The SGR Fix: Now What?

On April 16, 2015, President Obama signed the Medicare Access and CHIP Reauthorization Act into law, which repealed the much-maligned sustainable growth rate formula. Physicians are breathing a sigh of relief as the SGR repeal prevented steep reimbursement cuts that have been threatening physicians since the late 1990s. Now that the focus is off SGR, physicians and policy makers can shift focus to new patient care models that are supported under MACRA.

Despite the “doc fix,” physician reimbursement still remains uncertain. The minimal annual fee increases 0.5 percent from 2015 through 2019. Because there are no increases through 2025, physician charges remain below the historic consumer price index. Also, these limited increases will likely impact third-party payer reimbursement schedules. Many practices are uncertain if stagnant reimbursement will cover ever-increasing costs.

MACRA will encourage and quicken the shift towards value-based reimbursement systems. MACRA emphasizes quality over volume, and beginning in 2019, eligible professionals will be able to participate in the Merit Based Incentive Payment System. In 2026, Alternative Payment Models will permit certain professionals to be eligible for increased rates and incentives. Tracking and reporting quality data will be increasingly important. Because MIPS is budget-neutral, it is important to keep in mind that there will be downward adjustments as well. Since the parameters of these incentive payments are yet to be defined, the future of Medicare reimbursement still remains uncertain.

As the healthcare industry rapidly evolves, it’s likely that Medicare spending will continue to be a contentious topic. MACRA is estimated to cost $214 billion and add $141 billion to federal budget deficit over the next 10 years. Since APMs, which are designed to produce savings, are only theoretical at this point, it is unknown whether the anticipated savings can be achieved. So far, a definitive connection between healthcare delivery reform, payment reform and cost savings makes financial projections inexact. Efforts to control Medicare spending amidst the changing healthcare climate will be difficult, but also necessary.

While many are celebrating the victory of the SGR repeal, physicians and policy-makers can be assured that new issues and conflicts will likely ensue as MACRA is implemented and continues to be defined.