How the SGR repeal will impact managed care

President Barack Obama signed the Medicare Access and CHIP Reauthorization Act (MACRA) into law in April, and with its passage, repealed the highly criticized sustainable growth rate (SGR) formula.

The SGR, enacted as part of the Balanced Budget Act of 1997, attempted to control growth in physician payments by limiting the annual increase in spending per Medicare beneficiary to that of the gross domestic product. Exceeding the cap triggered automatic cuts to provider payments, explains John Barkett, director of policy affairs, Towers Watson Exchange Solutions, Washington, D.C. When Medicare expenditures exceeded the cap in 2002, however, and a 4.8% cut went into effect, physicians demanded change. Since then, every cut that was scheduled to go into effect has been overridden-for a total of 17 short-term patches.

Related: Updating the U.S. healthcare playbook

The $214 billion MACRA reform package puts an end to those short-term fixes by repealing and replacing the flawed formula through a heavy reliance on payment reforms. "The new law contains provisions meant to consolidate and accelerate ongoing efforts to reform Medicare's physician payment system to reward higher quality and better outcomes rather than greater volume and intensity," says Stuart Guterman, vice president, Medicare and Cost Control, The Commonwealth Fund, Washington, D.C. 

Senate overwhelmingly approved MACRA bill.

The U.S. Senate approved the MACRA bill by a vote of 92 to 8 and the U.S. House of Representatives passed it by a 392 to 37 vote. "The overwhelming bipartisan support underscores that the changes are here to stay," says Danielle Lloyd, MPH, vice president of Policy and Advocacy and deputy director of Premier's Washington, DC, office.

Here's more on some of the biggest changes included in MACRA, and how those changes will affect healthcare, health plans, and health providers.

 

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