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President Obama Signs Bill to Eliminate Medicare SGR Payment System

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President Obama Signs Bill to Eliminate Medicare SGR Payment System President Obama Signs Bill to Eliminate Medicare SGR Payment System President Barack Obama signed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) into law on April 17, permanently repealing the Medicare sustainable growth rate (SGR) formula used to determine physician payment rates. Congress had previously patched the SGR formula 17 times over the last 15 years. The U.S. Senate passed the legislation on April 14 by a vote of 92-8. The same measure passed the U.S. House of Representatives by a bipartisan vote of 392-37 on March 26. MAY 2015 Key elements of the legislation include: Permanently repeals SGR mechanism Updates physician payments annually by 0.5 percent in each of the years 2015 through 2019 Supports movement to alternative payment models (APMs) Establishes a Merit-Based Incentive Payment System (MIPS) to streamline and improve three distinct current law incentive programs Extends the Children's Health Insurance Program (CHIP) by two years The bill is partially offset through a combination of increased payments from higher-income Medicare beneficiaries and payment reductions to various Medicare providers. Six amendments were introduced to amend the legislation, but failed to be adopted. Senate Republicans introduced three amendments: To strike the pay-go exemption that typically requires any spending increase be paid for by a tax increase or spending cuts elsewhere: This amendment would strike the provision allowing Congress to identify offsets for the bill after enactment, therefore requiring Congress to identify savings to fully offset the legislation. To repeal the individual mandate: This amendment would repeal Sections 1501 and 1502 and subsections (a), (b), (c), and (d) of section 10106 of the Patient Protection and Affordable Care Act, and apply and administer the Internal Revenue Code of 1986 as if such provisions and amendments had never been enacted. To provide steady updates of payment rates under the Medicare physician fee schedule rather than incentive adjustments through alternative payment models: This amendment would update the single conversion factor that would otherwise apply to 2015 from January 1 through June 30 to 0.0 percent, update the single conversion factor for July 1 through December 31 to 0.5 percent, and update the single conversion factor for 2016 and each subsequent year to 0.5 percent. Senate Democrats introduced three amendments: To repeal the Medicare therapy caps: This amendment would repeal therapy caps and extend threshold for manual medical review for one year for outpatient therapy services. To extend CHIP for four years: This amendment would protect and retain PAGE 2 the Children's Health Insurance Program (CHIP) for four years, instead of two years as allowed for in the House-passed measure. To improve women's access to quality health care: This amendment would renew the application of Medicare payment rate floor to primary care services furnished under Medicaid and include coverage for additional providers and rural health clinics, federally-qualified health centers, and other health centers that receive reimbursement on a fee schedule applicable to a physician for services furnished from January 1, 2015 through December 31, 2016. It would also ensure payment by managed care entities, increase access to safety net providers, and improve community health centers, the National Health Service Corps, and teaching health centers. Finally, the amendment would increase investments in primary care and nurse practitioners by creating demonstration grants for training programs. To download the bill, click here. CMS Actuary Report on Legislation On April 9, the Centers for Medicare & Medicaid Service (CMS) Office of the Actuary issued a report, Estimated Financial Effects of the Medicare Access and CHIP Reauthorization Act of 2015 (H.R. 2), which estimates that from fiscal year 2015 through 2025, H.R. 2 would increase combined Federal spending for Medicare, Medicaid, and the health insurance marketplace by $102.8 billion. The Office of the Actuary warns that while this measure avoids significant pay cuts for physicians in the short term, it presents long-range concerns that will require future legislation. The memo states: "While physician payment updates would be adequate for many years, there are a number of concerns about the specified updates in the long range. In particular, the physician payment rates would be problematic under H.R. 2 in years with high inflation, in 2025 when the 5-percent APM bonus and the $500 million additional pool for MIPS are scheduled to expire, or at the point when the cumulative effects of payment updates not keeping up with physician costs become too large. If not addressed by subsequent legislation, we expect that access to, and quality of, physicians' services would deteriorate over time for beneficiaries." To read the Office of the Actuary report, click here. MedPAC Examines Bundled Payments for Oncology Services The Medicare Payment Advisory Commission (MedPAC) met on April 3 to discuss bundled payment policies for oncology services, during which several Commissioners expressed support for a broad approach to bundling oncology services in Medicare. Under this approach, all services related to cancer treatment would be covered in one bundle. According to a staff presentation, Medicare's current fee-for-service policies under Part B "result in beneficiaries not obtaining the best value" when receiving drug benefits for cancer treatment. The staff also noted that new policies to shift beneficiaries to the least costly alternative (LCA) for treatment and bundled approaches would improve spending value for Medicare beneficiaries needing cancer treatment. MedPAC staff also stated that bundled approaches allow clinicians to decide on the value of drugs and services, which might also lead to improved care coordination for beneficiaries needing oncology services. MedPAC staff presented several key design elements for bundling payments and examined both narrow and broad bundling examples, including the Bach bundling concept, the UnitedHealthcare and MD Anderson pilot, and CMMI Oncology Care Model. PAGE 3 MedPAC is expected to release its next report to Congress in June. To view the MedPAC presentation on bundling oncology services, click here. AMA Study Refutes Claims that Self-Referral Encourages Over Utilization of Medicare Services A new study, "Outpatient ancillary trends in the Medicare fee-for-service population: 2008-2012," examines specific self-referred services provided under the in-office ancillary services exception (IOASE) to the Stark Law, including advanced imaging and intensity-modulated radiation therapy (IMRT). Medicare claims data from 2008 to 2012 from a five percent sample of Medicare fee-for-service enrollees was reviewed to determine changes in spending and utilization for select services. Key study findings include: For most of the ancillary services, the proportion provided in physician offices compared to hospital settings is relatively small, suggesting that imposing pay cuts or self-referral restrictions on these services will not produce significant savings. In general, five-year annualized utilization and spending trends for these services show declining and even negative growth rates in office settings. These trends indicate that concerns about potential cost and utilization related to physician ownership are unwarranted. By the end of the study period, utilization growth in hospital outpatient departments was outpacing growth in physician offices for all four categories of ancillary services examined. There is a real risk that policies intended to preclude or discourage physician investment in ancillary services could backfire by accelerating their movement out of physicians' offices where Medicare and its beneficiaries often pay less than when the identical services are provided in the hospital. Specific to IMRT, the study finds lower growth of utilization and expenditures in physician offices, which has led to a decline in the share of spending in physicians' offices. The in-office share of total spending for IMRT showed a decline from 59 percent in 2008 to 53 percent in 2012. "The cost and utilization trends for the services in question do not support arguments that physician ownership of the services leads to overutilization and increases Medicare spending. In fact, they suggest that to the contrary, efforts to discourage availability of these services in physician's office could actually increase costs to Medicare and its beneficiaries," the American Medical Association (AMA) said in a statement. The study was sponsored by the AMA and completed by the independent actuarial firm Milliman, Inc. To download the report, click here. New Report Outlines Building Blocks for Alternative Payment Models A new report from the Center for Healthcare Quality and Payment Reform (CHQPR), The Building Blocks of Successful Payment Reform: Designing Payment Systems That Support Higher-Value Health, offers guidance on structuring alternative payment models in ways that benefit patients, payers, and providers. The report, prepared with support from the Robert Wood Johnson Foundation, describes how to design payment reforms that simultaneously achieve four important goals: PAGE 4 Sufficient flexibility in care delivery so that healthcare providers can deliver high quality, affordable services that are matched to the unique needs of individual patients; Appropriate accountability for spending to assure
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