Sequester Update

On March 1, despite partisan rhetoric over impending cuts to Medicare providers and defense and domestic programs, $85 billion in cuts went into effect as a result of capitol websequestration. While the effects of sequestration do not take place until after April 1, there is little indication that Congress will be able to rescind the 2 percent across-the-board cuts to Medicare providers before then. The key date that everyone will be looking to see if Congressional action will be taken to avoid these cuts is March 27, when the continuing resolution keeping the government funded expires.

At that point, Congress will have to figure out a plan to fund the government or else Congress could shut down. This week, House leadership and the Administration indicated they were in no mood to create a scenario in which a shutdown would occur. Until then, Congress will have to pass a measure for FY 2013 funding that is equivalent to FY 2012 funding or an additional sequestration will go into effect. Without a grand bargain, it is unlikely that the appropriations process would be able to fully offset the cuts from the sequestration beginning on March 1.

As reported earlier, payments made under Medicare Parts A and B, the percentage reductions are to be made to individual payments to providers for services. Reductions are to be made at a uniform rate and are not to exceed 2.0 percent.

In addition, under sequestration, Medicare’s benefit structure would remain unchanged for beneficiaries and certain Medicare programs and activities are exempt including: Part D low-income subsidies; the Part D catastrophic subsidy; and Qualified Individual (QI) premiums.

NASS continues to follow this issue very closely and will report new updates should they arise.

Ways and Means Chairman Not Optimistic About Stand-Alone SGR Bill

Chairman of the House Ways and Means Committee, Dave Camp (R-MI) said late last week that he didn’t see a way for a Sustainable Growth Rate Formula (SGR) reform bill coming to a vote as a stand-alone bill. Rather, the Chairman stated that a bill to replace the Medicare reimbursement formula would more than likely follow a path of being attached to “grand bargain” legislation. Chairman Camp held that because a grand bargain addressing deficit reduction would not be likely to pass this year, there are few options to attach an SGR proposal for final passage. However, the Chairman has been working feverishly with Senate Finance Committee Chairman Max Baucus (D-MT) on tax reform legislation, and indicated that if introduced this year, an SGR proposal could potentially be part of this plan. Last week, NASS sent Energy and Commerce and Ways and Means Committee staff recommendations on improving the framework that the committees jointly released late last month. NASS continues to proactively monitor this issue.

Commission Offers Solution for SGR Replacement

The National Commission on Physician Payment Reform released its recommendations to repeal the flawed Sustainable Growth Rate Formula (SGR) by implementing a 10–year plan, that would be paid for by savings in medical services. The Commission, headed by former Senator Majority leader Bill Frist, MD (R-TN), urges lawmakers to phase in a two-step SGR replacement process, which would implement a 5-year period of testing new payment models immediately after repealing the SGR, and then would allow specialties to pick from a menu of payment options that are best suited for their practices. The funding to cover the $138 billion price tag for repealing the SGR would come from targeting over-utilization in medical services within Medicare.

In all, the Commission makes 12 specific recommendations to replace the SGR, and even call for the eventual elimination of fee-for-service payment model. However, the Commission acknowledged that fee-for-service should continue to be a viable option for an unspecified period of time before the transition occurs. Other recommendations include: making the Relative Value Scale Update Committee (RUC) process “more transparent and representative of the medical profession,” and bundling payments.

A copy of this report can be found here.

Electronic Records to Cost Physicians

According to a report released in this week’s issue of Health Affairs, finds that just 27 percent of practices would have achieved a positive return on investment. And only an additional 14 percent of practices would have come out ahead had they received the $44,000 federal meaningful-use incentive.

The report used survey statistics from numerous community practices in a large EHR pilot to project five-year returns on investment. Analysts cite that the biggest discrepancy between physicians who have gained revenues as opposed to lost revenue is due to the number of patients each respective physician was able to see and the accuracy of their coding. The study also finds that adopting meaningful use criteria may not be a big enough incentive for physicians to experience revenue increases, especially smaller practices.