On November 12, the AUA submitted detailed comments to the Senate Finance and House Ways & Means committees in response to their bicameral, bipartisan discussion draft of a proposal to permanently repeal the sustainable growth rate (SGR) formula and reform the Medicare physician payment system. The proposal would freeze existing fee schedule rates for the next 10 years and create two payment tracks for physicians and other health care providers currently paid under the physician fee schedule: 1) value-based performance (VBP) program; and 2) alternative payment model (APM). The draft, which was released on October 30, does not include any potential offsets for the $139 billion cost to repeal the SGR, nor does it include other Medicare extenders that may be part of the final package.
The AUA's comments reiterated our position on several of the proposed policy changes impacting quality and valuation of physician services. The AUA has long advocated for repeal of the SGR; however, a 10-year freeze is a serious concern, given that fee schedule payments already have trailed inflation for nearly a decade. Extending current payment levels for 10 more years would result in a nearly 45 percent cumulative gap between the actual cost to treat Medicare patients, rising practice expense and the cost of inflation.
Under the VBP, physicians would continue to be paid under the physician fee schedule, but penalties and payment incentives under existing quality, resource use and electronic health record programs would be combined. Starting in 2017, fee schedule payments would be adjusted based on a single, budget-neutral incentive payment program centered on quality, resource use, clinical practice improvement activities, and EHR meaningful use. The payment pool for the VBP would be 8 percent of total estimated spending for eligible professionals. In 2018, the payment pool would increase to 9 percent and to 10 percent in 2019. On the contrary, providers that participate in APMs would be exempt from the VBP program and eligible for a 5 percent annual bonus from 2016 to 2021. The APMs involve two-sided financial risk with various revenue percentage thresholds that providers must earn to qualify for the bonus. The proposal also encourages testing of APMs for specialty providers and those that align with private and state-based payer initiatives.
The AUA supports testing of APM for specialists and welcomes the proposal to align Medicare payment initiatives with private payer initiatives. Physicians are already so overburdened with reporting requirements; reducing time spent collecting data is critically important in ensuring widespread participation in the VBP program.
In addition, the proposal would set a one percent target for misvalued services over a three-year period. If the target is not met, fee schedule payments would be reduced by the difference between the target and the amount of misvalued services identified that year. Selected physicians would be required to submit data. Participation for data submission would be compensated; however, physicians that refuse to comply would face a 10 percent payment reduction. The proposal also calls for a study of the AMA/Specialty Society Relative Value Scale Update Committee (RUC) process for making recommendations on valuation of physician services and would adjust surgical procedures by 20 percent over a two year period if the number and type of post-op visits are found to be misaligned.
The AUA comments reiterated support of the RUC as the most effective process to establish valuation of physician services, and adamantly opposed establishment of the proposed 1 percent expenditure target for identifying misvalued services, the 10 percent penalty for not providing information, and the 20 percent reduction phase-in for surgical procedures. Read the AUA's full comment letter here.
With the federal debt deal in place through the early part of next year, the AUA has been working closely with the American College of Surgeons on a congressional sign-on letter to repeal the SGR. The bipartisan effort was led by Representatives Bill Flores (R-TX) and Dan Maffei (D-NY). The AUA played an active role in securing signatures for this sign-on letter, which now has more than 200 supporters.
"We should not pass up this chance to repeal the SGR… and enact a permanent solution," the letter urges. "This year represents a great opportunity to repeal the flawed SGR formula, reform health care delivery to drive quality and efficiency, and set Medicare on a more stable and predictable course for current and future generations of patients and physicians."
The AUA will continue to monitor progress on this critical issue and advocate for repeal and replacement of the SGR with members of Congress.