SGR is Finally on its Way Out. Maybe.

Although many bills designed to kill the sustainable growth rate formula have languished in Congress over the years, the talk these days is much more serious and physician groups have reason to be optimistic.

The government is still struggling with the fallout from the HealthCare.Gov fiasco, President Obama continues to explain to the confused masses how they will get insurance, and the U.S. is still waking up from a partial federal government shutdown.

While much is in disarray, particularly in healthcare, there is some irony here: The long-running physician payment scheme—aka the "doc fix"—might be on its way to being resolved for good (maybe).

For a decade, the SGR (sustainable growth rate formula) sets Medicare physician payment rates through a formula set in 1997. It has been the subject of an annual dance in Washington. The "doc fix," imposed by Congress to ward off potential cuts in the SGR, is scheduled to lower Medicare rates by 24.4% in 2014.

That drastic rate drop explains why when physicians are asked about one of their chief concerns and hopes in their practices, demolishing the detested SGR is virtually always at the top of their lists.

Although many bills designed to kill the SGR have languished in Congress over the years, the talk these days is much more serious. A so-called "discussion draft" released by the Senate Finance and Senate Ways and Means Committees last week would not only get rid of the SGR, but would also deliver value-based payment and delivery models to Medicare physician payment systems. It builds on a plan approved by the House Energy and Commerce committee.

As envisioned, the proposal would hold doctors' pay at current levels as other optional payment plans are developed. And it would combine some existing Medicare quality programs into an initiative that would offer doctors additional pay based on new metrics, according to the American College of Physicians.

The SGR would be eliminated and a new performance-based incentive program would be created, which would become effective in 2017.

Reviewing the Proposals
Healthcare experts are examining the proposal and are being asked by lawmakers to comment on them. Analysts who have reviewed the plan are excited about the possibilities, though there is concern that there are still not enough details in place how any payment structure would replace the SGR.

Still, elected officials are patting each other on the back because there was a bipartisan agreement among powerful Senate committees that endorsed the plan. Physician groups are applauding it, too.

"It needs to be repealed and it needs to be repeated now," Charles Cutler, MD, FACP, chair of regents for the American College of Physicians, said in a statement.

"Congress is demonstrating that they understand that ending the failed SGR this year is fiscally responsible," American Medical Association President Ardis D. Hoven said in a statement.

"Congress must ensure stability in physician reimbursement and avoid any cuts that jeopardize the nation's teaching hospitals and the ability of their physicians to provide Medicare beneficiaries with timely access to care," The Association of American Medical Colleges' President and CEO Darrell G. Kirch, MD, said in a statement.

With the actions of the Senate committees, lawmakers have shown more progress in ditching the SGR than seen in the past decade, says Anders M. Gilberg, senior VP, government affairs for the Medical Group Management Association's Washington, DC office.

"The bottom line is you can go to (Capitol) Hill any day and get unanimous support for repealing the SGR. I'm not aware of any member of Congress not opposed to repealing the SGR," Gilberg says.

Details To Work Out
So, is this for real? Yes. But…

"It's for real in the sense people have put their cards on the table with respect to the policy alternative. What's not real is how to pay for it," Gilberg says. The Congressional Budget Office has estimated it would cost at least $139 billion over the next decade to get rid of the SGR. When another House committee passed a repeal bill in July, the estimated cost was estimated at $175 billion.

"The prospects for repeal this year is largely up in the air. What's going on are a lot of political crosswinds that can derail the success of an SGR bill this year," such as budget deficits.

As Gilberg sees it, reform is possible if Congress moves quickly in the remaining two months this year, or early next year.

If Congress doesn't act early next year, that could mean trouble for any SGR changes because "next year is an election year and the closer you get to an election, the more polarizing it would be, and it would be difficult again," Gilberg said, referring to House and Senate elections. "I can't think of a more dysfunctional situation in Congress right now."

Optimism
Other experts are even more optimistic.

"This time, it looks like the effort could actually succeed," writes Bob Doherty, Sr. VP of government affairs for the American College of Physicians in a blog. (The ACP staff pointed me to Doherty's blog when asked for comment). "Never before has there been agreement between the House and Senate, Republicans and Democrats on a plan to repeal the SGR, never mind on what they would replace it with. Their goal is to get the bill enacted and signed into law before the end of the year."

According to the American College of Physicians, under the Senate committees' SGR elimination plan, physicians will have the opportunity to earn additional Medicare incentive payments, above the zero percent annual baseline updates, for participating in a new Medicare Value Based Incentive Program, which would replace the existing Medicare Physician Quality Reporting Program, Meaningful use for electronic health records, and Medicare value-based modifier program.

This creates an opportunity to develop a "simpler, more harmonized and effective reporting and incentive program," the ACP states. There are also incentives for medical homes by directing Medicare to pay for complex chronic care management services in medical homes, and giving them the highest possible performance score for clinical practice improvement activities under a new value based payments incentive program.

Still, many details have to be worked out, including the various ways that lawmakers will have to consider to pay to replace the SGR.

"The question is what would the alternative payment models look like, because even with ACOs, the Medicare shared savings program, there have yet to be results from those," says Gilberg of MGMA.

"So basically you are designing a value system for Medicare, when people have yet to figure out what are the actual mechanisms to move us away from fee for service. There's a tension there."

As for physicians, they await to see the outcomes in Congress. As one healthcare official told me, "We want to keep the momentum and enthusiasm and getting change in there and have life more predictable for physicians."