The SGR ‘Fix’ and How It Affects Your Practice Revenue

March 27, 2015

Recently H.R. 2 was passed in the House, the Medicare Access and CHIP Reauthorization Act of 2015.  This would permanently repeal the SGR formula and replace it with a formula that will give half of one percent increases for the next five years, and then move all physicians into the value-based payment program.

The bill is now in the Senate.  The bill has to pass before April 1st to prevent a 21% pay cut from Medicare, and the Senate is scheduled to go on break today until April 13th.

What this effectively means is physicians’ payments are moving away from fee-for-service towards a valued-based bundled payment.  This is a really big change; it means being great at PQRS and being great at creating a margin per procedure.

Here is the most likely scenario for your practice: The Senate will pass H.R. 2, which would repeal the SGR formula, but it will take time and effort for all these changes to take place.  This means chaos for Medicare payments for the time being.

Therefore it may be feasible to hold some Medicare billings until this all gets washed out.  It is likely there will be some failed Medicare payments or even payments paid at the 21% reduced rate until the Medicare Access and CHIP Reauthorization Act of 2015 is fully implemented.  I would not plan on this being fixed by June 1st.  I would also expect to see some interesting payments from Medicare until this is finalized.

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