The Balanced Budget Act which became law in 1997 was designed to help stem the
increasing in costs of healthcare. The Sustainable Growth Rate (SGR) formula was
incorporated into that law as a method of helping balance the budget through a
complex formula tying reimbursement to the growth in the economy. Soon after its
inception, the flawed nature of the formula, linking the balancing of the federal budget
to physician professional fees was realized. Congress has provided multiple short-term
fixes known as SGR patches over the years so as to avoid generally progressively larger
negative corrections to professional reimbursement. The near annual SGR correction
requirement has been compared to Groundhog Day in the legislative arena. Over the
years, physician and other providers faced numerous looming, large cuts. Most recently,
on April 1, 2015 physicians faced a 21.2% cut in provider payments. To the surprise of
many, in April 2015 a bipartisan bicameral effort permanently repealed the Medicare
SGR formula for controlling provider payment.
The repeal of SGR means the temporary measures to override the growth rate formula
will no longer dominate Medicare policy discussions and now the focus turns to continue
payment reforms. The MACRA provides physicians and other health care professionals
with stable fee update for 5 years and it follows with a new incentive program, termed
the Merit-based Incentive Payment System (MIPS) replacing and consolidating preexisting incentive payment programs: meaningful use of electronic health records
(EHR), physician quality reporting system, and the value-based payment modified.
Thus, payments to clinicians will be subjected to adjustments based on participation in
MIPS or other approved alternative payment mechanisms. This legislation also creates
numerous other regulations.
The MACRA has been criticized for providing insufficient statutory updates, enacting
a flawed quality and performance improvement program associated with MIPS and
inappropriate use of utilization and payment data. Thus, the MACRA offers physicians a
predictable schedule for Medicare rates – a carrot, and controls the physician behaviors
with payment reforms analogous to a stick. Thus, it could be said that this legislation
embodies some good, bad, and ugly aspects.
Key words: Balanced Budget Act, sustainable growth rate, alternative payment
models, Medicare Access and CHIP Reauthorization Act of 2015, Merit-based Incentive
Payment System, payment reform, payment modernization, health information
technology
Policy Forum: Quebec's Debt—Taming the Beast