On Thursday, July 18, 2013, the House Energy and Commerce Committee released an updated draft of their “legislative framework” to repeal and replace the sustainable growth formula (SGR).  More information from the Committee is available here and the latest draft of the legislative framework is available here.  Background information on the SGR is available here and information on the previous iterations of the legislative framework is available here.

The Congressional Budget Office (CBO) estimates that a ten year freeze to physician payments would cost $139.1 billion.  More information on the CBO score is available here.

Unless Congress acts by the end of the year, physicians who treat Medicare beneficiaries will face an estimated 24.4 percent reduction in their reimbursement.  The exact amount of the reduction will be announced when the Centers for Medicare & Medicaid Services (CMS) releases the Medicare Physician Fee Schedule final rule, which is expected in November 2013.  More information on the proposed rule is available here.

As with similar proposals, the latest draft of the legislative framework would repeal the SGR and replace it with a stable 0.5 percent payment update during the period 2014-2018.  At the end of this period, Medicare would implement an enhanced Physician Quality Reporting System (PQRS) system, under which provider reimbursement would be linked to the quality of the care they provide.

Alternatively, providers can choose to participate in an alternative payment model (e.g., patient-centered medical home, bundled episodes of care, etc.).  These new alternative payment models will encourage high value and high quality health care.

The latest draft legislative framework is authored by Rep. Mike Burgess (R-TX), Energy and Commerce Health Subcommittee Chairman Joseph Pitts (R-PA), Energy and Commerce Health Subcommittee Ranking Member Frank Pallone (D-NJ), Energy and Commerce Committee Chairman Fred Upton (R-MI), Energy and Commerce Ranking Member Henry Waxman (D-CA), and Rep. John Dingell (D-MI).  The revised framework does not include any pay-fors.

The Committee plans to markup the legislation on Monday, July 22nd and Tuesday, July 23rd.  A link to the background memo prepared by the Committee can be found here.