Agreement on SGR 5 Year Fix: Possible Vehicle for WC & MSP Amendments

House Ways and Means Committee Chairman Dave Camp (R-Mich.), Senate Finance Committee Chairman Max Baucus (D-Mont.), Senate Finance Committee Ranking Member Orrin Hatch (R-Utah), House Ways and Means Committee Ranking Member Sander Levin (D-Mich.), House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) and House Energy and Commerce Committee Ranking Member Henry A. Waxman (D-Calif.) today introduced a bipartisan, bicameral bill that would replace the broken Medicare Sustainable Growth Rate (SGR) formula with an improved payment system that rewards quality, efficiency and innovation. The bill merges the proposals passed overwhelmingly by each committee of jurisdiction last year.

Summary of the SGR Problem

The Sustainable Growth Rate (SGR) formula – the mechanism that ties physician payment updates to the relationship between overall fee schedule spending and growth in gross domestic product (GDP) – is fundamentally broken. Although originally introduced as a mechanism to contain the growth in spending on physician services, a decade of short-term “patches” has frustrated providers, threatened access for beneficiaries, and created a budgetary dilemma from which Congress has struggled to emerge. Over the last decade, Congress has spent nearly $150 billion on short-term SGR overrides to prevent pending cuts.

The 113th Congress has brought renewed commitment to repealing and replacing the flawed SGR update mechanism. This effort has been helped by the significantly reduced Congressional Budget Office score for a freeze of physician payments over the next ten years and bipartisan proposals reported out by all three committees of jurisdiction last year. Building on that effort, the bipartisan, bicameral legislation introduced today joins the three committee-approved bills, moving Medicare away from the current volume-based payment system to one that rewards quality, efficiency and innovation.

Summary of the Bipartisan, Bicameral Legislation

The proposal would:

  • Repeal the SGR and end the annual threat to seniors’ care, while instituting a 0.5 percent payment update for five years.
  • Improve the fee-for-service system by streamlining Medicare’s existing web of quality programs into one value-based performance program. It increases payment accuracy and encourages physicians to adopt proven practices.
  • Incentivize movement to alternative payment models to encourage doctors and providers to focus more on coordination and prevention to improve quality and reduce costs.
  • Make Medicare more transparent by giving patients more access to information and supplying doctors with data they can use to improve care.

A more detailed summary is available here.

Opportunity for WC MSA Reform

The agreement on the appropriate policy for SGR reform opens the legislative process to further amendments to Medicare that may provide revenue or savings needed to pay for the SGR reforms.

UWC and the coalition of self insurers, the insurance industry and attorneys representing WC claimants are working with congressional staff to include HR 1982, the Medicare Secondary Payer and Workers’ Compensation Settlement Agreements Act of 2013 in the SGR legislation as it moves through the House. HR 1982 includes a feature that increases revenue to Medicare by permitting individuals with workers’ compensation settlements with Medicare Set- aside arrangements (MSAs) to make payment of the set aside amount directly to Medicare instead of maintaining the amounts in individual checking accounts and trying to manage the appropriate use of the funds to pay for future medical and provide reports to the Centers for Medicare and Medicaid Services (CMS).

HR 1982 as introduced may be accessed at http://www.gpo.gov/fdsys/pkg/BILLS-113hr1982ih/pdf/BILLS-113hr1982ih.pdf