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Temporary SGR Bill Passed With One-Year Doc Pay Patch, ICD-10 Delay

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On March 31, the Senate passed the "Protecting Access to Medicare Act of 2014," which was passed in the House last week, to provide a temporary fix to the Sustainable Growth Rate (SGR) formula.

The most recent SGR patch was set to expire on March 31; however, this new patch provides a one-year extension through March 2015 and prevents a 24 percent cut in Medicare physician payments on April 1.

Select provisions of the Act include:

ESRD Payment System

Starting in 2016, the Act reverses the impact of the recently implemented cut to the ESRD prospective payment system (PPS) bundled payment rate. Congress reduced the market basket by 1 percent to 1.25 percent from 2016 to 2018, significantly less than the cumulative 12 percent reduction CMS finalized last fall. Additionally, the legislation delays inclusion of oral-only ESRD drugs into the ESRD bundle from 2016 until 2024.

Clinical Laboratory Fee Schedule Changes

Beginning in 2016, laboratories will be required to report their payment rates for services paid by private payers; this will not include 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. Any reductions for individual codes would be capped at 10 percent from 2017 to 2019 and 15 percent from 2020 to 2022. The cuts do not apply to new advanced diagnostic tests meeting certain qualifications, which would be paid at a list price for three quarters before commercial payment data is available. If the list price is 130 percent or more of the weighted median rate, CMS could recoup payment for the difference.

ICD-10 Delay

The Act delays implantation of ICD, Tenth Revision (ICD-10) from Oct. 1, 2014 until Oct. 1, 2015.

Computed tomography (CT) Quality and Appropriate Use Criteria

CT services need to conform to National Electrical Manufacturers Association (NEMA) 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 beyond.

The Act includes provisions for establishing Appropriate Use Criteria (AUC) and Clinical Decision Support (CDS) mechanism for advanced imaging and applying prior authorization (PA) to outlier ordering professionals beginning in 2020.

SNF Value-Based Purchasing

The Act establishes a SNF value-based purchasing program beginning in fiscal year (FY) 2019, which includes readmissions and resource use measures. CMS will enact a 2 percent cut to payments, with recoupment opportunities of up to 70 percent of this amount, based program performance metrics.

Disproportionate Share Hospital (DSH) Cut Extension

The Act delays the beginning of the ACA-based DSH cuts from 2016 to 2017, while subsequently extending them through 2024.

Sequestration Shift in 2024

The Act changes the sequestration-based reductions schedule for Medicare Part B payments in 2024 from a flat, year-round, 2 percent reduction, to 4 percent in the first six months and to 0 percent in the last six months.

Elimination of ACA’s Deductible Limitations for Small Group Plans

The Act eliminates the ACA’s limits on deductibles for small group plans, effective immediately.

Extension of Two-Midnight Rule Enforcement Delay

The Act delays through June 2015 enforcement of the two-midnight rule, a provision for determining patient status based on whether a patient’s hospital stay spans over two midnights.

Misvalued Codes

The Act establishes targets for reductions in valuation of services under the Medicare Physician Fee Schedule (MPFS). MPFS payments must reach a threshold of 0.5 percent in reductions, which would be redistributed to other services in a budget neutral manner. If the target is not met, the budget neutrality does not apply and the reductions are taken out of the physician payment pool. Services that would see cuts of 20 percent or more in a single year would see phased-in cuts over two years.

This Act ends most hope for a full repeal of the SGR, and the next deadline to either permanently repeal or patch the SGR is March 31, 2015. Physician payments will remain current through the end of 2014, with regular updates to RVUs and the conversion factor released in the MPFS rules, effective January 1, 2015.

View the full SGR Act here.

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