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The Forecast for Health Reform Post-SGR Repeal: Sunny or Stormy?

by Stephanie Zaremba, Director of Government and Regulatory Affairs

The 10-plus-year Sustainable Growth Rate (SGR) debacle is over. For years, physicians have watched the same scene play out year after year: the SGR formula threatens automatic Medicare reimbursement cuts of up to 25%. Congress, having no intention of forcing physicians take such a drastic pay cut for caring for our nation’s senior citizens, passes a temporary “patch” to prevent the cuts from taking effect. This annual ritual became known as the “doc fix.”

While the doc fix was business as usual in Washington D.C., it was a constant storm cloud hanging over the heads of physicians. Imagine if every year you could lose one-fourth of your income absent an act of Congress!

A few days ago, Congress finally put an end to this absurd process and passed a bill repealing the SGR formula (without any ICD-10 delay included), replacing it with new rules for Medicare reimbursement. For physicians, this is fantastic news. That looming storm cloud has cleared, permanently.

With the storm behind us, we need to keep our eyes on what’s coming next. Here’s why: The SGR repeal is just one page of a 262-page law, and those remaining 261 pages provide us with a useful forecast.

Medicare rates will increase on a predictable schedule

From 2015 to2019, physicians will receive a 0.5% annual increase to current Medicare rates. From 2019 to 2025, the 2019 rates will be maintained with two opportunities for additional payments: adjustments based on performance in a new program called the Merit-Based Incentive Payment System (known as MIPS – yep, get ready for a whole new batch of alphabet soup), or additional reimbursement by participating in Alternative Payment Models (APMs). Let’s go long-range: In 2026 and beyond, rates will increase annually by up to 0.75%, with larger increases going to physicians who participate in APMs.

The new MIPS program will consolidate some of CMS’s more complicated incentive programs

Starting in 2017, the current Meaningful Use, Physician Quality Reporting System (PQRS), and Value-Based Modifier (VBM) programs will be consolidated into the MIPS program. While the requirements of each program will remain largely unchanged, once streamlined, they should be easier for physicians to manage, particularly as quality measures are harmonized. The penalties under each program will sunset at the end of 2018 and be replaced with MIPS payment adjustments, starting at a 4% penalty in 2019 and increasing to 9% by 2022.

Participation in the transition to value-based care will continue to be encouraged

Congress went to great lengths to encourage physicians to participate in value-based APMs. Those that do join in are largely exempt from MIPS, and will receive higher Medicare reimbursement rates. To participate, physicians need to be members of a Patient Centered Medical Home (PCMH) or meet several criteria regarding taking on risk through an approved APM.

Congress is looking out for independent physicians

One of athenahealth’s biggest gripes with health reform policy is that it’s had an overly complex one-size-fits-all approach that doesn’t always fit the independent physician community. Thankfully, this new policy addresses the need for better solutions to help independent physicians transition to value-based care.

  • Unaffiliated providers can be evaluated in MIPS as a virtual group, helping them lessen the burden of program’s requirements without sacrificing their independence.
  • There are a few new pathways for approval of innovative APM models, such as the Independent Risk Manager model, that would allow independent physicians to share risk without having to affiliate with a large system or Accountable Care Organization (ACO).
  • Congress is specifically looking at ways in which fraud and abuse laws like the Anti-Kickback Statute may unintentionally be making it difficult for physicians – particularly independent providers – to share risk in value-based models.


CMS claims data will finally be liberated in a meaningful way

The CMS claims database is one of the best tools out there for improving outcomes while reducing costs but it has been guarded a little too closely. A provision in the Affordable Care Act established “Qualified Entities” (QEs) that could request access to CMS claims data, but their use of the data was too limited to be useful for care improvement.

Now, under the new law repealing SGR, QEs are able to provide physicians with non-public analyses of CMS claims data, aimed at quality improvement activities and enabling their participation in value-based care models. More important, QEs will be able to share data with providers about their own patients, including information on care provided by other clinicians. This will be key in offering physicians full information on patient care, unlocking their ability to manage over-utilization and greatly improving care coordination.

Interoperation of health IT: not such a niche issue anymore

A couple years ago, the inability of disparate health IT systems to exchange information was far from a mainstream issue. Today, the problem is receiving major attention from mainstream media like the New York Times editorial board, as well as Congress.

Under the new law, Congress has set a statutory goal of achieving widespread interoperability of electronic health records by 2018. What’s more, it specifically prohibits behavior to block information sharing, such as disabling technical capabilities to exchange information, or imposing policies that discourage providers from sharing information with clinicians from competing hospitals.

All in all, the forecast for the future under the new law is a bit mixed. There will be clear moments of warm sunshine where health reform efforts move in the right direction. But this next iteration of health reform will not be without the occasional squall.

Physicians should make sure they are prepared with the right tools and partners to help weather those storms. At athenahealth, we will be digesting every detail of these new policies to make sure we provide our clients with every umbrella, rain boot, and windbreaker they need. Will your health IT vendor be your shelter from the storm? Now’s a great time to find out.

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