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SGR Fix a Milestone in Healthcare Reform

Today the House passed a permanent fix to the SGR Bill. It is believed by most that the Senate will follow suit in a few days. The significance of this act is dramatic. The SGR problem has been going on since the 1990s, when the bill was first passed. If it were going to go into effect as written, the doctors would have taken a 21% reduction in payment for Medicare patients. With the new bill that won’t happen. What is going to happen will change the industry.

Two parts of the legislation in particular are game changers. Over the next 10 years, payments to doctors will be gradually shifted away from fee for service to alternative payment systems. Doctors that participate in alternative payment systems and achieve required quality targets will be eligible for sizeable bonuses of up to 5% of payment. This incentive, we predict, will move doctors into different models already in existence, such as CMS’ Accountable Care Organization program and the Comprehensive Primary Initiative.

The other important aspect of the bill is that Medicare data will become available to Qualified Entities, such as the Wisconsin Health Information Organization. This will allow doctors access to their own data and comparative data with their peers. The provision also makes it clear that the data will be publicly reported. It will be possible to compare individual doctors in any state and market on important cost and quality performance metrics. Once this data is made public it will be the new burning platform for improvement. It has been shown previously that organizations that publicly display their performance improve more quickly.

Also, there is a provision to develop specific quality performance metrics for physicians. This has happened in certain specialties already such as primary care and cardiology, but now all specialties will need to comply.

It is likely that this SGR Bill may have a bigger impact on healthcare reform than the Affordable Care Act did. One thing is for sure, status quo will not be possible.

Click here to read a summary of the key provisions in the bill.

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