meaningful use, and value-based modifier programs. The legislation just passed by Congress actually decreases the amount at risk in the first year, reducing it to four percent, but gradually increasing the risk to nine percent in 2021. 

One major difference in the measurement of quality is that quality benchmarks will be established a year in advance and physicians or practices will receive credit for either achievement or improvement. This measurement methodology, which is already used in the hospital value-based purchasing system, allows strong incentives for both high and low performers. 

Just as in today’s system, it appears that physicians will be given significant latitude in determining which measures apply to them. In addition the use of clinical data registries, common in many specialties, are further encouraged for reporting of measures. 

Incentives to Move to New Payment Models

The establishment of very modest payment increases followed by flat payments is intended to provide an additional incentive to physician groups to move into payment models that require the taking of additional risk. In fact, the legislation essentially establishes two paths for physicians. Those who embrace alternative payment models enough that 25% of their Medicare revenue comes from these models by 2019, will receive an additional 5% bonus payment for all services. The threshold for receiving this bonus increases to 50% for 2021 and 2022. There will be a significant amount of regulation that will define how a physician or practice would demonstrate to CMS what percentage of their payments come from these models, particularly in cases in which a physician is considering their work with private payers. 

What Will This Mean for Hematologists?

For the most part, the everyday practice and involvement with Medicare will look very much like it does today with the passage of this law. While the SGR has loomed over physician’s heads for many years, the cuts associated with that formula only happened once more than ten years ago. The approved legislation eliminates that threat. The quality reporting and other mechanisms are again very similar to today’s programs, just repackaged in a relatively modest fashion. The incentives to move to alternative payment models should be carefully evaluated to ensure that groups are comfortable taking on risk, even with the bonus increases associated with early adoption of these models.

What Will ASH Do Now?

The passage of this legislation is not an end of the advocacy work related to physician payment. This legislation will require a great deal of regulatory interpretation by CMS and ASH will work closely with CMS on these issues. Of particular focus for the Society will be defining the performance improvement activities and ensuring they are relevant to practice, identifying performance measures appropriate for hematologists, and working to craft payment models that focus on blood cancers and chronic benign hematologic diseases.