Final Budget Act Allows Time for Full SGR Repeal in Q1 2014; Establishes a 0.5 Percent Update Factor for Physician Payment Through the End of March

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On Dec. 26, President Obama signed into law a two-year budget resolution that reduces budget uncertainties through fiscal year (FY) 2015.
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The agreement extends sequestration through 2023, including the 2% Medicare cuts for an additional two years. The budget also includes the Pathway for the Sustainable Growth Rate (SGR) Reform Act of 2013, a three-month “doc fix” that averts the 20.1% SGR cut to Medicare physician payments that would have gone into effect on Jan. 1. The law provides a 0.5 percent update for claims through March 31, 2014, resulting in a temporary conversion factor of $35.8228.

The agreement also includes several Medicare provisions, such as extension of the physician work geographic adjustment index floor at 1.0 and the exceptions process for outpatient therapy caps. Additionally, anticipated Medicaid disproportionate share hospitals (DSH) reductions are delayed until FY 2016.

Congress also recognizes in the law that as they work towards a permanent solution to the SGR in 2014, CMS should continue to focus their efforts to:

Congress also recognizes in the law that as they work towards a permanent solution to the SGR in 2014, CMS should continue to focus their efforts to:

    Reduce the administrative burden on physicians associated with reporting measurements across programs.

    The “doc fix” signed as part of the budget deal is only a temporary fix for the first quarter of 2014; Congress still needs to address a full SGR repeal and physician payment reform. The House Energy & Commerce, House Ways & Means, and Senate Finance committees have all developed physician payment and SGR replacement proposals, however, without identifying any pay fors. Finding cost offsets from other services, such as hospital or long-term care facility payments, will likely be a point of contention as the committees develop these solutions. All of the proposals to date have common themes, including a period of stability for physician payment, a focus on programs and incentives/penalties to measure quality and value, and a gradual movement toward alternative payment models, such as ACOs.

    Provide timely feedback to physicians regarding their performance in order to support participation and success.

    Test new payment models, particularly in specialty care.

To read the full Bipartisan Budget Act of 2014 click here. To read CMS’ provider alert outlining changes, click here.

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