The Daschle Imperative
According to American Medical News, January 19, 2009, Tom Daschle, appearing at his first confirmation hearing to be Health and Human Services [HHS] secretary, pledged to replace Medicare’s sustainable growth rate [SGR] formula with a system that bundles payments in an attempt to reward good patient outcomes.
Recommendations
Apparently, Daschle also promised to examine inefficiencies in private Medicare plans, discourage tobacco use, support the training of primary care physicians and work with lawmakers in a bipartisan manner. Reports suggested that Medicare’s SGR formula “just isn’t working right.”
Expiring Patches
The latest in a series of temporary SGR reform payment patches expires at the end of 2009. If Congress doesn’t act before Jan. 1, 2010, doctors will undergo an estimated 21% Medicare pay cut. Any new formula should focus on bundling payments based on episodes of care instead of paying per procedure. Daschle said in the News reported, “I’m not one who supports the so-called performance- based approach, but I do believe that there are episodic ways with which to look at reimbursement that give us a lot more latitude” to reward better outcomes.
Assessment
He did not elaborate further.
Conclusion
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Filed under: Breaking News, Health Economics, Health Insurance, Healthcare Finance | Tagged: Daschle, HHS, SGR |















On Daschle and Killefer,
I must admit that I didn’t believe Tom Daschle would ever withdraw his DHHS nomination, and I thought the ME-P’s call for him to resign was wrong, and premature. Wow; was I mistaken!
Nice job Dr. Marcinko and staff.
Now, add Nancy Killefer, “Chief Performance Officer”, to the list of non-tax payers.
Too bad we didn’t get Tim G, too! Poor Barack Obama … seen as just more of the same, already!
-Sarah
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Hi Sarah,
Allow me to make three suggestions now that Tom Daschle is no longer a candidate for the next Secretary of DHHS.
1. Senator Ron Wyden [D-OR]
2. Dr. Donald Berwick [Institute for Healthcare Improvement]
3. Mark B. McClellan MD, PhD [Director Engelberg Center for Health Care Reform at Brookings Institution].
What might be the pros and cons for these three candidates? Your thoughts are appreciated.
Best.
Dave
Dr. David E. Marcinko; MBA, CMP™
Publisher-in-Chief
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Rep. Hoyer Wants Permanent Fix for SGR formula
House Majority Leader Steny Hoyer (D-MD) in a meeting with reporters called for a permanent fix to Medicare’s physician payment problem, and asserted that a government-run public option provision “would not be thrown out” of House healthcare reform legislation. The one-year solution that the Senate Finance Committee’s reform bill contains for fixing the physician payment formula is inadequate, Hoyer said. “A one-year fix makes (the situation) look better but it’s a façade of looking better,” Hoyer said, adding, “What we ought to do is fix it permanently.”
Medicare physicians are paid under the sustainable-growth rate, or SGR, formula, which is tied to the health of the economy and has been threatening payment cuts for at least six years. Unless Congress intervenes as it has so many times in the past to stop these cuts, doctors face a 21% reduction to their payments in 2010.
The House bill, the America’s Affordable Health Choices Act, does contain a permanent solution for fixing the payment formula. A permanent fix is estimated to cost about $245 billion, he said. Whether or not such a fix is addressed in healthcare reform or some other legislative avenue doesn’t matter, Hoyer continued. The bottom line is compensating physicians adequately so they won’t drop Medicare patients, he said.
Source: Jennifer Lubell, Modern Healthcare [9/22/09]
[PMNews September 24, 2009 #3,657]
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Due to the lack of a cost of living increase for 2010 in Social Security benefits, 75% of all Medicare beneficiaries were already exempt from any Part B premium increase in 2010.
Currently, single earners above $85,000 and couples above $170,000 are not exempt and would likely be seeing a larger than normal increase to help off-set the lack of increases from the rest of the beneficiaries.
Mary
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House Unlikely to Back Stabenow Bill: Hoyer
The House is unlikely to approve stand-alone legislation being considered in the Senate to revamp the Medicare doctor payment formula as it is currently written, House Majority Leader Steny Hoyer (D-MD) told reporters.
Hoyer’s cautionary message makes good on a letter he and House Speaker Nancy Pelosi (D-CA) wrote in April indicating they would reject any Senate bills on four items—including the sustainable growth-rate, or SGR formula in Medicare and various tax issues—if those bills didn’t contain statutory “pay-as-you-go” language, or if the bills’ costs were not offset in some way.
These guidelines aren’t being applied in the Senate, however. The legislation to revamp the SGR formula that Sen. Debbie Stabenow (D-MI) wants considered on the Senate floor has no specific offset, such as a tax increase.
Source: Jennifer Lubell, Modern Healthcare [10/20/09]
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Here we go again!
The Senate just voted to delay – again – a 21 percent Medicare physician pay cut until October 1st.
If the House joins the Senate in passing the measure, this will be the third time Congress has postponed the cut that was mandated to take place Jan. 1, 2010.
Mary
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Medicare Physician Pay Cut Reversal in Senate’s Hands
When Congress returns from its Memorial Day recess today, the Senate will be racing the clock to stem damage from a 21% cut in Medicare physician pay that officially went into effect June 1.
This is the third time this year the cut has gone into effect before it could be reversed, and physician organizations say they are growing increasingly frustrated by what they perceive as a lack of urgency on the part of lawmakers to fix the situation in a more permanent fashion.
As it did the two previous times, the Centers for Medicare & Medicaid Services said it would instruct Medicare contractors to hold June claims for 10 business days, giving the Senate more time to pass the House bill before the program starts sending doctors’ payments at the reduced rate. The extension runs out after June 14.
Source: Chris Silva, AMNews [6/7/10]
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Breaking SGR News
The House passed, by a 417-1 vote, a measure to reverse the 21 percent federal fee cut imposed last week on doctors providing care to seniors on Medicare.
This means that a pending 21% cut in payments to physicians that see Medicare patients will be delayed through the rest of the year. House Speaker Nancy Pelosi (D. CA) said earlier Thursday that in light of the Senate’s failure to approve more comprehensive legislation including funds to avoid the payment reductions, the House would move to ensure that doctors don’t see the reduction in their payment rates.
Source: Corey Boles, Wall Street Journal [6/24/10]
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CMS Proposes 6.1% Cut in Medicare Payments to Docs for January
Physicians would receive a 6.1% cut to their Medicare payments starting Jan. 1, 2011, under a proposed rule issued by the CMS. That reduction would be in addition to a projected 23.5% cut that is scheduled to take effect Dec. 1, provided that Congress doesn’t act to change it.
The proposed rule’s creation follows a tumultuous debate on Capitol Hill over Medicare’s sustainable growth-rate formula. The SGR formula has called for payment cuts to doctors for years, with Congress stepping in intermittently to stop the reductions.
The latest intervention came on June 24, when the House approved legislation to replace a 21.2% Medicare physician pay cut with a 2.2% raise through November. The measure was swiftly signed into law. If Congress doesn’t act later this year, however, that 21.2% cut will reappear on Dec. 1, a CMS spokeswoman said. Taking into account the 2.2% increase physicians will receive through November, the net result will be more like a 23.5% cut, she said.
Source: Jennifer Lubell, Modern Healthcare [6/25/10]
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Physicians would receive a 6.1% cut to their Medicare payments starting Jan. 1, 2011, under a proposed new rule issued by the CMS.
Lloyd
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Physician Compensation Fix
How do we control healthcare costs?
The only sensible way to control rising costs is to change fee-for-service to payment by salary, and to persuade physicians to organize themselves into not-for-profit, multi-specialty group practices.
Why? The currently proposed solutions won’t work:
1. Basing medical payment on “quality improvement” sounds fine in theory, but won’t work in practice because there is no way to measure the “quality” of medical services. And sometimes it will cause physicians to avoid complicated and difficult cases.
2. Risk adjustment won’t work either, because it is a technique built on sand, always subject to dispute and variation.
3. Paying specialists less isn’t a good solution either because the specialists will use volume to protect their income, and/or will use more expensive procedures.
Alexander
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Dumping the SGR?
Alex at al, a bipartisan debt commission appointed by President Obama just released its proposed plan to cut the nation’s debt by nearly $4 trillion through 2020. Part of the plan is to get rid of Medicare’s sustainable growth rate (SGR) and replace it with a small reduction in pay to doctors.
http://www.medpagetoday.com/Washington-Watch/Washington-Watch/23289
According to the plan, by 2037, the nation would have a balanced budget. The report also recommended cuts in fiscal 2012 by following five recommendations ranging from simplifying the tax code to cutting the annual cost-of-living increases in Social Security.
Any thoughts?
Clinton
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House Likely to Pass Medicare Pay-Cut Delay
Rep. Michael Burgess (R-TX), vice chairman of the Energy and Commerce Health Subcommittee, said in an interview Monday that the House Republican leadership aims to begin consideration of an as-yet unintroduced Medicare physician pay bill next month. The leadership’s goal is to pass the bill in June and give the Senate months to act before the current one-year freeze of a 29.5% physician pay cut expires Jan. 1.
The House measure would not permanently replace the Medicare physician payment system, based around the sustainable growth rate formula, but would freeze the current rates for several years while Congress negotiated a permanent fix, he said. Such a permanent fix proposal is expected from the Medicare Payment Advisory Commission in October, but Burgess said Congress would need more than a few months to reach agreement on a permanent fix.
Source: Rich Daly, Modern Physician [3/22/11]
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MedPAC Offers Painful Path to SGR Repeal
Ten years after first recommending that Congress replace Medicare’s sustainable growth-rate formula, a divided Medicare Payment Advisory Commission suggested ways to pay for such a repeal. The proposal, approved 15-2, would repeal the SGR, cut and then freeze most physician fees, and cut a variety of other provider payments to cover the estimated $200 billion cost.
The physician component—reducing the 10-year SGR cost by about $100 billion—would freeze Medicare rates for most primary-care physician services while cutting other physician services by 5.9% for three years and then freezing those rates for seven years. The largest savings in the nonphysician component of the SGR replacement plan—worth about $220 billion over 10 years—include 34% from drugmakers, 15% from beneficiaries, 11% from hospitals, and 6% from durable medical equipment cuts.
Source: Rich Daly, Modern Healthcare [10/6/11]
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Democrats Press Boehner to Set Vote on Tax Cut – SGR
Today, congressional Democrats would not say if the House or Senate has plans to introduce a stand-alone bill to avert a looming 27.4% Medicare physician payment cut if federal lawmakers can’t agree on a payroll tax cut bill that includes a two-month freeze on payments to the nation’s doctors.
During a call with reporters, Sens. Charles Schumer (D-NY), Bob Casey (D-PA) and Rep. Chris Van Hollen (D-MD) repeated a message that Senate Majority Leader Harry Reid (D-NV) sent to House Speaker John Boehner (R-OH) in a letter Wednesday: that the Ohio Republican should reconvene House members and hold an up-or-down vote on the Senate-amended version of a House payroll tax cut bill that the Senate passed with strong support last weekend.
Source: Jessica Zigmond, Modern Healthcare [12/21/11]
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Baucus Unsure Permanent SGR Fix is Within Reach
Although Democrats have pushed to permanently replace the Medicare physician payment formula as part of extending a package of expiring tax cuts, a senior Democrat indicated Tuesday that a permanent fix was unlikely. Sen. Max Baucus (D-MT), the senior Democrat on the panel negotiating the tax package, downplayed the likelihood of permanently replacing the Medicare sustainable growth-rate formula when asked about it after the group’s fourth meeting. “That would be my preference but this is the art of the possible,” he told reporters when asked about a permanent SGR replacement.
Members of the two parties appeared far apart on using any version of three House-passed proposals to pay for the SGR fix and other provisions of the legislation that were discussed Tuesday. Those so-called offsets included raising Medicare premiums for high-income enrollees and requiring insurance exchange enrollees who receive premium subsidies to pay back more of that assistance if their incomes increase during the year.
Source: Rich Daly, Modern Healthcare [2/7/12]
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Doctor Pay
This is what congress has done to doctors pay on average over the past decade:
2011: 24.9% cut avoided (2.2% increase)
2010: 21.3% cut avoided(2.2% increase)
2009: 10.6% cut avoided (0.55 increase)
2008: 9.9% cut avoided, CHAMP bill = 0.5% increase
2007: frozen
2006: frozen
2005: frozen
2003: 1.6% increase
2004: 2005: 4.5% reduction
2003: MGMA 1.5% increase in 2004, 2005
Janice
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MGMA and AMA Repeat Call for SGR Repeal
Two organizations representing the country’s doctors and practice managers reiterated their position that Congress should repeal the sustainable growth-rate formula and outlined alternative approaches to the current Medicare physician payment system.
The appeals from the MGMA-ACMPE and the American Medical Association to the House Ways and Means Committee were in response to the panel’s April request for comments on different approaches to the way physicians are reimbursed in the Medicare program.
Source: Jessica Zigmund, Modern Healthcare [5/26/12]
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SGR Patch Expected in Lame Duck Session
The co-chair of the GOP Doctors’ Caucus is “pretty confident” that Congress will approve a one-year freeze in Medicare physician pay rates during the lame duck session of Congress. Rep. Phil Gingrey (R-GA) told reporters Thursday that the caucus has discussed a plan to push during the post-election session of Congress, a one-year freeze in Medicare physician pay rates, which are slated for a 27.5% cut Jan. 1. During the lame duck, there will be a patch,” he said.
Gingrey was confident that Congress would find the $18 billion needed to offset the cost of a one-year payment freeze and suggested using savings from cutting programs included in a recently released annual report by physician Sen. Tom Coburn (R-OK) on wasteful government spending. However, Gingrey rejected the use of savings from the end of the Iraq War—an SGR pay-for long favored by Democrats—as “smoke and mirrors.”
Source: Rich Daly, Modern Healthcare [11/15/12]
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Estimated Cost of SGR Patch Surges
A new Congressional Budget Office estimate calculates that the cost of a one-year suspension of the scheduled 27% Medicare pay cut to physicians called for by the sustainable growth-rate formula has risen more than 36%.
According to numbers supplied to Modern Healthcare by the office of Rep. Michael Burgess (R-TX), a physician and chairman of the Congressional Healthcare Caucus, the cost of a one-year “patch” with no increase in payment has risen to $25.2 billion from the previous estimate of $18.5 billion. The latest numbers have led to more calls for repealing the SGR and for coming up with a more predictable method for calculating Medicare payment.
Source: Andis Robeznieks, Modern Physician.com [11/21/12]
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Proposal Nixes Medicaid Raise to Fund ‘Doc Fix’ or Deficit
Did you know that organized medicine is protesting a Congressional proposal to eliminate a Medicaid raise for primary care physicians that would either fund a 1-year postponement of a 26.5% Medicare pay cut set for January 1 or reduce the federal deficit in general?
The American Medical Association and 260 other national and state medical societies registered their “strong opposition” to the idea in a letter to Republican and Democratic leaders in both the House and Senate.
Alex
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White House Calls for Healthcare Cuts, Permanent SGR Fix
The White House has called for a permanent—not temporary—fix to Medicare’s sustainable growth-rate formula and about $400 billion in healthcare cuts, according to a source familiar with the fiscal-cliff negotiations. House Speaker John Boehner (R-OH), however, was generally dismissive of the president’s new proposal, signaling that a permanent fix to the physician payment system is still not within reach.
The GOP leadership plans to introduce a bill this week that would extend current tax rates for Americans who make $1 million or less, but Boehner stopped short of saying whether that legislation would include a temporary fix to Medicare’s physician payment formula.
Source: Jessica Zigmond, Modern Healthcare [12/18/12]
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Medicare Pay Reprieve in Place; Next Threat is 2% Cut in March
Late on Jan. 1, the House voted in favor of a legislative package approved by the Senate in the early hours of the morning that postponed a 26.5% cut to doctors’ pay rates mandated by the sustainable growth rate formula. Although enactment technically came after the cut officially had taken effect, the result of the retroactive measure is that all 2013 physician claims will be paid at 2012 levels.
Medicare physician pay rates and many other federal expenditures would still be affected by the sequester, the consequence of Congress and the Obama administration failing to agree on more targeted spending cuts during 2011 negotiations. If such an agreement or another delay cannot be achieved by March 1, the new sequestration deadline established by the departing 112th Congress, doctor pay will be reduced by 2% under the automatic cuts. Certain non-Medicare health programs, such as clinical research and health professions funding, will be cut by 7.8% for 2013.
Source: David Glendinning, Amednews [1/4/13]
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Lawmakers Offer Dueling Approaches on Fixing Doc Pay
Both a bill introduced Wednesday by Rep. Allyson Schwartz (D-PA) and a bill expected from Ways and Means Health subcommittee Chairman Kevin Brady (R-TX) would replace the sustainable growth-rate formula with temporary increases while replacement methodologies were devised. But the bills differ on important points, including whether federal officials or physician groups would take the lead in developing new payment systems and the degree to which fee-for-service payments would be eliminated.
Schwartz’s bill would mostly unravel the fee-for-service system by requiring physicians to adopt one of several replacement models that the CMS would test and approve over five years. Physicians who did not do so would face successive payment cuts, although a small number of physicians could remain in a modified fee-for-service system if they met certain quality benchmarks or were near retirement. The Republican alternative, according to a Ways and Means Committee memo, would continue wide-scale use of a modified fee-for-service system while offering extra payments for physicians who undertook efficiency improvements.
Source: Rich Daly, Modern Healthcare [2/6/13]
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ACP to Budget Committee
Flawed payment mechanism should not be part of the federal budget framework due to be reported to Congress on December 13th, according to the nation’s internal medicine physicians.
http://www.medicalpracticeinsider.com/news/acp-budget-committee-sgr-needs-go-now
IOW: The ‘SGR needs to go now’
Dr. Hamilton
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The Sustainable Growth Rate (SGR) One Step Closer to Repeal
On December 12, 2013, bills were presented and passed, both in the Senate Finance Committee, and (unanimously) in the House Ways and Means Committee, opening the door for a permanent repeal of the SGR formula.
Click to access SGR_Out_Of_Committee.pdf
Robert James Cimasi MHA AVA CMP™
[Health Capital Consultants, LLC]
via Ann Miller RN MHA
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Will the SGR Finally be Retired?
Medicare spending continues to be a significant contributor to soaring healthcare spending. The Sustainable Growth Rate (SGR) formula, enacted as part of the Balanced Budget Act of 1997, has become problematic for healthcare providers and policymakers alike, with many seeking “fixes” to the flawed formula.
Click to access SGR.pdf
In the past decade alone, almost $150 billion has been spent by Congress by overriding annual cuts to physician reimbursement based on the SGR formula; another reimbursement cut of 24.4% has been postponed until March 31, 2014, allowing Congress sufficient time to deliberate on a permanent solution to the SGR.
Robert James Cimasi MHA AVA CMP™
[Health Capital Consultants, LLC]
via Ann Miller RN MHA
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Congress Delays Medicare Reimbursement Cuts and ICD-10
The Senate voted Monday evening to pass a so-called “doc fix” bill approved last week by the House, the 17th time that Congress has acted since 2003 to temporarily delay cuts to doctor reimbursements under Medicare due to a structural problem in the formula used to determine funding levels. Senators voted 64 to 35 to pass the bill, which delays the cuts for one year in a vote that came after House Republicans used a rare voice-vote to get the measure through the lower chamber due to uncertainty over whether the bill had sufficient support to pass.
The Senate Bill also delays scheduled cuts in physician payments under Medicare and moves the switch to ICD-10 billing codes to October 2015. President Obama is expected to sign the bill into law before midnight, when the reimbursement cuts were set to go into effect.
Source: Wesley Lowery, Washington Post [3/31/14]
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Doc Fix Update 2015
The U.S. House of Representatives just passed HR 2 that would prevent an automatic cut of 21 percent in Medicare payments to physicians and would require seniors to pay more in the form of higher copayments and premiums.
Brian
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MACRA
If implemented as currently outlined, the MACRA law will be a game changer. There are two main reasons:
Firstly, MACRA will greatly strengthen the push toward valued-based contracting. Given that the APM path entitles participants to an automatic 5% Medicare rate premium (as opposed to the risk associated with the MIPS pathway), providers will have a strong incentive to invest in meaningful population health management infrastructure and migrate into Medicare contracts with significant up and downside risk–and away from upside only contracts, such as type 1 MSSP. Most health systems are not prepared to manage downside risk and will need to intelligently enhance their population health competency if they are going to be successful in these high stakes risk contracts.
Secondly, the MIPS pathway will be very challenging for smaller independent providers, driving them into the arms of larger health systems (or possibly discouraging independent providers from participating in Medicare at all). On the one hand, small independent providers cannot participate in an APM unless they are part of a clinically integrated network (CIN), ACO, or similar network. Yet, on the other hand, small independent practices will face a significant challenge to be successful in the MIPS program given quality and reporting infrastructure that will be required to avoid MIPS financial penalties. With the first reporting year (2017) only months away and little time to develop the necessary quality infrastructure, providers in small independent practices will likely be looking to larger health systems for either employment or to join in a CIN. Health systems should have a provider alignment strategy that will have various points of attachment for independent physicians seeking cover.
Where Medicare goes, Medicaid and commercial insurers are likely to follow. This will only further tip the scale toward value-based contracting and will force providers to develop a cost-effective population health strategy. Given that many health systems have found it challenging to generate a return on their population health infrastructure investment, this will be an important area of focus for health systems in the next few years.
David Fairchild MD, MPH
[BDC Advisors]
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Many Physicians Predict Mass Exodus From Medicare Over MACRA
Almost four in 10 physicians in solo and small group practices predict a mass exodus from Medicare within their ranks on account of the program’s new payment plan and its punishing penalties, a Medscape Medical News survey reveals.
Fifty-nine percent of physicians in practices with fewer than 25 clinicians also said they expect to receive a performance penalty as high as 4% under proposed regulations that implement the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015. Only 9% of physicians in under-25 groups expect a bonus, with another 12% counting on no change in compensation.
Roughly one third of physicians in small practices said merger into larger groups promises to be the most likely fallout from MACRA. CMS estimates that 54% of all physicians in MIPS will receive a bonus, most of them in practices with more than 24 members, and 46% would be penalized.
Robert Lowes
[Medscape News 6/30/16]
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MIPS and APMs will begin in 2017 with their effects on payment to start in 2019
The maximum negative payment adjustment for those who participate in MIPS starts in 2019 at 4 percent and increases to a maximum of 9 percent by 2022. There are no details to indicate beyond 2022 if the payment adjustment will increase past the 9-percent threshold, and information from CMS at this time shows the adjustment remaining at 9 percent past 2022.
There are also opportunities for positive payment adjustments—so there will be winners and losers in the MIPS program.
Hope Hetico RN MHA
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Holy MACRA! Half of Docs Have Never Heard of Medicare Payment Reform
Half of non-pediatric physicians have never heard of the Medicare Access and CHIP Reauthorization Act of 2015—a new CMS payment plan that will put 4% or more of their Medicare reimbursement at risk beginning in 2019, according to a new survey by Deloitte. With CMS preparing final rules this autumn, just 21% of self-employed or small-group physicians and 9% of physicians employed by hospitals or larger groups were even somewhat familiar with the pending reimbursement changes, the survey showed.
Physicians with a high share of Medicare payments were just as clueless about MACRA as those with lesser exposures, Deloitte found. The consultancy surveyed 600 physicians through its Deloitte Center for Health Solutions. Physicians and other clinicians have been caught flat-footed by the “transformational” changes portended by MACRA because for 20 years they have heard about major impending Medicare reforms that never came to fruition, said Anne Phelps, Deloitte principal and U.S. healthcare regulatory leader.
Source: Dave Barkholz, Modern Healthcare [7/14/16]
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