"An Immense Weight Has Been Lifted From the Shoulders of American Medicine"

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Cover Story — June 2015 

Tex Med. 2015;111(6):26-37.

By Amy Lynn Sorrel
Associate Editor

For 13 long years, medicine never quit chasing a fix to the broken Medicare physician payment system. Thirteen proved to be a lucky number, and medicine's years of labor paid off in April when Congress finally uttered the three little words the nation's physicians have longed to hear: SGR is dead.

Physician and congressional leaders say medicine's united voice was instrumental in successfully repealing the flawed Sustainable Growth Rate (SGR) formula — a payment design enacted in 1997 to sustain Medicare with lower costs but that instead threatened physicians with unsustainable payment cuts every year since 2003. 

In true "everything-is-bigger-in-Texas" fashion, lawmakers from the nation's largest state and physicians from the nation's largest state medical society remained at the forefront of the fight, bedeviling the SGR with years of advocacy that culminated in a bipartisan burial of the bygone formula that failed to keep up with cost of care and sent many Medicare doctors packing. Texas champions also brought to life first-ever federal medical liability protections, in the process protecting the legacy of the state's landmark tort reform law. 

Texas Congressman Michael C. Burgess, MD, a Republican obstetrician-gynecologist from Lewisville who staked his congressional career on ridding SGR, authored its death certificate: the Medicare Access and CHIP Reauthorization Act (MACRA). Read HR 2 online

The law charts a new path for physician payment, replacing SGR with an annual 0.5-percent physician pay increase over the next five years — the first of which takes effect in July — and largely shifting from a fee-for-service system with multiple penalties to one that also rewards physicians for performance improvements and encourages experimentation with new payment models. (See "Medicare Access and CHIP Reauthorization Act of 2015.") The law also extends the Children's Health Insurance Program (CHIP) for another two years.

"What makes this historic is we've been working on it for so darn long," Representative Burgess told Texas Medicine. Even after the bill overwhelmingly passed the House 392-37 on March 26, he saw it through to the end, spending hours on the Senate floor to make sure it avoided a diversion at the last minute. 

"Most of all, SGR pulled the joy out of practicing medicine when year over year, you didn't know what life was going to be like," he said. "The most important thing now is, it's not coming back. And may we never speak of it again."

Abilene otolaryngologist Austin King, MD, says the victory may have come under his watch as TMA president, but it also came at the hands of "my predecessor TMA presidents who have kept the movement alive, the thousands of Texas physicians and patients who have visited and written and called their representatives and senators to demand repeal of the SGR formula, and the lawmakers who heeded our call. An immense weight has been lifted from the shoulders of American medicine."

Eliminating the constant threat of payment cuts now frees medicine to advocate on other lingering issues affecting Medicare, Dr. King adds. "We can focus our energies on improving this new law. We can focus our energies on removing the bureaucratic impediments that get in the way of good patient care. We can focus our energies on enacting substantive and fundamental Medicare reforms that will help us provide lifesaving, life-sustaining, and life-enhancing care to our senior citizens, military families, and Texans with disabilities."

SGR's Last Gasp

Indeed, the SGR hung on to the bitter end. 

The Senate delayed its vote well beyond April 1, when the formula was set to throw its last dagger: a 21.2-percent pay cut. It was SGR's final gasp before the Senate came through on April 14. 

The 92-8 vote ended Congress' ritual patchwork politics: Every year, the formula would trigger a pay cut, and every year — 17 times since 2003, sometimes multiple times per year and sometimes retroactively — lawmakers stepped in to block the reductions, knowing they threatened seniors' access to care. 

The drama carried on until President Barack Obama signed MACRA into law on April 16 — one day past the deadline the Centers for Medicare & Medicaid Services (CMS) could hang on to claims before processing them at the lower rate. Some managed to slip through before CMS could implement the new provisions. The agency says Medicare contractors will automatically reprocess them at the new payment rate. No action by physicians is necessary.

Momentum for SGR repeal gathered when, over the past two years, both parties and both chambers of Congress finally came together to formulate a plan of action, TMA Vice President for Advocacy Darren Whitehurst says. "At the end of the day, where this differed from a decade ago was we passed a policy, and once the policy was set up, the only conversation was how to pay for it. That's what pushed this to the finish line." 

Premium increases for high-income Medicare beneficiaries offset about half of the 10-year, $141 billion cost to repeal SGR, according to a Congressional Budget Office (CBO) analysis. 

Republicans and Democrats largely overcame what Representative Burgess describes as illusory accounting over the cost of repeal, as Congress would have had to go all the way back to 1997 to balance the books and collect the debt incurred from more than a decade of patches that blocked the Medicare cuts. MACRA offers a fresh start, he says. 

"We are cleaning up our books, and that should have happened a long time ago. This makes it more manageable going forward," Representative Burgess said. "Will it ever be necessary to come back and do something else? Well, at least the starting point won't be having to repeal SGR. And now we've got structural reforms we can all agree on." 

Medicine long advocated that the cost of doing nothing continued to outweigh the cost of a true fix. The 17 Band-Aids administered from 2003 to 2014 cost a total of $153.5 billion, compared with MACRA's $141 billion price tag for repeal, according to an American Medical Association analysis. The 10-year cost of repeal still falls $1 billion below the cost of a long-term patch that would freeze physician payments at current levels during that period, according to CBO. (See "We Don't Need No Stinking Patches.")

"One of my biggest concerns was that we are driving doctors out of practice," Representative Burgess said. "This costs less money and moves us toward a solution. And maybe encourages a doctor my age to stay in practice."

Texas Leads the Way 

SGR repeal has always been a bipartisan effort in Texas, says TMA Legislative Affairs Director Dan Finch. But another difference this time around was, "we had broad bipartisan support in Congress." 

Representative Burgess had SGR repeal on his agenda since he got to Congress in 2003. Reps. Kevin Brady (R-Texas) and Gene Green (D-Texas) were among the 13 Republicans and Democrats who cosponsored MACRA, and Representative Brady carried the torch in the House Ways and Means Committee, which has jurisdiction over Medicare. 

Rep. Henry Cuellar (D-Texas), who also supported the bill, pushed to include language that bars federal quality-of-care and payment guidelines for Medicare, Medicaid, and the Affordable Care Act from being used to establish medical liability lawsuits against physicians. The provisions not only protect Texas' historic tort reform law, but also mark the first time Congress has passed medical liability protections. (See "Liability Win!")

House Speaker John Boehner (R-Ohio) and House Minority Leader Rep. Nancy Pelosi (D-California) pushed both sides of the aisle to reach the 392-37 House vote, which Mr. Whitehurst called "pretty unheard of, other than naming a post office."

Carrying the flag in the Senate was Republican Senate Majority Whip John Cornyn of Texas, who, Mr. Whitehurst adds, was instrumental in defeating a key amendment threat. Texas Senator Ted Cruz voted against MACRA over concerns it added to the national debt. 

Any amendment in the Senate would have sent the bill back to the House, making it less likely to pass. A slate of last-minute add-ons cropped up to try to extend CHIP for four years instead of two, insert antiabortion language, and curb perceived deficit spending. 

The amendment most likely to survive, however, was a stand-alone change to eliminate Medicare's cap on outpatient therapy services, which could have led to a pay cut for physicians, Mr. Whitehurst explains. Senator Cornyn helped squash those votes by adding the therapy cap provisions to his amendment to repeal the ACA individual mandate, which was unlikely to pass. 

"This legislation provides our health care professionals with a predictable expectation for reimbursement rates, an idea that only sadly had been a dream for many physicians," Senator Cornyn told his fellow lawmakers as the Senate prepared to cast its vote for SGR repeal. "Such a meaningful solution is long, long overdue." 

Joy and Relief 

Thanks also to organized medicine's unrelenting advocacy, the victory spells joy and relief for physicians who've been stuck in the trenches of uncertainty. Amid the thousands of phone calls, emails, letters, and hours spent walking the floors of Congress, "if there was one state medical society leading the charge on this, it was the TMA," the association's newest president, A. Tomas Garcia III, MD, proclaimed.

AMA galvanized more than 750 state and specialty medical societies around the issue, "finally bring[ing] an end to an era of uncertainty for Medicare beneficiaries and their physicians," AMA Executive Vice President and Chief Executive Officer James L. Madara, MD, said. "Patients will be able to get the care they need and deserve."

AMA House of Delegates Vice Speaker and Past TMA President Susan Rudd Bailey, MD, praised AMA for single-handedly uniting the voice of medicine. "But the local relationships that TMA has with its congressional representatives — I don't think we can underestimate the importance of that." 

The Fort Worth allergist and immunologist remembers early on, visit after visit, explaining to lawmakers what SGR was, let alone how to get rid of it and the administrative burdens Medicare's quality programs impose on physicians.

"But the last few years, we'd walk into those offices and they would preemptively say: 'Yes, I'm against SGR, and I know we have to fix it.' That's a testimony to how important it is to maintain those relationships and to never, ever give up," Dr. Bailey said. "It's not only a relief professionally to know that I won't have that [SGR] sword hanging over my head, but it's a relief personally knowing these patients are always going to have care. And now that SGR is out of the way, we can start working on other things to make care better for patients and bring some physicians who left back into the system." 

In 2008, then-TMA President William W. Hinchey, MD, authored TMA's "Medicare Manifesto" after Congress left physicians hanging with only a six-month patch on what would have been the first double-digit pay cut. On top of that, physicians had nary a pay raise that kept up with cost of care and stood to lose even more because commercial health insurance companies tie their fee schedules to Medicare rates, the San Antonio pathologist says.

"We felt we needed another way to heighten the awareness and seriousness we attach to this issue," Dr. Hinchey said of the manifesto. "Things were so bad, I remember conversations with physicians about just letting it [the pay cut] happen one way or another so we can adjust and get back to some kind of stability." 

Now with SGR gone, he's looking forward to tearing up the manifesto. 

"I don't call it a 'doc-fix.' I call it a 'patient-fix,'" Dr. Hinchey said. "It's a relief. It's joyous. Everybody involved in this never gave up the fight. We kept it a burning issue. We knew we were right, and this shows sometimes you've got to persevere, keep going, and never give up the fight when you are right."

After 12 years of visiting Washington, D.C., as a member and chair of TMA's Border Health Caucus, Manuel Acosta, MD, nearly jumped across his desk when he read the news of SGR's demise. 

"I can tell you for the border this is extremely important. About 75 percent of our patients here are Medicare and Medicaid. All over the United States, more and more physicians shy away from taking Medicare and other insurance. But on the border, we have to," the El Paso general surgeon said. 

The low pay rates and uncertainty over the years have meant Dr. Acosta, like many physicians, had to borrow money to stay in business, particularly in his border town of El Paso, where he treats a higher percentage of low-income elderly patients with complicated conditions.

"There's no question, we really needed this win," he said. "We knew if we kept on pushing and had good communication with our politicians, they would hear us and our concerns. And they need to see our face and know we are still here."

In another hard-fought win for medicine, the Texas Alliance for Patient Access (TAPA) and Texas Medical Liability Trust (TMLT), in partnership with TMA and AMA, have been working to pass federal medical liability protections since before the passage of ACA in 2010.

Austin internist Howard Marcus, MD, is chair of TAPA, a statewide coalition of doctors, hospitals, clinics, nursing homes, and physician liability insurers formed in 2001 to lobby for tort reform. Physicians worried the new quality measurement and payment guidelines could be used in a lawsuit to create a presumption of medical negligence, he says. Texas doctors, in particular, also worried the federal standards could preempt the state's comprehensive medical liability protections. 

"This bill eliminates that uncertainty," Dr. Marcus said. "Practice guidelines should be just that — a guideline — and not a rigid, unfaltering edict that creates new opportunities to sue." 

A New Medicare

But the SGR win is just step one, TMA leaders say. After popping the champagne and tasting victory, medicine is girding for the next round.

The comprehensive SGR repeal legislation may not be perfect, but it represents a marked improvement over the status quo, Donna Kinney, director of research and data analysis in TMA's Division of Medical Economics, says. Future rulemaking processes will present opportunities for TMA's ongoing advocacy to ensure any new payment system keeps up with physicians' cost of providing care without additional burdens and unwarranted penalties, and removes quality measures that depend on factors out of physicians' control. 

The first thing MACRA does is repeal SGR, followed by a five-year transition period of fee-for-service payments that include an inflation update of 0.5 percent per year from 2015 through 2019. 

Although Medicare's existing quality programs and payment penalties stick around for the next few years, they will go away in 2019. In their place, a new Merit-based Incentive Payment System (MIPS) will link a portion of doctors' pay to their quality and cost performance from two years prior. It also will consolidate Medicare's three main existing quality reporting programs — the Physician Quality Reporting System, meaningful use of electronic health records (EHRs), and the value-based payment modifier — a shift that could help reduce physicians' compliance and reporting costs and offer fewer penalties and more flexibility, at least in the short term, Ms. Kinney says.

Eventually, physicians will have a broader range of measures to choose from to meet their quality requirements, and at medicine's urging, the law includes physician input in development of quality reporting metrics. 

The current programs and their penalties — which could add up to 10 percent or more of physician pay for noncompliance — would sunset in 2018. And while penalties under the new system still exist, they will range from 4 percent to 7 percent from 2019 to 2021 and cap at 9 percent in 2022 and beyond. MACRA also adds more funds for possible incentive payments for physicians' quality improvement efforts and for small practices to implement MIPS or alternative payment models like medical homes or accountable care organizations. 

Such models are voluntary, and the law keeps the fee-for-service option. However, practices that choose instead to pursue alternative payment models over MIPS would be eligible for other bonus payments. 

Over the Hump

In drafting the bill, Representative Burgess says lawmakers deliberately sought medicine's input, which figured heavily into provisions that keep what he called a "private practice option" under fee-for-service and streamline administrative complexities for quality reporting. He also praised medicine for its help overall in getting the bill across the finish line. 

"There's no question the message was focused, it was relentless, and it was a big part of this," he said. 

Now that MACRA gets physicians over the SGR hump, it provides a good foundation for future discussions and an opportunity to focus efforts on other important issues, TMA President Dr. Garcia says. Most important, it helps bolster the viability of private practice. 

"Every single patch was like putting a stitch on an aorta bleeding violently," the Houston cardiologist said. During that time, "I have not bought any new equipment; I have not done any new hiring. The only thing I acquiesced to was getting a new EHR system because it was mandated. So it's only by duress that I did it." 

Dr. Garcia says there's still a lot of work ahead to ensure the new Medicare keeps its promises to make payment models once reserved for large, resource-rich organizations accessible to smaller practices, and to simplify the system so that it doesn't take an accountant, a lawyer, and hours of work just to submit a form to a quality reporting program. 

With SGR out of the way, those goals are finally within reach, he says, likening the victory to Texas' tort reform win in 2003. 

"Just like tort reform, if you build it, they will come. And now that we are over the SGR hurdle, we can start moving forward, and we can see where the opportunities are to make the system even better," Dr. Garcia said. 

When he spoke to Texas Medicine, Dr. Garcia was on his way to talk to a group of medical students at Baylor College of Medicine and excited to tell them a good story. With tort reform securely in place and SGR gone, "this is exactly the one-two punch we need to unleash private practice."

Amy Lynn Sorrel can be reached by phone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email.


Liability Win!

Legislation to repeal the flawed Medicare Sustainable Growth Rate (SGR) formula carried the added bonus of long-sought liability protections that ensure plaintiffs cannot use quality metrics or payment standards in federal law to sue physicians for medical negligence.

The so-called standard-of-care protections in the Medicare Access and CHIP Reauthorization Act (MACRA) specifically state "the development, recognition, or implementation of any guideline or other standard under any federal health care provision shall not be construed to establish the standard of care or duty of care owed by a health care provider to a patient in any medical malpractice or medical product liability action or claim." The law singles out physicians for inclusion in the definition of a health care provider. 

Moreover, MACRA seals Texas' landmark tort reform law by specifically stating nothing in the SGR repeal legislation or the Affordable Care Act can be interpreted to alter state laws governing medical liability claims. 

The protections were a long-standing top federal legislative priority for the Texas Alliance for Patient Access (TAPA), and the win was the culmination of five-and-a-half years — since before passage of ACA — of grassroots advocacy by TAPA, the Texas Medical Liability Trust, TMA, and the American Medical Association, among others. 

"We were concerned the quality metrics and payment standard would morph into some sort of evidence of negligence," TAPA Director Jon Opelt said. "Practice guidelines, while important, are just that: guidelines." 

The victory would not have happened without commitment from key members of the Texas congressional delegation, he adds. In particular, U.S. Rep. Henry Cuellar (D-Texas) originally authored the protections for inclusion in ACA back in 2009, sponsored stand-alone legislation over the years, and successfully pushed for its inclusion in the SGR bill over trial lawyers' objections. 

Upon the House passage of the SGR bill, Representative Cuellar said the legislation permanently fixes the flawed formula, relieves doctors of the fear of undue legal issues, and ensures "state medical malpractice liability laws are not adversely impacted by the federal government … all wins for Texas patients and doctors." 

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June 2015 Texas Medicine Contents
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Last Updated On

April 17, 2018

Originally Published On

May 22, 2015

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MACRA | Medicare | SGR