Fee-for-service preserved in first step of SGR repeal

Lori Shoaf and Carrie Lamb
08/01/2013 at 4:00PM

In a long-awaited development, the U.S. House Energy and Commerce Committee on July 31 passed out of committee a bipartisan bill designed to repeal the sustainable growth rate (SGR) formula. While this is only the first step in what's certain to be a long legislative process, the legislation itself meets many of the principles that ASPS has for years recommended for SGR reform. The bill moves Medicare physician payment from a system based on restraining service-volume to a value-based purchasing program. Most important to the specialty, it preserves the fee-for-service system. ASPS supports many of the provisions in this bill and will continue to work on areas of concern as it moves forward in Congress. 

"Passing this bill out of committee is a solid first step that's been a long time in the making - much progress unquestionably has been achieved," says ASPS President Gregory R.D. Evans, MD. "There's much work to be done, but we've successfully shaped this first important step."

ASPS Advocacy & Health Policy Vice President Scot Glasberg, MD, applauds the committee's move. "It's a positive development, in that a Congress that can't agree on much has finally agreed - in an important committee - to repeal the SGR and maintain a fee-for-service system," he says.

The Medicare physician payment system currently uses the SGR formula to determine the annual conversion factor that, in turn, is used to calculate payments for individual services. Enacted by Congress in the late 1990s, the formula is tied to the GDP - and it slashes physician payments when an annual expenditure target for physician spending is exceeded. Due to the cumulative nature of this formula, physician services have automatically been cut by double digits in recent years, with Congress burdened to intervene annually (and sometimes monthly) to stop these cuts. 

Many earlier SGR reform drafts forced all physicians into accountable-care organizations and bundled payment systems only. However, under the proposed legislation, physicians could choose to join those programs and opt-out of fee-for-service, but with the bill still preserving the fee-for-service option. The legislation also includes a five-year period of stable payment updates (0.5 percent increase per year), rather than many more years of double-digit cuts. ASPS has long sought a period of stable payments while a new system rooted in value-based purchasing is being developed.

ASPS Government Affairs Committee Chair Loren Schechter, MD, says the legislation would be a welcome move toward reforming a system badly in need of change, and that the stability built within would help support medicine in general. "While there are still issues to be addressed and not everything is the way we'd like it, this is a huge step forward and a 'win' for the plastic surgery community," he says. "Five years of stability as we transition to a new payment system - that, in and of itself, is an important key component of this bill."

"It is nice to see Congress finally coming together on a bipartisan basis to address this overdue issue of huge importance to the physician community," adds ASPS Government Affairs Committee Vice Chair  Debra Johnson, MD. 

Another key component involves the quality measures and clinical improvement activities that would be developed in the coming years - these would be developed by the specialty societies, rather than by the government in the absence of consultation with specialties. This would ensure that quality reporting would be handled in a meaningful and clinically relevant manner through the use of data registries.

The legislation would require that data reported as part of a quality-reporting system could not give rise to medical liability causes of action. ASPS fought hard to have those liability protections added after reviewing original drafts of the bill.

Additionally, a caseload threshold would be determined to allow a hardship exemption for physicians who bill Medicare for so few services that a statistically meaningful quality-score could not be developed for them.

One provision that ASPS strongly recommends for removal as the process goes forward relates to the relative-value units used to set fees for physician services, with the current bill allowing for a review of "misvalued codes." This is a process already underway, but the savings from "over-valued" codes currently go back into the physician payment pool. Unfortunately, this provision sucks those savings out of the system and shrinks the physician pie. ASPS strongly objects to this particular provision.

ASPS has worked diligently for many years to replace the SGR with a system that protects patient access to care and eliminates continuous threats to physician payments. The Society will not support anything short of full repeal of the SGR, and much remains to be done. ASPS continues to work to adjust certain provisions as this legislation continues to gain support. More information will be shared with membership in the coming months as this process moves forward.