- THCA

Volume XXX, Number 5
May 2015

President Signs into Law Permanent Solution to SGR

On April 16, President Obama signed the bi-partisan, bi-cameral Medicare Access & CHIP Reauthorization (MACRA) Act into law. The new law repeals the flawed formula known as the Sustainable Growth Rate (SGR) that forced deep rate cuts to reimbursement of physician and other practitioner services. The legislation will eliminate the perennial threat of providers paying for a “Doc Fix” and inject much-needed stability for the long term and post-acute care sector.

In a message to membership, American Health Care Association (AHCA) President and CEO Mark Parkinson stated that “This is a historic victory for our profession. The annual routine of fixing the flawed SGR formula was always a billion-dollar risk for skilled nursing providers. Though the bill does contain a cut to our profession, it is a fraction of what we would have faced if we continued the risk of being a pay-for year after year. In addition, the law provides important therapy relief which AHCA sought for many years.”

According to AHCA, key components of the legislation include:

Stability – A permanent fix to the annual SGR battle. The doc-fix limped along year-to-year for a total of 17 patches since 2003. It is estimated that skilled nursing has been cut by more than $27 billion to pay for those short-term SGR fixes.

Therapy Reforms – The bill includes a 33-month extension of the therapy cap exceptions process (through December 31, 2017). This allows providers to continue delivering therapy above the current $1,940 threshold as long as supporting coding and documentation show the services were medically necessary.

The legislation also mandates a new therapy review process to take the place of current manual medical review (MMR). The new structure will be in place within 90 days of enactment of the bill. It will target providers with high denial rates and outlier billing patterns as well as new providers, certain medical conditions and certain group practices. It also takes RACs out of the review process.

1 Percent Market Basket Update – Skilled nursing is part of the pay-for in this bill. AHCA/NCAL staff worked closely with Congressional leadership to push the cut back to FY 2018 with the understanding that the cut can be avoided if a better alternative can be identified in the interim.

Additional information regarding this issue can be found on AHCA’s web site.