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GE Healthcare Camden Group Insights Blog

SGR is Fixed! What's Next?

Posted by Matthew Smith on May 7, 2015 1:23:00 PM

By Mary Witt, MSW, Senior Vice President, The Camden Group

sgr.pngThe Medicare Access and CHIP Reauthorization Act (“MACRA”) became law last month, and the repeal of the of the sustainable growth rate formula (“SGR”) was official. As important, MACRA reinforces Medicare’s move away from fee-for-service and into pay for value. The major impact on medical groups includes:

  • Provides a 0.5 percent annual update to Medicare rates from 2015 through 2019.
    • The 2015 update will occur July 1, 2015.
  • Moves all providers (physicians, nurse practitioners, clinical nurse specialists, midwives, certified registered nurse anesthetists, and physician assistants) into value-based payments in 2019, either through the Merit-Based Incentive Program (“MIPS”) or through bonuses for participation in an Alternative Payment Methodology (“APM”). All providers will be incentivized through MIPS if they do not qualify for bonuses under APM.
  • MIPS consolidates and streamlines current Medicare quality programs (Physician Quality Reporting System [“PQRS”], Meaningful Use, and the value-based payment modifier and sunsets the penalties associated with each of the current programs in 2018.
    • MIPS will reward providers based on performance in four categories: quality, resource use, meaningful use, and clinical performance improvement.
    • It creates a composite score based on the four categories and, depending on how it compares with a performance threshold (based on the mean composite score of all eligible professionals), eligible providers will receive a bonus, a penalty, or no adjustment in payment. Those scoring in the lowest quartile will receive a penalty and bonuses will be proportional depending upon the score.
  • Provides a five percent bonus for 2019 to 2024 for eligible professionals who are a “qualifying APM participant.”
    • Qualifying APM categories include accountable care organizations, patient centered medical homes, bundled payments, or other models developed by the Centers for Medicare and Medicaid Services (“CMS”).
    • In 2019, a qualifying APM participant must have at least 25 percent of payments attributed to services furnished under an eligible APM. It increases to 50 percent in 2021, and 75 percent in 2023 and beyond.
  • Reverses CMS’ decision to eliminate the use of 10- and 90-day global day surgical codes.

So Does MACRA Mean We Don’t Need to Do Anything Different?

The answer is a resounding "NO!"  

This legislation is another signal that payers have moved away from fee-for-service to pay for value, and medical groups need to assess their readiness and act now. Waiting until the payment methodology changes is too late. Instead, medical groups must begin the work of redesigning their practices now to be successful in the future.

Must Dos

  • Improve patient access to increase patient satisfaction and prevent leakage to new competitors
  • Maximize operational efficiency
    • Analyze your performance on quality and cost and develop a performance improvement action plan now
    • Document and assess your current work flows for all key practice processes:  check-in, check-out, physician visit, and visit discharge to identify waste, barriers, duplication, and missing steps
    • Maximize patient throughput
    • Develop work flows to effectively use team members to maximize physician effectiveness
    • Optimize electronic health records utilization
  • Re-examine your physician compensation plan and add incentives for quality, patient satisfaction, and efficiency
  • Use the current Medicare value-based payment initiatives to help you build the foundation for success under MIPS
    • Participate in PQRS

witt_headshot.pngMs. Witt is a senior vice president with The Camden Group and has over 25 years of healthcare experience. She has held management positions in hospitals, health systems, and management services organizations (MSOs). She has extensive experience in medical group and integrated delivery system development and management. This includes developing patient-centered medical homes, practice management, performance improvement, physician compensation, managed care, strategic planning, healthcare marketing, and physician recruitment. Ms. Witt leads medical group development, performance improvement, and turnaround projects for integrated delivery systems, medical groups, and academic residency programs throughout the country. She may be reached at mwitt@thecamdengroup.com or 424-201-3971.

Topics: Mary Witt, Sustainable Growth Rate, SGR, Medicare Access and CHIP Reauthorization Act, EHR Optimization, MACRA

Senate Passes SGR Fix, Embraces Value-Based Reimbursement

Posted by Matthew Smith on Apr 15, 2015 2:45:32 PM

senateThe fix for Medicare’s Sustainable Growth Rate (“SGR”) is finally in as the Senate approved the previously House-passed healthcare reform package (“H.R. 2”). The fix repeals Medicare’s SGR physician payment formula after previous passage of 17 short-term bills since 2003 to block cuts to physician payments. President Obama had previously pledged to sign the bill as soon as it passed the Senate.

Impact on Physicians

  • Stabilizes payment increases from 2015 to 2019 with 0.5 percent increase per year with 0.0 percent payment adjustment between 2020 to 2025
  • Moves to pay-for-value in 2019
    • Incentive bonuses (5 percent annually) to providers who “receive a significant portion (25 percent+) of their Medicare revenue” from an alternative payment model, including patient-centered medical homes and accountable care organizations (“ACOs”) between 2019 to 2024
  • Combines the various current incentive payments and streamlines the current Merit-Based Incentive System (“MIPS”) beginning in 2019 to reward physicians for quality, resource utilization, clinical practice improvement activities, and meaningful use of the electronic health record (“EHR”)

Medical Group Must Dos

The SGR fix doesn’t eliminate challenges for medical groups, whether they are independently or hospital/health system owned. To be successful, medical groups need to be taking action on a number of fronts, including the following:

  • Re-examine your physician compensation plan and add incentives for quality, patient satisfaction, and efficiency
  • Maximize operational efficiency
    • Assess work flows
    • Maximize patient throughput
    • Effectively use care team members to maximize physician effectiveness
    • Improve patient access so you can meet quality and efficiency standards
  • Participate in Medicare’s current value-based payment initiatives
    • Participate in Medicare’s Physician Quality Reporting System (“PQRS”)
    • Attest for EHR meaningful use
    • Analyze your performance on quality and cost and develop a performance improvement action plan now

Other Key Provisions

H.R.2 also extends the Children’s Health Insurance program through September 30, 2017 and includes provisions on hospitals and post-acute providers. Other provisions include:

  • Delays disproportionate share payment cuts to safety net hospitals until 2018 and extends the DSH policy through 2025
  • Delays until September 30 changes in the two midnight rule on inpatient billing that were set to take effect at the end of this month
  • Increases Medicare payments to post-acute facilities by no more than 1 percent in 2018
  • $7.2 billion in additional funding for community health centers
  • Permanently extends Medicare’s Qualifying Individual program for low income seniors and the Transitional Medical Assistance program that helps families with Medicaid keep their coverage as they transition from welfare to work

Only about one-third of the $200 billion-plus package was offset by spending cuts. To help offset new spending, H.R. 2 provides for means testing for Medicare recipients. Higher-income beneficiaries will pay higher premiums for physician services and prescription drugs; some Medi-Gap plans will see limits on first-dollar coverage.

Although the bill’s passage was welcomed, some expressed caution and suggested that the legislation should not be considered a permanent solution. Additional payment updates and bonuses are currently set to expire in 2025 so there will be a need to re-examine the physician payment methodology again in the future.

Topics: Value-Based Reimbursement, Medicare, Physician Compensation, Operational Efficiency, Physician Group Practices, Sustainable Growth Rate, SGR

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