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New “Doc Fix” Bill Proposes Incentives for Care Coordination

Posted in Accountable Care Organizations, Legislation and Public Policy, Medicare and Medicaid, Reimbursement Matters

A new bipartisan bill would permanently repeal Medicare’s Sustainable Growth Rate (SGR) formula and eliminate the annual “doc fix” ritual in which legislators must undo impending statutory payment cuts to physicians. The draft bill, released by Senator Max Baucus (D-MT), Chairman of the Senate Finance Committee, and Representative Dave Camp (R-MI), Chairman of the House Ways and Means Committee, would freeze Medicare payment rates for 10 years and give physicians bonuses for transitioning from fee-for-service billing to alternative payment methods.

At present, the Centers for Medicare & Medicaid Services (CMS) is required to follow the SGR, adopted as part of the Balanced Budget Act of 1997, in determining Medicare fee schedule payments to physicians for each new year. Application of the SGR generally results in across-the-board reimbursement cuts of 20-30%, forcing Congress to pass a last-minute bill every December in order to undo them. Many healthcare organizations, including the American Medical Association, Medical Group Management Association and American Hospital Association, have urged Congress for years to find a permanent solution to the annual SGR problem.
The new proposed bill, called the “value-based performance (VBP) payment program,” would freeze physician payment levels through 2023 and create a performance-based incentive program that would begin in 2017. The draft bill would combine various existing quality incentive programs into one comprehensive program, rewarding physicians for bundling medical services with other providers and participating in shared-savings programs. In lieu of the incentive program, physicians who receive a “significant portion” of their revenues through coordinated care programs would receive a bonus of 5% for each year from 2016 through 2021.

After 2023, physicians who choose an “advanced alternative payment model” would receive a 2% increase in reimbursement every year, compared to 1% annual increases for those who stick to the traditional fee-for-service model.
The House Energy and Commerce Committee had proposed its own SGR repeal bill, the “Medicare Patient Access and Quality Improvement Act of 2013,” in July. That bill would provide a 0.5% reimbursement increase for each year from 2014 to 2018. The Congressional Budget Office estimated in February that any bill to repeal the SGR and keep reimbursement rates flat would cost $138 billion over 10 years, but they increased their estimate in September to $175 million.
Comments on the new draft bill are due to the committees by November 12.

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