Is the SGR Replacement Almost Here?

Kenneth J. Terry, MA


March 14, 2014

In This Article

Get Rid of the SGR Madness

If proposed legislation that has bipartisan support in both houses of Congress is passed and signed by President Obama, it would have a major impact on physician reimbursement and healthcare delivery, observers say.

Most important, the bill would repeal the hated sustainable growth rate (SGR) law, which threatens to cut doctors' Medicare reimbursement by nearly 24% on April 1. In addition, it would help move healthcare away from fee-for-service and toward value-based reimbursement. Although not all doctors are enthusiastic about this shift, physician leaders and experts say it is essential to get healthcare costs under control.

The bill's passage is still not assured, because Congressional leaders have not yet figured out how to pay for the estimated $138 billion cost of repealing the SGR. But Molly Cooke, MD, President of the American College of Physicians (ACP), says, "We certainly hope the bill will pass. We see it as a tremendous opportunity to get this whole SGR madness behind us once and for all and start turning our attention to more productive work on improving the way patients are cared for and physicians are paid for their care."

What's in the Bill?

The measure now before Congress would give all physicians who participate in Medicare a 0.5% annual raise for 5 years, from 2014 to 2018. For the next 5 years, their base rates would be frozen.[1]

Starting in 2018, participating doctors and other eligible professionals (including midlevel practitioners) would be subject to a new merit-based incentive payment system (MIPS) that would consolidate the current Physician Quality Reporting System, the meaningful use electronic health record (EHR) incentive program, and the physician value-based modifier (VBM) program, which starts next year and will affect all physicians by 2017.[2] The rewards and penalties in the MIPS would replace the carrots and sticks in the 3 current programs.

Under the MIPS, a composite performance score that includes quality, resource use, meaningful use, and clinical practice improvement would determine whether a physician would receive a negative or a positive update on his or her Medicare reimbursement each year. For physicians whose score fell below a certain threshold, the maximum cut in Medicare reimbursement would be 4% in 2018, rising to 9% in 2021 and staying there in successive years. Most physicians whose scores exceeded the threshold would see their payments increased by the same amounts that reimbursement for lower-performing doctors would be decreased. The top performers could receive bonuses of up to 3 times the maximum reduction.

The threshold that physicians would have to surpass to receive MIPS rewards would change each year. According to the bill, it would be either the mean or the median of the performance scores of all MIPS participants.

The quality measures have yet to be determined, but only one set of metrics would be used for MIPS. The quality data would be reported at the level of group practices and healthcare systems, rather than of individual practitioners. Doctors in solo or small practices would be allowed to form "virtual groups" with other practices of up to 10 physicians for purposes of reporting and calculation of performance scores. The members of such groups -- which could be geographically- or specialty-based -- would have to take financial responsibility for their colleagues' performance.


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