The bill repealing SGR and replacing it with a more reliable payment schedule will alleviate physicians having to wonder whether their Medicare reimbursement rate will be slashed each year. However, it has also accelerated the need for providers to adopt value-based reimbursement (VBR). While the transformation won’t happen overnight healthcare organizations can, and should, begin preparing now. The following steps will make the transition easier: 1. Get educated and involved; 2. Understand the new law; and 3. Most importantly, providers should consider ways to take advantage of the upcoming 5 percent bonus. Providers that are already participating in VBR arrangements should consider how to increase the volume of their VBR business. Those that have not yet embraced VBR practices need to start immediately. Having a solid roadmap by the end of 2015 will ensure for a successful transition to a value-based system.

1. 2015 Sustainable Growth Rate
Repeal: The Future is Here
— Bobbi Brown

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Repealing the SGR
On April 14, 2015, almost 20 years of
Medicare reimbursement uncertainty
came to an end with the repeal of the
Medicare Sustainable Growth Rate
(SGR) formula.
Everyone rejoiced!

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Repealing the SGR
Without rehashing history
suffice it to say that the SGR
originally came about in the
Balanced Budget Act of 1997
as a refinement to physician
payment rates.
The SGR formula specified
each year how CMS would
calculate the Medicare
payment rate.

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Repealing the SGR
Without rehashing history
suffice it to say that the SGR
originally came about in the
Balanced Budget Act of 1997
as a refinement to physician
payment rates.
The SGR formula specified
each year how CMS would
calculate the Medicare
payment rate.

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Repealing the SGR
The provision was designed to
regulate spending on Medicare
physician services.
It soon became clear that the
formula mandated drastic
payment cuts that would force
some physicians to leave the
Medicare system altogether.

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Repealing the SGR
Instead of changing the law to
avert these disastrous cuts,
Congress simply blocked them
with annual legislation.
A long succession of short-term
fixes left physicians wondering
up to the last minute each year
whether their Medicare
reimbursement rate would be
slashed.

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Repealing the SGR
The bill repealing SGR replaces
uncertainty with a fairly reliable
payment schedule.
Providers are being pushed to
adopt the value-based
reimbursement (VBR).

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Expect More Reimbursement Certainty
Although not perfect, the overall
design of the new payment
program is greatly improved.
It delivers a plan with defined
timelines and stability in the
rate increase.
This is what physicians can
expect from the new bill:

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Expect More Reimbursement Certainty
During the next few years (2015 to 2019), Medicare
reimbursement will increase by .5 percent annually.
In 2019 VBR begins with a potential 5 percent bonus
for participation in innovative care-delivery models.
At least 25 percent of their Medicare revenue must
be in an alternative payment model.
Beginning in 2018, providers will only need to attest
one time for all of the various CMS quality reporting
initiatives (like meaningful use and PQRS).

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HR Bill 02 Timeline
The path forward has stability and clarity:
For the next four years, providers will get a .5 percent
increase, and then they’ll have to move to VBR.
With the plan projected through 2026, expect changes in
specific fixes and timelines along the way.

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A Quick Caveat
Providers should pay close
attention to claims submitted to
CMS between April 1 and 15 of
this year.
The House of Representatives
passed the new legislation by
the April 1 deadline.
The Senate, however, didn’t
actually pass the bill until two
weeks later, April 14.
This delay introduced possibility
for error in the claims system.

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The Future is Here
In the wake of the SGR repeal,
providers need to begin the
transformation from a volume-
based to a value-based
reimbursement system now.
For those who have resisted
healthcare reform this new
legislation is the writing on the
wall that the transformation isn’t
on the horizon-it’s here.
This transformation will take
time. To be successful we need
education and partnership.

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Get Educated And Involved
Opportunities for education
abound.
For instance the Health Care
Payment Learning and Action
Network founded by CMS.
Participants in this network range
from health system leaders to
consumers, physicians, and
government officials.

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Understand The New Law
Learn all you can about the
implications of the SGR repeal.
Regulations stemming from the
bill have yet to be released.
Specific regulations will come
from CMS in the near future.

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Secure the 5 Percent Bonus
It’s crucial that providers already
participating in VBR arrangements
should consider how to increase
the volume of their VBR business
to meet the 25 percent, 50 percent,
and 75 percent thresholds outlined
in the bill.
Devoting even an hour a week to
planning can produce a solid
roadmap for a successful transition
to a value-based system.

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Additional Recommendations
• Explore the requirements for
qualifying as a patient-centered
medical home. Do you have the
staff and other resources to
support the PCMH model?
• Look at partnerships, especially
those that enable participation in
an ACO.
• Work to ensure that incentives
align with quality rather than
quantity. Success in a PCMH or
ACO requires appropriately
aligned incentives.

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Immediate Action is Needed
The most important thing is to
start today.
Providers need to set milestones.
2019 is not that far away. One
thing is certain:
It may have taken 17 years to
repeal SGR, but there won’t be
that much time to prepare for
transition to value-based
initiatives.

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More about this topic
The Medicare Sustainable Growth Rate Repeal: Implications for Your Health System
Laura Dietzel, Director of Regulatory Knowledge
The Truth About Changing Healthcare Reimbursements: A Q and A
Dale Sanders, Senior Vice President, Strategy
Why You Need to Understand Value-Based Reimbursement and How to Survive It
Bobbi Brown, Vice President, Financial Engagement
The Key to Transitioning from Fee-for-Service to Value-Based Reimbursement
Bobbi Brown, Vice President, Financial Engagement and
Jared Crapo, Vice President
The Best Solution for Declining Medicare Reimbursements
Bobbi Brown, Vice President, Financial Engagement
Link to original article for a more in-depth discussion.
2015 Sustainable Growth Rate Repeal: The Future is Here

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For more information:

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Other Clinical Quality Improvement Resources
Click to read additional information at www.healthcatalyst.com
Bobbi Brown is the Vice President of Financial Engagement for Health Catalyst.
Ms. Brown started her healthcare career at Intermountain Healthcare supporting
clinical integration efforts before moving to Sutter Health and, later, Kaiser
Permanente, where she served as Vice President of Financial Planning and
Performance. Ms. Brown holds an MBA from the Thunderbird School of Global
Management as well as a BA in Spanish and Education from Misericordia
University. She regularly writes and teaches on finance-related healthcare topics.