Update on the SGR for Anesthesiologists and Pain Physicians

The Sustainable Growth Rate (SGR) formula that constrains the annual update to the Medicare payment rate is projected to reduce physician payments by 24.4% in 2014, unless Congress intervenes.

Congress—that is, the “committees of jurisdiction”—is considering sweeping changes to the payment system, including repeal of the SGR.  The legislators agree that the SGR is a flawed and unsustainable mechanism. 

All three committees will have conducted hearings within the four-week period that began on May 7^th, when the Health Subcommittee of the House Ways and Means Committee held its most recent hearing to discuss how the federal government, along with physicians, could develop new payment policy.  During a hearing before the Senate Finance Committee on May 14^th, the first such hearing in six years, Chairman Max Baucus (D-MT) said that it is time “to repeal the SGR once and for all this year.” The House Energy and Commerce Committee’s Subcommittee on Health, which released draft legislation last week, has scheduled a hearing entitled “Reforming SGR: Prioritizing Quality in a Modernized Physician Payment System” for June 5^th, the day after tomorrow.

The draft legislation, which is a framework with numerous blanks to be filled in rather than a bill ready for passage, would replace the SGR formula with a set payment for an initial period, and then in a second phase update fee-for-service physician payments based on performance on a specialty-specific set of quality measures.  Alternatively, physicians would be able to opt out of the traditional fee-for-service system and adopt payment models that focus on quality and efficiency such as accountable care organizations.  In particular, the legislative framework would do the following:

• Repeal the SGR and create a “stable period of payments” (a 5-year period is under consideration) (Phase I).
• Require HHS to establish a “Competency Update Incentive Program” under which physicians receive individualized payment updates based on their performance under quality measure sets applicable to their specialty (“peer cohort,” as defined by the American Board of Medical Specialties and identified by the physician himself or herself) (whether there will be both individual assessment and a group-treatment election is an open question)(Phase II). 
• Provide for development of sets of measures and core competency categories.
  • Measures may be existing consensus-based measures, e.g., PQRS, or be proposed by specialty societies and others.
  • Measures must be published in peer-reviewed journals to ensure validity.
  • Measure sets will go through a public rule-making process.
  • Measure sets may be updated annually, with specialty society input.
• Require HHS to coordinate quality measure sets with other existing measures and reporting systems, such as the development of CMS' Physician Compare Website.
• Require HHS to establish the performance period, methods to assess performance, and appropriate weighting of measures.
  • The Committee is looking at two recommendations for assessing performance against measure sets:  (1) measure physicians against their peers using a grading (percentile) system, and (2) assess physicians against measure thresholds.
• Require HHS to offer feedback and education to physicians.
• Provide for opt-out for physicians who adopt approved “new models of care” that will be proposed by medical societies, providers, healthcare organizations and others.  The new models will include, but are not limited to, accountable care organizations, bundled payment systems, gainsharing arrangements and medical homes.

A glance at the draft bill shows the Committee’s intent that there be a detailed ongoing discussion with medical societies.  Organized medicine has already had input into the development of the proposal through a number of iterations, urging members of Congress to adopt meaningful Medicare payment reforms that recognize quality care and improvement activities at the practice level.

The American Medical Association has expressed strong support for allowing the new payment models as options in addition to the current fee-for-service model.  The American College of Surgeons has called for a value-based overhaul of the payment system, with payment updates to be based on improving quality and patient safety while warning against “zero-sum, budget-neutral scoring methodology” that would offset greater payments to high-performing doctors by reducing payments to those with lower quality scores.  Both organizations have previously proposed a five-year period of stable payments preceding the transition to a new payment system.

The American Society of Anesthesiologists, in its April 15^th letter responding to the House Committees’ request for feedback, stated that a correction to the specialty’s “33 percent Medicare payment problem” must be a precursor to the launch of any SGR replacement.  ASA also highlighted the Perioperative Surgical Home Model and urged that any new alternative payment system allow physicians "to participate in more than one payment model."

The SGR has threatened the level of Medicare payments to physicians ever since its adoption as part of the 1997 federal budget legislation.  Beginning in 2003, Congress has voted every year to override the formula.  Those annual overrides have only postponed the cuts, however.  The cost to repeal the SGR has grown to an estimated $139 billion over the next ten years, according to the Congressional Budget Office.  The good news is that that cost is 43% less than it was a year ago because of a slowdown in the growth of spending on medical care.

The cost of canceling the SGR cuts remains a major obstacle to eliminating the SGR.  There are also sizable differences in the approaches to payment reform of the Senate and of the House.  The Republican-led House is unlikely to give additional power to HHS, or in reality to CMS regulators, to make the final decisions on physician pay as the very general draft legislation would provide. These factors all indicate that it will be difficult for Congress to do more than kick the SGR can down the road again this fall.

Still, Congress is more sympathetic toward repeal than it has ever been, and a resolution of the SGR problem this year is not out of the question.  We urge our readers to participate in the grassroots lobbying efforts to which their professional organizations will summon them.

California Society of Anesthesiologists Elects New Officers

ABC congratulates the following members of the CSA on their election to office:

Peter Sybert, M.D., President

Paul B. Yost, M.D., President-Elect

Mark Zakowski, M.D, Chair, Legislative and Practice Affairs Division

Jeffrey Poage, M.D., Vice-Chair for Legislative Affairs, Legislative and Practice Affairs Division