Thursday, July 18, 2013

Committee Holds SGR Replacement Mark Up

After stating last month that his committee would take up legislation replacing Medicare’s Sustainable Growth Rate formula (SGR), House Energy and Commerce Committee Chairman Fred Upton (R-MI) has scheduled a meeting on the matter. The Energy and Commerce Health Subcommittee has set a markup for a new bill addressing the SGR for next Monday.

According to CQ, the subcommittee markup will be the first in several years on a plan to repeal the SGR and institute a new system for Medicare reimbursements to doctors. Upton confirmed the markup Monday in an interview.

The sustainable growth rate, or SGR, was enacted by the Balanced Budget Act of 1997. The formula is intended to ensure that the yearly increase in expense per Medicare beneficiary doesn’t exceed the volume increase of the country’s gross domestic product (GDP). Four factors are taken into account, including the estimated percent change in fees for physicians’ services, the estimated percent change in the average number of Medicare fee-for-service beneficiaries, the estimated 10-year average annual percentage change in real GDP per capita, and the estimated percentage change in expenditures due to changes in laws or regulations. According to ModernHealthcare, the formula also includes a “clawback” mechanism that reduces Medicare fees if overall spending targets were exceeded the previous year.

Each year, Congress passes a ‘patch’ or ‘doc fix’ to avoid the cuts required by the SGR. This bill framework would totally replace the current SGR with an enhanced fee-for-service system, while allowing providers to opt out and participate in alternative payment models. In the fee-for-service program, providers would get payment updates and incentives based on how they met specified quality measurements.

The House Ways and Means Committee may also take up possible fixes, as they have direct jurisdiction over a number of potential payment offsets. 

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