H.R. 4015/S. 2000, the SGR Repeal and Medicare Provider Payment Modernization Act

On February 6, 2014, the House Ways and Means and Senate Finance Committees introduced H.R. 4015/S. 2000, the Sustainable Growth Rate (SGR) Repeal and Medicare Provider Payment Modernization Act. This bipartisan, bicameral bill outlined in great detail how federal lawmakers intended to eradicate the current antiquated system of Medicare physician reimbursement last Congress. While introduction of this bill was a Herculean accomplishment for Congress, the Congressional Budget Office (CBO) estimated the legislation would cost $138 billion over 10 years and lawmakers from both parties in each chamber intentionally did not specify any “offsets” that could be used to finance this policy. In the end, coming to an agreement on ways to cover the cost of this bill proved too difficult for Republicans and Democrats. Although the House and Senate ultimately failed to pass this legislation, it represented the closest Congress ever came to eliminating the SGR and the legislation laid the foundation for the formula's eventual repeal in the 114th Congress following the enactment of the Medicare Access and CHIP Reauthorization Act.

It is important to note that through the combined efforts of the ACR physician leaders and members, along with the Government Relations staff, the College earned three major victories within this SGR legislation introduced in the 113th Congress. First and foremost, H.R. 4015/S. 2000 included provisions requiring ordering physicians to consult imaging-specific appropriateness criteria prior to referring Medicare patients for advanced imaging procedures. The legislation also included a cap on the amount codes reimbursed through the Physician Fee Schedule (PFS) can be reduced in a given year. Finally, the bipartisan, bicameral bill mandated that the Secretary of Health and Human Services (HHS) disclose data used by the agency to justify the imposition of a 25 percent professional component multiple procedure payment reduction (PC MPPR) in 2012. All three of these provisions were ultimately enacted into law following the passage of a separate bill H.R. 4302, the Protecting Access to Medicare Act, in March 2014. H.R. 4302 also temporarily prevented the impending 24 percent SGR cut from going into effect until March 31, 2015. For reference purposes, the key provisions of H.R. 4015/S. 2000, as well as various ACR's comments filed throughout the bill drafting process, are described in greater detail below:


Appropriateness Criteria Provisions


According to Section VI, Promoting Evidence-Based Care, the legislation required ordering physicians to consult (not adhere to) imaging-specific appropriateness criteria when ordering advanced diagnostic imaging services (CT, MRI, and Nuclear Medicine) within the Medicare system. Under the policy, by November 15, 2015 only the Secretary of (HHS) had the authority to specify “accepted” appropriate use criteria, which were required to be developed by national medical specialty societies or what the legislation defined as “other provider-led entities." The Secretary of HHS was explicitly prohibited from developing the appropriateness criteria. By April 1, 2016, the HHS Secretary was required to identify and publish a list of qualified clinical decision support (CDS) “mechanisms” that ordering physicians could use to consult the appropriate use criteria. To be deemed a qualified CDS mechanism, the tool was required to be able to clearly identify which appropriateness criteria was utilized, determine the extent to which an imaging order followed the appropriateness criteria, provide documentation to the ordering physician that the consultation occurred, be updated to reflect revisions to the appropriateness criteria, and meet all applicable privacy and security standards. While approved CDS mechanisms were allowed to be embedded within a certified electronic health record (EHR) technology, the ordering physician was permitted to also consult the tools independently.

Beginning on January 1, 2017, payment would only be made to the rendering physician who performs an advanced diagnostic imaging service if the claim included the following information: 1) that the ordering professional consulted the guidelines through a qualified CDS “mechanism;” 2) whether the ordered service adhered to the guideline consulted 3) the ordering provider’s national provider identification (NPI) number. Ordering physicians referring patients for advanced imaging in emergency situations or the hospital inpatient setting were exempt from the appropriateness criteria policy.

Finally, January 1, 2020 marked the beginning of the "outlier" policy. Individuals deemed “outliers,” or physicians with a pattern of ordering behavior that is inconsistent with the appropriateness criteria, were subjected to prior authorization. No more than 5 percent of the ordering physician population affected by this policy can be subjected to prior authorization. As stated above, this section was ultimately enacted following passage of H.R. 4302 in March 2014.

Coding Cap/Dampening Provisions


The ACR also appreciated the legislation including provisions in Section V, Ensuring Accurate Valuation of Services Under the Physician Fee Schedule, which sought to cap the total amount a Medicare service could be cut in a given year. More specifically, the bill mandated that, starting with the 2015 Medicare Physician Fee Schedule, any total downward relative value unit (RVU) adjustments for a service of 20 percent or more (as compared to the previous year's reimbursement level) must be phased-in over a two year period. As stated above, this section was ultimately enacted following passage of H.R. 4302 in March 2014.

PC MPPR Provisions


In an attempt to provide greater transparency to past Medicare Physician Fee Schedule Final Rules, H.R. 4015/S. 2000 included provisions mandating that the Secretary of HHS disclose the data that the Agency used in 2012 in justification of 25 percent PC MPPR. The release of this data was designed to assist the ACR in its efforts to repeal this arbitrary and capricious regulatory reimbursement cut. As stated above, this section was ultimately enacted following passage of H.R. 4302 in March 2014.

SGR Repeal, Merit-Based Incentive Payment System (MIPS), and Alternative Payment Models


In general, H.R. 4015/S. 2000 sought to advance a long-standing policy goal for Congress, specifically curbing Medicare spending through the creation of incentives for physicians to abandon the current volume-drive fee-for-service system in favor of value based, coordinated care models. To achieve this important objective, Section II of the legislation repealed the flawed SGR formula and provided physicians with an annual 0.5 percent update between 2014 and 2018. In addition, starting in 2018 this section of the bill created the Merit-Based Incentive Payment System (MIPS), essentially a modified fee-for-service program that allowed physicians to earn incentive payments should they perform well on a variety of quality metrics and clinical improvement programs. More specifically, starting in 2018 the MIPS program streamlined and consolidated the existing Physician Quality Reporting System (PQRS), Value-Based Purchasing Model, and Electronic Health Record/”Meaningful Use” policies, along with newly created clinical practice improvement activities, into one larger reimbursement program. The statutorily mandated penalties associated with these quality measurement programs were scheduled to be eliminated, however, the extent to which physicians successfully meet all of the requirements outlined in these previously separate programs would be captured in a new “composite score.” How much physicians were paid depended on their composite score in comparison to a performance threshold. In general, low composite scores in comparison to the quality threshold were expected to result in physicians being subjected to financial penalties while high composite scores were anticipated to provide additional incentive payments. The incentives and penalties were capped at 4 percent in 2018, 5 percent in 2019, 7 percent in 2020 and 9 percent in 2021.

To achieve the goal of driving the expansion of value based, coordinated care, Section II of the bill stipulated that physicians who practiced in an Alternative Payment Model (APM) were exempt from the MIPS Program and eligible for 5 percent annual bonuses between 2018 and 2023. APMs were loosely defined as practice models which included two-sided financial risk and a quality measurement component. Participating physicians were also required to derive a significant portion of their revenue from the APM. The revenue threshold gradually increased over the 10-year budget window for the policy. It was the intention of Congress for concepts such as Accountable Care Organizations, Patient Centered Medical Homes, bundled payments, and other innovative care models to meet this definition of an accepted APM.

Below is a brief overview of other sections within H.R. 4015/S. 2000:

Section III. Priorities and Funding for Quality Measure Development
• This section sought to fill any gaps in the development of measures for use in the various quality programs that would contribute to the composite score of a physician participating in the MIPS and APM programs. By May 1, 2015, the HHS Secretary, along with key health care stakeholders, were required to develop and publish a plan addressing any existing quality measurement gaps.
Between 2014 and 2018, the federal government would annually allocate $15 million to quality measurement development.

Section IV. Encouraging Care Coordination for Individuals with Complex Chronic Care
• This section established one or more payment codes for complex chronic care management services, beginning in 2015. The bill permitted payments for these new codes to be made

Section V. Ensuring Accurate Valuation of Services Under the Physician Fee Schedule
• Between 2015 and 2018, the section set a target of 0.5 percent of the total estimated amount of expenditures under the physician fee schedule to be identified and “revalued” by the HHS Secretary.
• If the target was met, that amount would be redistributed in a budget-neutral manner within the PFS. If the target was NOT met, fee schedule payments for that year would be reduced by the difference between the target and the amount of misvalued services identified that year. In addition, if the target was NOT met, the bill required budget-neutrality to be suspended, thus enabling the federal government to remove the savings from the Medicare program and redistribute them to other programs.
• To accomplish the goal of identifying and revaluing services, the Secretary was required to solicit and collect information from “selected professionals” (both physicians and non-physicians).
• Instructed the Government Accountability Office (GAO) to study the AMA/Specialty Society Relative Value Scale Update Committee (RUC) process for making recommendations to CMS on valuation of physician services.
• In addition, provisions outlining the aforementioned “dampening policy” were found in this section.
• This section was ultimately enacted following passage of H.R. 4302 in March 2014. These provisions were also enhanced and expanded following passage of H.R.647, the Achieving a Better Life Experience Act, in December 2014.

Section VI. Promoting Evidence-Based Care
• See above

Section VII. Empowering Beneficiary Choices through Access to Information on Physician Services
• This section required HHS to publish utilization and payment data for physicians and other practitioners on the Physician Compare web site.
• Physicians were granted the opportunity to review and correct information prior to it ultimately being posting on the web site. The web site was also required to indicate that the data might not be completely representative of the physician, in question.

Section VIII. Expanded Claims Data Availability to Improve Care
• This section allowed organizations that currently receive Medicare data for public reporting purposes, known as qualified entities “QEs,” to provide or sell non-public data analyses to physicians and other professionals to assist them in their quality improvement activities. QEs were permitted to sell similar analyses to health insurers and employers meeting certain criteria.

Section IX. Reducing Administrative Burden
• This section of the legislation stated that the quality measurement standards used in the MIPS program cannot be used against a physician in a medical liability case.

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