Two influential committees in the U.S. House of Representatives continue to work on a framework for eliminating the Medicare sustainable growth rate (SGR) formula. With the cost of eliminating the SGR at its lowest point in a decade, the congressional committees have been making progress on draft legislative language to fix the badly broken Medicare payment system.

The SGR formula has been threatening severe payment cuts to physician reimbursement for more than a decade. Over the years, moves to repeal the SGR have failed, due in large part to the large price tag of such a fix. Recent declines in spending on physician services have lowered the estimates on the price tag for a repeal of the SGR. In February, the Congressional Budget Office cut earlier projections in half when it said that it would cost $138 billion over 10 years to freeze physician pay rates. With the cost going down so dramatically, there's a concerted effort on both sides of the political aisle to get this problem fixed this year.

The most recent draft of the legislation, released last month, begins with a repeal of the SGR and a period of stable payment increases and would then move to a model that promotes quality, efficiency and value. While the draft doesn't specify what quality measures would be used, it does say that the measures would be physician developed and Medicare reimbursements would be based on quality scores relative to their peers, improvements in scores from previous years and clinical improvement activities. It also states that quality measures would be risk adjusted so that providers are not penalized for treating sicker or more complicated patients. The bill promises that physicians would receive timely feedback on their performances so they can identify areas for improvement.

Lawmakers are also intent on minimizing reporting burdens and encouraging flexibility in the quality measures that would help determine future pay rates. It also lays out a framework for physician practices to select a payment and delivery model that best fits their individual situation.

The California Medical Association (CMA) supports the general approach and is pleased to see that physician groups are engaged in the process. The draft is consistent with the American Medical Association’s (AMA) SGR Task Force’s principles, developed by AMA, national specialty societies and state medical associations, including CMA. CMA will continue to engage with the committee staff as they further develop the proposal.

Contact: Elizabeth McNeil, (800) 786-4262 or emcneil@cmadocs.org.