Innovative Healthcare Teams Updates

Sustainable Growth Rate (SGR) Repeal: What does it really mean?

By Michelle Burris

Everyone in health care has been celebrating the repeal of the SGR in April 2015. The celebration is appropriate because we no longer have the annual worry of a 21.2% reduction in the physician fee for service reimbursement, which would have had a significant negative impact on financial performance of all medical groups. With the repeal of the SGR, the government will maintain the current physician fee for service schedule with a nominal annual increase of 0.5% through 2019. This is the good news.

The unsettling news is the uncertainty of physician reimbursement after 2019. The physician fee for service schedule will be maintained with no further increases. However, there will be two payment models into which all physicians will be placed. The specific details of these payment models are still undetermined. But there are some highlights available.

The default payment model is the Merit-based Incentive Payments (MIPS), which all physicians are placed in if they do not meet the requirements for the Alternative Payment Model (APM). The MIPS model is proposed to consolidate current quality reporting:

  • PQRS
  • Value Based Modifier
  • EMR Meaningful Use

The concern with this model is the built-in penalties that range from 4-9% beginning in 2019. Essentially, of the physicians participating in this payment model, only 33% will receive an incentive. The remaining 67% will not receive an incentive or be penalized as demonstrated in the chart below.


Two important unknown/undefined factors of these models are:The second payment model is the Alternative Payment Model (APM). The APM requires participation with an Accountable Care Organization or Patient Centered Medical Home certification and incentivizes participation with a 5% bonus.   Clearly, the structure of this model supports the idea that the ultimate goal of CMS is to migrate as many practices as practical to the Alternative Payment Model.

  • Incentives based on Quality & Cost measures are not yet defined.
  • CMS has not yet defined the measurement period.

Typically, CMS has a two-year look back for incentives. If CMS is consistent and these new payment models are effective for the beginning of 2019, then operational models for patient care delivery need to be in place and functioning by the beginning of 2017.

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