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From Health Affairs:


Assessing Efforts to "Solve The Sustainable Growth Rate Formula Conundrum"



Bethesda, MD—On April 1, unless Congress acts to prevent it, the current Sustainable Growth Rate (SGR) fee cut would take effect, dictating a 21.2 percent reduction in physician's fees for Medicare beneficiaries. A new commentary, being released by Health Affairs as a Web First, assesses last year's bipartisan and bicameral legislative model for how to repeal the SGR, a model likely to be used in similar efforts this year. The 2014 legislation contained many useful steps to replace the SGR but had a major omission, the
authors argue: It did not adequately address overhauling the current Medicare fee schedule. The authors advocate greater efforts to fix inaccurate valuations in the fee schedule, where "it is generally accepted that cognitive services are undervalued while many procedures performed by specialists are overvalued." The authors state that correcting the physician fee schedule "is vitally important to the SGR's fix's prospects for success and requires greater focus and support."  

Solving The Sustainable Growth Rate Formula Conundrum Continues Steps Toward Cost Saving And Care Improvements


By James D. Reschovsky, Larisa Converse, and Eugene C. Rich


The authors are all affiliated with Mathematica Policy Research in Washington, D.C.


This study, which will also appear in the April 2015 issue of Health Affairs, was supported by The Commonwealth Fund.

The 2014 legislation offers additional incentives for providers to participate in value-based alternative payment models (such as accountable care organizations and patient-centered medical homes). The authors suggest that the legislation's potential to woo more providers away from fee-for-service arrangements depends on both the implementation of APMs and whether these additional incentives are sufficient. They also recommend that the quality metrics used in value-based reforms focus on "a limited number of meaningful, clinically relevant outcome measures." In conclusion, the authors support using the 2014 legislation as a model for any attempt to repeal the SGR this year, saying that it "would provide CMS [Centers for Medicare and Medicaid Services] with substantive additional mechanisms and resources it could use to hasten the development of alternative payment models that hold the promise of lowering costs and improving care."

About Health Affairs

Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print, with additional Web First papers published periodically at The full text of each Health Affairs Web First paper is available free of charge to all website visitors for a one-week period following posting, after which it switches to pay-per-view for nonsubscribers. Web First papers are supported in part by a grant from The Commonwealth Fund. You can also find the journal on Facebook and Twitter. Read daily perspectives on Health Affairs Blog. Download our podcasts, including monthly Narrative Matters essays, on iTunes. Tap into Health Affairs content with the new iPad app.