Joseph Rugg's Health Law Blog

There is great celebration in the healthcare community about the repeal of the Medicare Sustainable Growth Rate (“SGR”).  All the healthcare-related and other media are abuzz reporting on the jubilation:

• MGMA
• AAFP
• Becker’s Hospital CFO Report
• Health Leaders Media
• Modern Healthcare
• Kaiser Health News
• Reuters

among others.

In fact, the only comparable celebration that I can recall occurred on the death of the Wicked Witch in the Wizard of Oz. Actually, the repeal of the SGR and the witch’s death are more alike than different.

For years, the SGR has terrorized physicians.  Every December and into the following new year, physicians had to wait to see whether their reimbursement from Medicare would be reduced by some double-digit percentage.  Recently, physicians have been pawns for Democrats and Republicans trying to make points (perhaps “ping pong balls” is the better metaphor), with their livelihoods held hostage until some form of political rationality prevailed.

According to the summary/analysis of MACRA prepared by the Staffs of the House Energy and Commerce and Ways and Means Committees:

The legislation repeals the flawed Sustainable Growth Rate (SGR) formula and replaces it with the bicameral, bipartisan agreement to return stability to Medicare physician payments. The SGR formula is a cap on aggregate spending on physicians’ services where exceeding the cap resulted in punitive recoupments in subsequent years. The formula was passed into law in the Balanced Budget Act of 1997 to control physician spending, but it has failed to work. Since 2003, Congress has spent nearly $170 billion in short-term patches to avoid unsustainable cuts imposed by the flawed SGR. The most recent patch will expire on March 31st. Based on H.R. 1470, the bicameral, bipartisan unified Committee bill to replace the SGR, this policy removes the imminent threat of draconian cuts to Medicare providers and ensures a 5-year period of stable annual updates of 0.5 percent to transition to a new system. The new system moves Medicare away from a volume-based system towards one that rewards value, improving the quality of care for seniors.

The Medicare Access and CHIP Reauthorization Act, or MACRA for short, has been praised by President Obama who has  promised to sign it.  The 324-page Congressional print of MACRA does a lot of things in addition to repealing the SGR, including the following:

• Extension of the Children’s Health Insurance Program (“CHIP”) for two years
• Development of “alternative payment models” away from fee for service and toward quality of care
• Strengthening of Medicare’s ability to fight fraud and build on existing program integrity policies
• Additional $7.2 billion for community health centers
• Increasing Medicare premiums for some seniors and elimination of Medigap policies starting in 2020 from covering Medicare deductibles for new beneficiaries