House and Senate Committees Unveil Proposal to Repeal Medicare Physician Payment Formula

The U.S. House Ways and Means Committee and the Senate Finance Committee this week released a joint, bipartisan proposal to repeal the flawed Medicare physician payment formula.

Key Provisions    

  • The SGR formula would be repealed.
  • Annual fee schedule payment updates would be frozen for 10 years; annual positive updates would begin in 2024.
  • A new “value-based performance (VBP) payment program” would be used to adjust payments beginning in 2017. This new VBP program combines all the current incentive and penalty programs (e.g., value-based modifier, meaningful use, PQRS) into one budget-neutral program.  Payments could be increased or decreased significantly, depending on how well a physician scores relative to others on a composite performance score.
  • Physicians participating in certain alternative payment models, including the patient-centered medical home, would be exempt from the VBP program. Revenue thresholds are established for alternative payment methods other than the medical home model, and two-sided risk and a quality component would be required to qualify for a 5 percent bonus in 2016-2021.
  • Appropriate use criteria would be applied to certain imaging services; prior authorization requirements would be imposed on outliers.
  • HHS would publish utilization and payment data for physicians on the Physician Compare web site.

The draft does not identify the means to pay for this legislation. By congressional rule, all such legislation must be budget-neutral.

Next Steps

The committees are asking for comments on their proposal by Nov. 12. Unless Congress takes action on the SGR, a payment cut of nearly 25 percent is scheduled to take effect Jan. 1, 2014.

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