A bipartisan group of House and Senate lawmakers introduced legislation (H.R.4015/ S.2000) to repeal and replace Medicare’s sustainable growth rate (SGR) formula and gradually implement a value-based payment system.The legislation titled, SGR Repeal and Medicare Provider Payment Modernization Act of 2014 would repeal the SGR formula and institute a 0.5% annual payment increase for physicians between 2014 and 2018. This increase would be maintained until 2018 in an effort to offer payment stability and help doctors transition to new care models.

The AASM co-signed letters to Senate and House leaders congratulating them on introducing the legislation. The letters encouraged legislators to pass a long-term solution to the SGR and establish a transition to a more stable Medicare physician payment policy to better serve America’s senior citizens.

According to a one-page summary of the legislation, the new payment system would:

  • Encourage care coordination initiatives for patients with chronic illnesses;
  • Increase public access to provider payment data;
  • Replace disvalued codes to improve payment accuracy; and
  • Require development of quality measures in collaboration with physicians.

Beginning in 2018, physicians would participate in a new merit-based incentive payment system (MIPS) that would consolidate the three existing incentive programs: the Physician Quality Reporting System; Value-Based Payment Modifier; and meaningful use of electronic health records. In addition, the bill would award a 5% bonus to physicians who collect at least 25% of their Medicare revenue from an alternative payment model in 2018. Such models include accountable care organizations, patient-centered medical homes and other public or private payer initiatives.

However, lawmakers have yet to determine a way to cover the cost of repealing and replacing the SGR. According to estimates, the bipartisan proposal would cost about $126 billion over a decade. Since 2003, Congress has spent nearly $150 billion on short-term patches to stave off Medicare payment cuts scheduled under the SGR formula. The most recent short-term “doc fix” is set to expire March 31, after which physicians would face a 24% cut to their Medicare reimbursement rates unless Congress acts to delay the cuts or repeal the SGR formula outright.