Congress Patches SGR, Delays ICD-10

Congress has done it again. For the 17th time, lawmakers slapped yet another Band-Aid on Medicare to stave off a 24-percent physician payment cut under the fatally flawed Sustainable Growth Rate (SGR) formula. It sets the next SGR cliff for April 1, 2015.

On March 27, the House of Representatives quickly passed HR 4302, the Protecting Access to Medicare Act of 2014, on a voice vote with opposition from the American Medical Association and some other physician organizations. Senate Finance Committee Chair Ron Wyden (D-Ore.) appealed to his fellow senators to consider a permanent fix for the SGR to no avail. The Senate passed the bill the evening of March 31, narrowly averting the drastic physician pay cut set to take place April 1. 

AMA reports that under the bill, the geographic adjustment (GPCI) "floor" of 1.0 for physician work in the Medicare fee schedule would be extended for 12 months. Also, the secretary of Health and Human Services would have discretion to continue suspending recovery audit contractor postpayment audits under the "2-Midnight" policy through June 2015.

To cover the costs of the patch and other provisions, the bill: 

  • Establishes targets of 0.5 percent in savings from "misvalued" Medicare physician payment schedule services from 2017 through 2020, for an estimated savings of $4 billion.
  • Revises the payment system for diagnostic tests and the laboratory fee schedule, based on market-based private sector rates ($2.5 billion).
  • Reduces payments for using CT equipment that does not meet certain dosage standards and implements appropriate use criteria for advanced imaging services ($200 million).
  • Revises the Medicare sequester in 2024 to effectively amplify the sequester's impact on all Medicare providers in that year ($4.9 billion). 

After months of bipartisan progress in both the House and the Senate, this last-minute stall is most frustrating.

From 2003 to March 2014, Congress enacted 16 SGR patches to the tune of $153.7 billion, a total the Texas Medical Association, AMA, and other organizations say far exceeds what it would cost to reform the Medicare physician payment system once and for all. The 10-year cost of bipartisan, bicameral legislation that would have repealed the SGR is $138 billion. 

On the other hand, the measure shows Congress has been listening to what TMA has been saying about the Oct. 1, 2014, mandatory transition to the ICD-10 coding system. Survey after survey document that physicians are nowhere near ready for this ridiculously expensive and unnecessary shift to a brand new coding language. The legislation delays the ICD-10 start date for one year, to Oct. 1, 2015. This represents the second deadline extension for ICD-10. 

Adding to the confusion, the Centers for Medicare & Medicaid Services (CMS) has ordered Medicare contractors like Novitas to hold physicians' claims for two weeks after the April 1 deadline.

In a March 28 email notice to health professionals, the agency stated the claims hold would only affect 2014 Medicare Physician Fee Schedule claims with dates of service of April 1, 2014, and later and "should have minimal impact on provider cash flow, because under current law, clean electronic claims are not paid any sooner than 14 calendar days (29 days for paper claims) after the date of receipt."

CMS noted "all claims for services delivered on or before March 31, 2014, will be processed and paid under normal procedures."

Action, April 1, 2014

Last Updated On

January 08, 2015