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House Releases SGR Bill With 1-Year Doc Fix; Extenders, ICD-10 Delay and Major Lab Payment and ESRD Changes Included

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On March 25, the House released the bill text for the "Protecting Access to Medicare Act of 2014," which provides a temporary fix to the Sustainable Growth Rate (SGR).
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The current SGR fix expires on March 31; however, this new patch would provide a one-year extension through March 2015 at current rates, and prevent a 24 percent cut in Medicare provider payments scheduled for April 1. Major provisions in the bill include revisions to the end-stage renal disease (ESRD) payment system, changes for determining payments for laboratory services, a one-year delay of International Classification of Diseases, Tenth Revision (ICD-10) implementation until Oct. 1, 2015, and imaging quality and appropriate use criteria.

ESRD payment system

As written, starting in 2016, the bill would reverse the impact of the recently implemented cut to the ESRD prospective payment system (PPS) bundled payment rate. From 2016 to 2018, the market basket would be reduced by 1 percent to 1.25 percent, significantly less than the cumulative 12 percent reduction that was finalized by CMS last fall. Additionally, the legislation will delay inclusion of oral-only ESRD drugs into the ESRD bundle from 2016 until 2024, and mandate the creation of quality measures specific to the conditions treated with oral-only ESRD drugs.

Clinical Laboratory Fee Schedule Changes

Beginning in 2016, laboratories would be required to report their payment rates for laboratory services paid by private payers, not including any capitated or bundled payment amounts. Beginning in 2017, Medicare payments for clinical laboratory services will be set at the weighted median of these prices. These payments will apply to independent and hospital laboratories where payment is not currently bundled by Medicare. Any reductions for individual codes would be capped at 10 percent from 2017to 2019 and 15 percent from 2020 to 2022.

Computed tomography (CT) quality and appropriate use criteria

Another temporary doc fix dramatically decreases the chances Congress passes a permanent SGR bill under the Obama administration. The bill provides financial relief, and thus increases Medicare margins for dialysis facilities, which MedPAC recently projected to be 2.9 percent in 2014. Medicaid Disproportionate Share Hospital (DSH) payment cuts from the Affordable Care Act are extended to 2024, while SNFs will see a shift toward value-based payment impact future reimbursement. Laboratory payments will be more closely linked to commercial rates, but the changes to the system may eliminate some uncertainty around payment reductions to specific services based on the CMS review of technology changes to laboratory services. The ~$20 billion cost of the bill is fully paid for with a number of provisions, including extension of the DSH cuts and a budget gimmick that shifts calendar year 2024 sequestration cuts to 4 percent in the first six months and 0 percent in the second six months. The bill ultimately is scored at $1.2 billion in savings over 10 years.

Computed tomography services would need to conform to National Electrical Manufacturers Association standards. If the use of the equipment does not conform to these standards, payment for those services would be cut by 5 percent in 2016 and 15 percent in 2017 and subsequent years. The bill also includes provisions for establishing Appropriate Use Criteria (AUC) and Clinical Decision Support (CDS) mechanism for advanced imaging and applying prior authorization to outlier ordering professionals beginning in 2020. Ordering physicians will need to adhere to AUC that are available within a qualified CDS.

The bill is set to be called to a vote in an expedited process prior to the March 31 deadline. If a bill is not passed prior to that deadline, CMS may hold claims until a bill is passed. There will also likely be a push from certain members of Congress to reject a temporary patch and move forward with permanent repeal, although the success of this in the near-term seems unlikely.

View full text of the bill.

For more bill or SGR specifics, please contact Adam Borden at

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