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Congratulations Congress!

The over 20% in Medicare rate reductions for physicians called for by the Sustainable Growth Rate (SGR) is repealed in legislation passing the House and Senate with overwhelming majorities.

SGR sought to link the growth in Medicare provider reimbursement to the growth in the economy. What that meant in very crude terms is that if physician payments per Medicare beneficiary increased by 10% and the growth in the economy was flat, then Medicare payments to doctors would be cut by 10%. No significant changes were made to the ways in which providers were reimbursed by Medicare that would have allowed the program to live within the SGR cap. Congress was never willing to pull the trigger and cut physician reimbursements and kicked the issue down the road from year to year until the anticipated cut in 2015 now equaled more than a 20% cut in physician reimbursement rates.

Replacing the SGR are small increases in physician reimbursement and a shift from volume to value based reimbursements – i.e. reimbursements will be tied to improved quality and better outcomes. The reimbursement increases are 0.5% for 5 years, then flat for 5 years, then 0.25% increases thereafter. Value based means “alternative payment models,” patient centered medical homes, transparency of outcomes and quality improvements. A technical advisory committee would set these changes in place.

Also included is a two-year extension of the CHIP program for uninsured children, two years and $7.2 billion for community health centers, and a one-year delay to 2018 in federal Medicaid DSH cuts.

The bill’s costs are partially offset by cuts of 1% in reimbursement rates to long term care institutions and an increase in the amounts that seniors with higher incomes pay towards their Medicare coverage.

 

Posted by Lucien Wulsin

References:

Mary Ann Carey, Congress Passes a Bill to Fix Medicare’s Doctor Payments, What’s in It? (Kaiser Health News , April 15, 2015)

Kathleen Hunter, Congress Votes Raise for Doctors in US Medicare Payments (Bloomberg news, April 14, 2015)

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