The effort to permanently eliminate the SGR in the 114th Congress took a major step forward on March 19, 2015, when Congressman Michael Burgess, MD (R-TX) along with bipartisan members of the House Committees on Ways and Means and Energy and Commerce, as well as Senate Finance Committee Chairman Orrin Hatch (R-UT), introduced H.R. 1470/S. 810, the SGR Repeal and Medicare Provider Payment Modernization Act of 2015. With the exception of changes to key dates and the imaging appropriateness criteria section which was already enacted in March 2014, this bipartisan, bicameral SGR repeal bill was essentially identical to the policy introduced in the 113th Congress.

Introduction of H.R. 1470/S. 810 preceded the historic announcement by then House Speaker John Boehner (R-OH) and Minority Leader Nancy Pelosi (D-CA) that Republicans and Democrats agreed to a package of policy changes that would cover close to one-third of the approximately 10-year, $200 billion total cost of repealing this antiquated system of reimbursing physicians for treating Medicare patients. The deal reached by House Republican and Democratic leaders utilized a combination of more stringent means testing for wealthy Medicare beneficiaries, limits on the ability of Medicare Supplement Insurance (“Medigap”) plans to offer first-dollar coverage for patients, as well as additional cuts to hospitals and post-acute providers to offset the cost of repealing the SGR. In addition, Speaker Boehner and Minority Leader Pelosi elected to use the same policy agreement to reauthorize the popular state children’s health insurance program, commonly referred to as SCHIP, for an additional two years.

As a result, on Tuesday, March 24, 2015, the House introduced a new bill, H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which was ultimately passed by an overwhelming bipartisan majority (392 Ayes and 37 Nays) on March 26, 2015. H.R. 2 incorporated all of the legislative language found in H.R. 1470, as well as the additional policy provisions agreed to by then Speaker Boehner and Minority Leader Pelosi. The Senate also passed the legislation with a large bipartisan majority (92 Ayes to 8 nays) on April 14, 2015. President Obama ultimately signed H.R. 2 into law on April 16, 2015.

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

In general, H.R. 2 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-driven fee-for-service system in favor of value based, coordinated care models. To achieve this important objective, Section 101 of the legislation, entitled Repealing the Sustainable Growth Rate and Improving Medicare Payment for Physicians’ Services, eliminates this antiquated formula and provides physicians with an annual 0.5 percent update starting in July 2015 through 2019. In addition, starting in 2019, this section of the bill creates the Merit-Based Incentive Payment System (MIPS), essentially a modified fee-for-service program that allows physicians to earn incentive payments should they perform well on a variety of quality metrics and clinical improvement activities. For physicians who elect to participate in the MIPS program, the 2019 base payment rates will be frozen through 2025.

Starting in 2019, the MIPS program also streamlines and consolidates 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 are scheduled to be eliminated, however, the extent to which physicians successfully meet all of the requirements outlined in these previously separate programs is now captured in a new “composite score.” How much physicians are paid now depends on their composite score in comparison to a performance threshold. As expected, low composite scores in comparison to the quality threshold are anticipated to result in physicians receiving financial penalties while high composite scores will result in additional incentive payments. The incentives and penalties are capped at 4 percent in 2019, 5 percent in 2020, 7 percent in 2021, and 9 percent in 2022 and beyond.

To achieve the goal of driving expansion of value based, coordinated care, Section 101 of the legislation also stipulates that physicians who participate in an Alternative Payment Model (APM) are exempt from the MIPS program and eligible for 5 percent annual bonuses between 2019 and 2024. APMs are loosely defined as practice models which include two-sided financial risk and a quality measurement component. To be eligible for the bonuses, participating physicians are also required to derive a significant portion of their revenue from an APM. The revenue threshold gradually increases over the 10-year budget window for the policy. It’s the intention of Congress for concepts such as Accountable Care Organizations (ACOs) and other innovative care models to meet the definition of accepted APMs.

Information on the CMS issued regulations to implement MACRA can be found here.  Below is an overview of the other key policy sections of H.R. 2:

Section 102, Priorities and Funding for Measure Development                                                

  • This section seeks to fill in gaps in quality measurements that will be used in both the MIPS and APM programs. More specifically, the HHS Secretary is required, with stakeholder input, to develop and publish a plan for the development of quality measures. The initial plan must be completed by May 1, 2016 and it is required to prioritize outcome measures, patient experience measures, care coordination measures, and measures of appropriate use of services. Starting on May 1, 2017 and annually thereafter, the HHS Secretary must publish a report on the progress made in developing quality measures.
  • Between 2015 and 2019, the federal government will allocate $15 million annually for professional quality measurement development. The funding remains available through fiscal year 2022.

Section 103, Encouraging Care Management for Individuals with Chronic Care Needs

  • Beginning in 2015, this section establishes one or more payment codes for complex chronic care management services.
  • HHS Secretary must conduct an education and outreach campaign to inform Medicare Part B physicians and patients of the benefits of chronic care management.
  • Not later than December 31, 2017, the HHS Secretary must submit a report to Congress on the use of chronic care management services by individuals living in rural areas and by racial and ethnic minority populations.

Section 104, Empowering Beneficiary Choices through Continued Access to Information on Physicians’ Services

  • Beginning in 2015, in addition to the quality and resource use information posted through the newly created MIPS program, the Secretary is required to publish utilization and payment data for physicians and professionals. By 2016, this data will ultimately be searchable on the Physician Compare web site and special emphasis will be placed on the services a professional most commonly furnishes, including submitted charges and payments.

Section 105, Expanding Availability of Medicare Data

  • This section allows organizations that currently receive Medicare data for public reporting purposes, known as “qualified entities (QEs),” to provide or sell non-public data analyses and claims data to physicians and other professionals to assist them in their quality improvement activities or in developing APMs. QEs are permitted to sell similar analyses to health insurers and employers meeting certain criteria.
  • Providers who are identified in such analyses have the opportunity to review and submit corrections before the QE provides or sells the analysis to other entities.
  • QEs that provide or sell analyses or data must provide an annual report to the HHS Secretary that provides an accounting of two major topics:
    • The analyses provided or sold, the amount of fees received, as well as the topics and purposes of the analyses.
    • A list of entities that were provided or sold data, the uses of the data, and the fees received by the QE for such data.

Section 106, Reducing Administrative Burden and Other Provisions

  • This section states that the quality measurement standards used in the MIPS program cannot be used against a physician in a medical liability case.
  • It also includes a variety of other concepts including:
    • Allowing professionals who opt-out of Medicare to automatically renew at the end of each two-year cycle.
    • Requires regular reporting of opt-out physician characteristics.
    • Requires that Electronic Health Records (EHR) be interoperable by 2018 and prohibits providers from deliberately blocking information sharing with other EHR vendor products.
    • Requires the HHS Secretary to issue a report recommending how a permanent physician-hospital gainsharing program can be best established.
    • Not later than 24 months after the date of enactment, the bill requires GAO to report on barriers to expanded use of telemedicine and remote patient monitoring, including licensure and the current definition of telemedicine. This report should include recommendations for specific legislative and regulatory changes.