CIOs, the SGR and a New Direction for Health IT

Last week, House and Senate leaders introduced a bipartisan bill that would repeal Medicare's sustainable growth rate formula for physician reimbursements and replace it with a payment system designed to foster effective, low-cost care.

It's something Congress has been putting off for a while — an aging patient population and increased demands for healthcare services have made the original 1997 formula financially unsustainable. Since 2003, legislators have delayed making the needed cuts to the reimbursement structure, allowing the size of needed cuts to increase. The latest stop-gap measure, the Bipartisan Budget Act of 2013, pushed back a 24 percent reimbursement cut in favor of a 0.5 percent increase.

The new bill would avoid a steep reimbursement cut by fundamentally changing the way Medicare reimburses physicians, by legislating a gradual but permanent shift from fee-for-service to value-based payments. It would ensure annual physician payment updates of 0.5 percent for five years, but it would also introduce payments based on the attainment of certain quality measures and reward alternative care models such as patient-centered medical homes.

The SGR bill would also combine CMS' three electronic health record incentive programs into one, to be called the Merit-Based Incentive Payment System. The current incentives and penalties under meaningful use, the Physician Quality Reporting System and the Value-Based Payment Modifier would continue through 2017. Starting in 2018 a new formula under MIPS would determine incentives or penalties based on physicians' composite scores from these three programs.

The bill would therefore remove the 2 percent reimbursement penalty for failure to report PQRS measures and the 3 to 5 percent penalties for failure to meet meaningful use criteria. Instead, reimbursement rates would be linked to providers' MIPS performance, a new system aligned with the bill's overall goal of tying reimbursements to value.

The bill also requires all EHRs to be interoperable by 2017 and prohibits any provider from deliberately hindering information sharing with other EHR vendor products.

The legislation, along with its health IT provisions, is a clear sign the industry is transitioning from a fee-for-service to a value-based reimbursement world, a world for which CIOs already know they need to be ready, says Russ Branzell, president and CEO of the College of Healthcare Information Management Executives. "I think most CIOs have already been working to move their organizations in that direction," he says.

However, the looming industry shift and potential changes to the EHR incentive programs makes the issue more pressing, says Mr. Branzell. "[CIOs] have to put in the building blocks for this while still supporting fee-for-service, because that's what's currently paying the bills," he says.

Because he has observed meaningful use stage 2 attestment to be slower than anticipated, he reiterates CHIME's worries that the current meaningful use timeline isn't giving providers enough time to implement and fully optimize their IT infrastructures before the industry takes its next steps.

"We've made up a lot of ground with meaningful use stage 1, but we still have a lot to do with stage 2," says Mr. Branzell. "If any coming changes are harmonized well with what's currently going on, it will be a very positive thing. If not, we could lose a lot of the traction we've made already with health IT."

More Articles on the SGR:

Paying for a Permanent Solution: How Cost Still Stands in the Way of SGR Repeal
Debt Limit Bill Would Fund SGR Repeal, Extend Sequestration Cuts
House, Senate Leaders Introduce Medicare SGR Replacement Bill

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