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This week’s headline:

Permanent SGR repeal derailed by 17th short-term SGR patch

Congress has passed, and President Obama has signed, the Protecting Access to Medicare Act, HR 4302, which includes a one-year patch from the 24 percent Medicare physician payment cut that was scheduled to begin April 1, 2014, and delayed implementation of the ICD-10 coding set for one year. Passage of the patch has stalled progress on the SGR Repeal and Medicare Provider Payment Modernization Act of 2014, HR 4015/S 2000, which would have provided a permanent fix to the broken sustainable growth rate (SGR) formula.

The American Academy of Dermatology Association (AADA) expressed deep disappointment that Congress missed the opportunity to repeal the SGR and instead enacted yet another short-term patch. This marks the 17th time that Congress has patched the SGR since 2002.

ICD-10 delay and misvalued code provisions
While HR 4302 stopped the scheduled 24 percent Medicare payment cut and delays ICD-10 implementation until Oct. 1, 2015, it did so by exposing physicians to other potential payment cuts that could negatively impact patient access to care in the future, and seriously undermining efforts to permanently repeal the SGR formula.

Because of these issues, the AADA joined the American Medical Association, the American College of Mohs Surgery, the American Society for Dermatologic Surgery Association, and more than 80 other specialty organizations opposing this legislation prior to the House passage of the bill. Specific items of concern in HR 4302 include:

  • Provisions requiring CMS to identify potentially “misvalued” services or codes within the Medicare fee schedule, reduce payments for these services, and redistribute funds to other physician services. The agency must find misvaluations totaling 0.5 percent of fee schedule spending annually between 2017 and 2020.
  • Provisions stipulating that if CMS does not meet its annual target, these funds must be completely taken out of the Medicare payment pool — resulting in payment cuts for all physician services.
  • Removal of the above “misvalued codes” provisions from the SGR repeal package (HR 4015/S 2000) as a means to pay for this patch. While the AADA and most physician groups expressed concern regarding these provisions in HR 4015/S 2000, it supported HR 4015/S 2000 as a whole because of the payment reforms the bill included. However, the removal of this provision from HR 4015/S 2000, and including it in HR 4302, will not only negatively impact the specialty and patient access to care; it will also drive up the cost of permanent reform embodied in HR 4015/S 2000 — making the already difficult task of identifying fiscal offsets for SGR repeal all the more difficult for Congress in a challenging fiscal environment.

Next steps for Medicare payment reform
The AADA is actively assessing the impact of the ICD-10 delay on physicians, their business partners, and CMS and will communicate any new developments as more information is available.

The AADA also continues to encourage Congress to build on the bipartisan effort of the past year and pass HR 4015/S 2000, which would bring much-needed stability to Medicare and will preserve and promote access to high-quality dermatologic care. The AADA is calling on all members to log on to the AADA Dermatology Advocacy Network and submit a letter telling Congress to repeal the SGR and reform the Medicare physician payment system.

For more information on Medicare payment reform, contact Shawn Friesen at sfriesen@aad.org.

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