SGR repealed, CHIP extended, what’s next?

April 7, 2015

SGR repealed, CHIP extended, what’s next?

On April 14, the United States Senate joined the House of Representatives in overwhelmingly approving H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015.

Once signed by the President, the new law will permanently repeal and replace the Medicare Sustainable Growth Rate (SGR) formula and retroactively rescind the 21 percent payment cut in Medicare physician fee schedule (MPFS) payments that went into effect on April 1. H.R. 2 received broad bipartisan support in both the House and Senate.

The legislation will have both positive and negative implications for allergists. On the positive side, in addition to repealing the flawed SGR, the new law will provide for a positive 0.5 percent payment update beginning in July for Physician Fee Schedule payments and then successive .5 percent annual updates every January 1, through 2019. The Advocacy Council of ACAAI (formerly JCAAI) has long supported efforts to repeal the flawed SGR and replace it with positive updates.

Value-Based Payment

Less clearly on the positive side, beginning in 2019, the three existing value-based programs (EHR Meaningful Use, PQRS, Value-based Modifier) would be consolidated into a single new program which would be called the Merit-Based Incentive Payment System (MIPS). Providers would receive a single MIPS score based on their performance for the consolidated program. Their score would earn them a positive, negative or neutral payment updates. Physicians who participate in patient-centered medical homes would automatically earn high scores. Physicians who have a low-volume of Medicare business would not be subject to MIPs. In addition, the legislation requires that CMS give special consideration to small practices of 15 or fewer professionals in implementing the MIPs program. Although recognition of the special needs of small practices is certainly positive, it is unclear how this requirement will actually be implemented and it can reasonably be expected that smaller practices with fewer resources will have more difficulty in being successful under MIPs.

Alternative Payment Models

The bill also creates new incentives for physicians and hospitals to move to new Alternative Payment Models (APMs) that the government hopes will be developed by physician stakeholder organizations. For example, H.R. 2 directs CMS to work with physician stakeholder groups, particularly specialty societies, to develop multiple alternative payment models that will work for various physician specialties. Particular attention will be paid to developing alternative payment models for patients that suffer from chronic diseases. The goal here will be to financially reward physicians for better managing the care of these patients with the objective of keeping them out of the hospital or out of the emergency room.

Accountable Care Organizations would be one type of APM that CMS would recognize. If a physician participates fully in an APM, he/she would not be subject to the MIPs program.

The Advocacy Council of ACAAI is one of the physician stakeholders and has a Committee reviewing various alternative payment models. Members of the Committee are practicing Allergists and are carefully analyzing the effects that each option will have on an Allergists’ practice. We will continue to update members as the process moves forward.

Aditional Provisions

Other provisions that may impact allergists include:

  • Elimination of Revaluation of Global Surgery: The surgical asociations were successful in persuading Congress to stop CMS from implementing the elimination of global surgery packages. Under CMS final rules adopted last year, all 10 and 90 day global surgery codes were to be revalued and effectively unbundled with evaluation and management services paid for separately. This was expected to result in a redistribution of Medicare dollars away from procedures in favor of cognitive specialties. 
  • Easing of Process for Opting Out of Medicare: Under the new law, physicians who opt-out of Medicare would no longer be required to renew their opt-out decision with CMS every two years Instead it would renew automatically unless the physician makes a decision to change his/her status.
  • Protection from Malpractice Liability: Guidelines or standards recognized under Federal health programs (e.g. PQRS) would not extablish the standard of care for purpose of medical malpractice suits.


How the SGR Fix is Paid For

The major obstacle that has prevented the success of past physician payment reform efforts was how to offset the immense cost of the bill. H.R. 2 does not offset the entirety of the cost. Only about one-third of the cost ($70 billion) is offset. The remaining $140 billion will be added to the Federal deficit. The offsets included in this bill are:

  • Raising the Medicare Part B and D premiums for high-income beneficiaries;
  • Prohibiting first-dollar Medigap coverage;
  • Increasing the allowable tax amount on providers with tax delinquency from 30 percent to 100 percent; and
  • Phasing in a 3.2 percent increase for hospital inpatient payments over six years, in addition to other offset provisions affecting long-term care facilities.

CHIP Extension

The bill also extends funding for the Children’s Health Insurance Program (CHIP) for two additional years. Funding was not set to expire until September 30 but State governments advocated for action now, as they are currently in their budget planning periods. CHIP is now funded through September 30, 2017.

Now that H.R 2 has been passed and the SGR cut rescinded retroactive to April 1, many have asked what happens to those Medicare claims that were submitted for services provided after April 1, 2015 that were being held by the Medicare Contractors.

The following statement was released by CMS in an attempt to explain how they will handle the claims they have been holding. If you have any questions, you are encouraged to direct them to your Medicare Administrative Contractor (MAC).

Attention Health Professionals: Information Regarding the Medicare Access and CHIP Reauthorization Act of 2015​

On April 14, 2015, Congress passed the Medicare Access and CHIP Reauthorization Act of 2015; the President is expected to sign it shortly. This law eliminates the negative update of 21% scheduled to take effect as of April 1, 2015, for the Medicare Physician Fee Schedule.​

In addition, provisions allowing for exceptions to the therapy cap, add-on payments for ambulance services, payments for low volume hospitals, and payments for Medicare dependent hospitals that expired on April 1 have been extended. CMS will immediately begin work to implement these provisions.​

In an effort to minimize financial effects on providers, CMS previously instituted a 10-business day processing hold for all impacted claims with dates of service April 1, 2015, and later. While the Medicare Administrative Contractors (MACs) have been instructed to implement the rates in the legislation, a small volume of claims will be processed at the reduced rate based on the negative update amount. The MACs will automatically reprocess claims paid at the reduced rate with the new payment rate.

No action is necessary from providers who have already submitted claims for the impacted dates of service.