Health Information Management

News: Congress proposes new bill to reform physician payments

CDI Strategies, February 13, 2014

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Senate Finance, House Ways and Means, and House Energy and Commerce committees combined multiple Medicare physician payment reform proposals into one bipartisan bill titled SGR Repeal and Medicare Provider Payment Modernization Act of 2014, released Feb. 6.  

The proposal would repeal the sustainable growth rate (SGR) formula, move Medicare physician payment towards a system that rewards quality and value over quantity of services, and incentivize physicians to participate in alternative payment models.
The SGR, implemented in 1997, linked physician reimbursement to the overall economy’s inflation rate and often resulted in purported negative adjustments of upwards of 25%. These adjustments rarely came to fruition due to the strong physician lobbies and Congressional intervention often at the proverbial 11th hour. The latest intervention is set to expire on March 31, according to an article in Medical Economics.
"Congress has been debating the shortcoming of the SGR policy for more than a decade. Continuing the cycle of short-term patches by merely addressing the 2014 cut that is imminent on April 1 without solving the underlying problem would be fiscally irresponsible and further undermine the Medicare program,” said American Medical Association President Ardis Dee Hoven, MD, in a release. “It is time for action to repeal the SGR and establish a transition to a new more stable Medicare physician payment policy to better serve America's senior citizens."
“This agreement begins the movement away from fee-for-service reimbursement toward an improved system that rewards quality. Moreover, we appreciate the committees’ willingness to provide stable and predictable payment updates for the nation’s physicians,” said President and CEO of the Association of American Medical Colleges, Darrell G. Kirch, MD, in a release.
The proposal would provide a 0.5% payment update for five years under the fee-for-service model as a transition, and allow further updates if needed, the American Hospital Association reported.


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