Ding-dong—the Sustainable Growth Rate (SGR) formula is dead. As of April 16, 2015—after 17 temporary patches—the wizards in Washington have permanently repealed the flawed SGR formula that threatened to significantly cut Medicare payments. Now, when payments exceed the growth in per-capita gross domestic product, PTs will no longer face reduced payments. Instead, they can look forward to a bit more stability, simplicity, and cash flow for the next decade. The new payment determination process begins with a static increase in payments across the board for the next several years. From July 1, 2015, through the end of 2019, the SGR replacement measure allots providers annual payment increases of 0.5%.
Next, starting in 2019, Medicare quality-reporting and incentive initiatives—like the PQRS, Value-Based Modifier, and Meaningful Use of Electronic Health Records (EHR) programs—will merge into one program, called the Merit-Based Incentive Payment System. The penalties for failure to comply with these individual programs will be abolished as well. Thanks to the new consolidated system’s additional funding, high-performing providers will have the opportunity to “earn additional payments from a pool of up to $500 million per year from 2019 to 2024,” with a pool of $20 million per year set aside specifically for smaller practices.
The new payment measures also make a strong push for value-based payment models. Eventually, providers will be required to adopt either a merit-based or alternative payment model. One hefty reason to select an alternative model: you’ll be eligible for a 5% annual bonus between 2019 and 2024. Plus, as this article explains, the new system will allow providers to choose from a menu of performance measures created by speciality-specific associations (like the APTA). It also will permit “professional organizations and other relevant stakeholders to identify and submit quality measures and updates to be considered for selection and used in the performance program.” Not sure you’re ready to skip down the yellow brick road to one particular model? No worries. Providers can switch models on a yearly basis.
The SGR repeal is certainly good news for practitioners, but permanent improvements to Medicare payments may still be somewhere over the rainbow. According to a report from CMS Chief Actuary Paul Spitalnic, the new payment measures may not be sustainable past 2025, and without subsequent legislation, “access to, and quality of, physicians’ services would deteriorate over time for beneficiaries.” Only time will tell how the measures—and payment reform itself—will shake out, but for now, the government seems to be taking a step in the right direction.