March 20, 2015

On March 19 leaders in the US House of Representatives and the US Senate released bipartisan, bicameral legislation to replace the broken Medicare Sustainable Growth Rate (SGR) formula with an improved payment system that rewards quality, efficiency, and innovation. The bipartisan, bicameral bill seeks to end the cycle of annual ‘doc fix’ crises that have created uncertainty for millions of Medicare providers and beneficiaries for more than a decade and also create a system that promotes higher quality care for America’s seniors.

The legislation (HR 1470) is nearly identical to bills introduced in the House and the Senate last year. The House is expected to vote on it sometime next week, with only days left before the current physician payment patch expires on March 31. The new legislation does not provide details on the roughly $70 billion in budget offsets and other policy changes expected to accompany it when floor votes occur. US House of Representatives Speaker John Boehner (R-OH) and House Minority Leader Nancy Pelosi (D-CA) are working together to finalize the offset package.

According to documents released by the authorizing congressional committees, the new legislation will:

• repeal the SGR and end the annual threat to seniors’ care, while instituting a 0.5 percent payment update each year for five years;
• improve the fee-for-service system by streamlining Medicare’s existing web of quality programs into one value-based performance program by increasing payment accuracy and encouraging physicians to adopt proven practices;
• incentivize the use of alternative payment models to encourage doctors and providers to focus more on coordination and prevention to improve quality and reduce costs; and
• make Medicare more transparent by giving patients more access to information and supplying doctors with data they can use to improve care.

APMA is encouraged by this most recent bill introduction, and is currently reviewing the legislation to ensure it aligns with the interests of podiatric physicians and surgeons. In the meantime, APMA urges its members to use our quick and easy eAdvocacy system to let Congress know that the time has come to repeal and replace the flawed Medicare SGR formula.

The SGR formula—the mechanism that ties physician payment updates to the relationship between overall fee schedule spending and growth in gross domestic product (GDP)—is widely recognized as being fundamentally broken. The flawed formula has led to 17 short-term patches enacted by Congress to prevent significant Medicare reimbursement rate cuts over the past decade.

This bipartisan policy agreement is an important step in finally resolving the flawed SGR formula, providing certainty for seniors and their physicians, and creating a system that promotes high quality health care.

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